UAE to finance Egypt’s wheat imports for five years in deal worth $500m

Al Dahra, a UAE-based agribusiness, and the Abu Dhabi Export Office (ADEX) have signed a five-year agreement worth $500 million to finance Egypt's wheat imports, the firm announced on Monday.

The agreement will see $100 million worth of "high quality imported milling wheat" go to Egypt per year at "competitive prices," according to the statement.

The deal comes as the Egyptian government has been struggling to cope with an economic crisis that has seen its' currency depreciate 50 percent to the dollar and food inflation reach double-digits at 65.8 percent in June according to a World Bank report in last month.

Egyptian Minister for Supply and International Trade Dr. Ali Al-Moselhy stated that the deal would allow Egypt to "withstand any unexpected shocks in the global markets."

He also noted that "the low-cost financing package from ADEX helps us procure high quality wheat at the lowest cost financing available, with comfortable payment terms."

Since the Russian invasion of Ukraine last year Egypt, which imports wheat from both countries, has been suffering from inflationary pressures, hampering its ability import and subsidise food for its 112 million population.

The price shock and supply constraints immediately following the invasion were partially alleviated by the Black Sea Grain Initiative between Russia and Ukraine that allowed for the export of foodstuff through the Black Sea.

That deal collapsed in July, to the dismay of Egypt, which promptly sought alternative arrangements with the UAE, as reported by Bloomberg in the aftermath of the collapse.

As well as unreliable sourcing, Egypt has struggled to finance its wheat imports because of a hard currency shortage, in some cases deferring payments for months.

Arnoud van den Berg, CEO of Al Dahra, stated that the agreement "highlights our commitment to food security in countries we operate in and complements our efforts in our farms in Egypt."

The firm currently farms 28 thousand hectares in Egypt, with 85 percent of produce being supplied to Egypt.

Egypt is expected to be the world's largest importer of wheat for the fiscal year 2023-24, according to a report by the Food and Agriculture Organization of the United Nations, with the government planning on spending upwards of $4.1 billion on food subsidies from July 2023 to June 2024.