.
In Egypt the cost of food touches politics like nothing else can. Between the two there exists a basic and sometimes fateful link. The Pharaohs, who once lorded over the fertile Nile valley with god-like authority, were reminded of this, from time to time, whenever food supplies ran short and their temple and tomb masons put down their tools in quiet protest.
Those who would rule modern Egypt ignore food prices at their own peril. The country’s 89 million people consume more than 200 million loaves of bread every day. About three-quarters of those depend on government food subsidies, which were introduced by socialist President Gamal Abdel Nasser in the 1950s.
For decades, Egypt’s dictators have used bread subsidies to help keep their subjects quiet and themselves in power. But when disruptions in the wheat supply system caused prices to soar over 300 percent in 2011, Egyptians poured into the streets by the hundreds of thousands, calling for an end to President Hosni Murbarak’s 30-year rule. They demanded freedom and justice, but what they also wanted, perhaps above all else, was aish, a word that in Arabic means both bread and life.
It wasn’t the first time in recent memory that rising food prices have sparked mass political revolt. In 1977 the Bread Riots erupted after Anwar Sadat’s government, looking to mollify foreign creditors who felt public spending had slipped out of control, decided to kill subsidies for basic foodstuffs like flour, rice, and cooking oil. Two days of violent rioting followed, leaving seventy-nine people dead and another 566 injured.
And it happened again thirty years later. In 2007 and 2008 disruptions in flour supply created widespread panic, which quickly morphed into deadly protests against official graft and corruption.
Along the Nile, urban sprawl has gradually squeezed traditional farmlands, and the agricultural supply chain has been left in desperate need of modernization. As a result, the country has become the world’s largest importer of wheat to feed its rapidly growing population, which has one of the highest per capita wheat consumption rates in the world.
Each year the government is forced to purchase on international markets nearly three times the amount of wheat it buys from its own domestic farmers. That represents about 10 million tons – a major drain on the country’s foreign reserves and more wheat than China, India, Japan, and Venezuela combined import. Deposed President Mohamed Mursi, during his short year in power, called for an Egyptian solution to the problem and promptly slashed imports, believing that alone would lead Egypt on a path to self-sufficiency.
Abdel Fattah el-Sisi, the country’s current president, says that simply cutting imports is not enough. The solution, he thinks, lies in controlling high levels of consumer food waste and post-harvest losses, which also use up other resources such as water, energy, and labor.
To deal with food waste, el-Sisi’s administration has introduced a nationwide smartcard system to ration bread. Plastic cards are issued to households, allowing each to buy five loaves per family member per day. If a family uses less than its full daily allowance, it accumulates points on the card, which can be used to purchase other staples in government-registered stores. The government reckons the program will curb enough waste to enable the country to bring down imports by 30 percent.
On the supply side, officials are working on ways to trim post-harvest losses. About 40 percent of all food grown in Egypt never makes it to market. Most is lost to spoilage due to heat and humidity, or to insects, rodents, and human theft. That spoilage occurs mainly in the country’s traditional shouna or open-air, dirt-floored storage barns, protected only by barbed-wire fencing.
Last year, el-Sisi’s government hired Blumberg Grain, a division of Miami-based investment firm Blumberg Partners, to build the largest integrated grain-storage network in the Middle East and North Africa. Blumberg Grain works with countries in Africa and around the world to modernize agricultural supply chains, with a focus on reducing post-harvest losses to 5 percent or less. In Egypt, that could translate into savings of more than $600 million (U.S.) a year.
The Shouna Development Project, as it is called, is planned in two phases. The first will see Blumberg Grain equip 93 shouna with modern warehousing units for initial processing and storage of locally harvested wheat. Blumberg says it can drastically lower spoilage simply by moving the grain into a temperature-controlled environment, out of the sun and humidity. Inside, the grain can be cleaned, dried, and graded before being stored, where it could remain preserved for years on end.
The average warehouse can hold about 8,000 metric tons of grain and process about 20 metric tons per hour but the system’s modular design is a fully scalable. Being bolted together, rather than welded, it can be quickly constructed without specialized skilled labor. The Egyptian Army has already agreed to help put up the steel warehouse, as well as assist with project management and logistics.
Light steel and concrete are only the start. The warehouses, more importantly, will be connected remotely to a central management station in Cairo – Blumberg likens it to a military command center – which allows the Supply Ministry to monitor inventory levels and site security in real-time across the country.
Environmental sensors placed throughout the storage units routinely measure air humidity and temperature. An automated system makes needed adjustments to air flows to maintain the right moisture levels, preventing mold growth, rot, sprouting, and insect infestation. The power to run all these systems is drawn from the units’ own generators, and Blumberg offers the option of rooftop solar cells and wind turbines, making them completely energy self-sufficient.
Egypt’s Minister of Supply and Internal Trade, Dr. Khaled Hanafy, who recently toured the first site in Alexandria, said that President el-Sisi is expanding the project to see another 201 shouna modernized, for a total of 294 sites in all. With this second phase completed the project will enable processing capacity of 11.7 million metric tons of wheat a year, and create 2.35 million metric tons of new storage capacity in 11.4 million square feet of storage space.
James L. Jones, former Supreme Allied Commander of NATO and U.S. National Security Advisor, said he was pleased to see an American company “play a critical role in bolstering Egypt’s food security while also fostering U.S.-Egyptian business-to-business ties.” Jones, together with the U.S. Chamber of Commerce, the world’s largest business federation, assisted in expediting the project.
Blumberg Grain is now also working with the Ministry of Supply to build cold chain logistics centers for perishable produce in each of the governorates across Egypt.
In addition, the company is setting its sights further afield. It wants to establish a manufacturing plant in Egypt, from which it can build, on an annual basis, food security systems capable of storing 3.6 million metric tons, and distribute them across the broader region. According to company estimates, 432 million metric tons of storage capacity is needed in North Africa and the Middle East. Accounting and professional services firm KPMG says a manufacturing and export hub in Egypt would create more than 1,000 jobs for Egyptians and contribute $1 billion (U.S) to the country’s economy during its first year of operation alone.
Blumberg Grain has previously installed similar storage facilities in other African countries, including Senegal, Nigeria, and the Democratic Republic of Congo, where post-harvest losses account for more than the total in food aid given to the countries.
Outside the region, the company recently announced plans to invest $250 million (U.S.) in India over the next five years to set up facilities to manufacture storage units for fruit and vegetables in states such as Punjab, Gujarat, Uttar Pradesh, Haryana, and Karnataka.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
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Rethinking Egypt’s wheat barns
Morocco Traditional Market
September 18, 2015
In Egypt the cost of food touches politics like nothing else can. Between the two there exists a basic and sometimes fateful link. The Pharaohs, who once lorded over the fertile Nile valley with god-like authority, were reminded of this, from time to time, whenever food supplies ran short and their temple and tomb masons put down their tools in quiet protest.
Those who would rule modern Egypt ignore food prices at their own peril. The country’s 89 million people consume more than 200 million loaves of bread every day. About three-quarters of those depend on government food subsidies, which were introduced by socialist President Gamal Abdel Nasser in the 1950s.
For decades, Egypt’s dictators have used bread subsidies to help keep their subjects quiet and themselves in power. But when disruptions in the wheat supply system caused prices to soar over 300 percent in 2011, Egyptians poured into the streets by the hundreds of thousands, calling for an end to President Hosni Murbarak’s 30-year rule. They demanded freedom and justice, but what they also wanted, perhaps above all else, was aish, a word that in Arabic means both bread and life.
It wasn’t the first time in recent memory that rising food prices have sparked mass political revolt. In 1977 the Bread Riots erupted after Anwar Sadat’s government, looking to mollify foreign creditors who felt public spending had slipped out of control, decided to kill subsidies for basic foodstuffs like flour, rice, and cooking oil. Two days of violent rioting followed, leaving seventy-nine people dead and another 566 injured.
And it happened again thirty years later. In 2007 and 2008 disruptions in flour supply created widespread panic, which quickly morphed into deadly protests against official graft and corruption.
Along the Nile, urban sprawl has gradually squeezed traditional farmlands, and the agricultural supply chain has been left in desperate need of modernization. As a result, the country has become the world’s largest importer of wheat to feed its rapidly growing population, which has one of the highest per capita wheat consumption rates in the world.
Each year the government is forced to purchase on international markets nearly three times the amount of wheat it buys from its own domestic farmers. That represents about 10 million tons – a major drain on the country’s foreign reserves and more wheat than China, India, Japan, and Venezuela combined import. Deposed President Mohamed Mursi, during his short year in power, called for an Egyptian solution to the problem and promptly slashed imports, believing that alone would lead Egypt on a path to self-sufficiency.
Abdel Fattah el-Sisi, the country’s current president, says that simply cutting imports is not enough. The solution, he thinks, lies in controlling high levels of consumer food waste and post-harvest losses, which also use up other resources such as water, energy, and labor.
To deal with food waste, el-Sisi’s administration has introduced a nationwide smartcard system to ration bread. Plastic cards are issued to households, allowing each to buy five loaves per family member per day. If a family uses less than its full daily allowance, it accumulates points on the card, which can be used to purchase other staples in government-registered stores. The government reckons the program will curb enough waste to enable the country to bring down imports by 30 percent.
On the supply side, officials are working on ways to trim post-harvest losses. About 40 percent of all food grown in Egypt never makes it to market. Most is lost to spoilage due to heat and humidity, or to insects, rodents, and human theft. That spoilage occurs mainly in the country’s traditional shouna or open-air, dirt-floored storage barns, protected only by barbed-wire fencing.
Last year, el-Sisi’s government hired Blumberg Grain, a division of Miami-based investment firm Blumberg Partners, to build the largest integrated grain-storage network in the Middle East and North Africa. Blumberg Grain works with countries in Africa and around the world to modernize agricultural supply chains, with a focus on reducing post-harvest losses to 5 percent or less. In Egypt, that could translate into savings of more than $600 million (U.S.) a year.
The Shouna Development Project, as it is called, is planned in two phases. The first will see Blumberg Grain equip 93 shouna with modern warehousing units for initial processing and storage of locally harvested wheat. Blumberg says it can drastically lower spoilage simply by moving the grain into a temperature-controlled environment, out of the sun and humidity. Inside, the grain can be cleaned, dried, and graded before being stored, where it could remain preserved for years on end.
The average warehouse can hold about 8,000 metric tons of grain and process about 20 metric tons per hour but the system’s modular design is a fully scalable. Being bolted together, rather than welded, it can be quickly constructed without specialized skilled labor. The Egyptian Army has already agreed to help put up the steel warehouse, as well as assist with project management and logistics.
Light steel and concrete are only the start. The warehouses, more importantly, will be connected remotely to a central management station in Cairo – Blumberg likens it to a military command center – which allows the Supply Ministry to monitor inventory levels and site security in real-time across the country.
Environmental sensors placed throughout the storage units routinely measure air humidity and temperature. An automated system makes needed adjustments to air flows to maintain the right moisture levels, preventing mold growth, rot, sprouting, and insect infestation. The power to run all these systems is drawn from the units’ own generators, and Blumberg offers the option of rooftop solar cells and wind turbines, making them completely energy self-sufficient.
Egypt’s Minister of Supply and Internal Trade, Dr. Khaled Hanafy, who recently toured the first site in Alexandria, said that President el-Sisi is expanding the project to see another 201 shouna modernized, for a total of 294 sites in all. With this second phase completed the project will enable processing capacity of 11.7 million metric tons of wheat a year, and create 2.35 million metric tons of new storage capacity in 11.4 million square feet of storage space.
James L. Jones, former Supreme Allied Commander of NATO and U.S. National Security Advisor, said he was pleased to see an American company “play a critical role in bolstering Egypt’s food security while also fostering U.S.-Egyptian business-to-business ties.” Jones, together with the U.S. Chamber of Commerce, the world’s largest business federation, assisted in expediting the project.
Blumberg Grain is now also working with the Ministry of Supply to build cold chain logistics centers for perishable produce in each of the governorates across Egypt.
In addition, the company is setting its sights further afield. It wants to establish a manufacturing plant in Egypt, from which it can build, on an annual basis, food security systems capable of storing 3.6 million metric tons, and distribute them across the broader region. According to company estimates, 432 million metric tons of storage capacity is needed in North Africa and the Middle East. Accounting and professional services firm KPMG says a manufacturing and export hub in Egypt would create more than 1,000 jobs for Egyptians and contribute $1 billion (U.S) to the country’s economy during its first year of operation alone.
Blumberg Grain has previously installed similar storage facilities in other African countries, including Senegal, Nigeria, and the Democratic Republic of Congo, where post-harvest losses account for more than the total in food aid given to the countries.
Outside the region, the company recently announced plans to invest $250 million (U.S.) in India over the next five years to set up facilities to manufacture storage units for fruit and vegetables in states such as Punjab, Gujarat, Uttar Pradesh, Haryana, and Karnataka.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
