Egypt courts investors for grain trading hub

Egypt’s Ministry of Supplies has been in talks with international investors for a mega-project to turn the country into a global grade trading hub.

The government aims to turn Egypt into a major center for processing and re-exporting wheat, soy, sugar, maize and other commodities, via a massive development project centered on the port of Damietta on the Mediterranean coast. The plan also calls for the creation of a regional mercantile exchange and the construction of new piers capable of receiving giant ships and tankers.

The plan was officially given the green light by President Abdel Fattah al-Sisi on October 26. The government aims to complete the project within two years, at a cost of LE15 billion.

Egypt, the world’s largest wheat importer is hoping to cut its own import bills, as well as to create jobs in five proposed investment areas spread out over 170 hectares.

This week, Supplies Minister Khaled Hanafi has met with officials from Slovenia and businessmen from Sudan to discuss partnerships in developing the port. According to ministry press releases, deals with Sudan will be signed at an upcoming Arab Investment conference to be held in late November, while Slovenia “welcomed” the opportunity to invest in the project.

The Ministry also reports having met with potential investors from Russia, the United States and the United Arab Emirates, as well as major international commodity traders.

Egypt is in dire need of better grain storage. Much of the country’s wheat harvest is stored in unprotected, open lots and experts believe that up to 30 percent of Egypt’s grain is lost during storage. Egypt has recently secured funding from the United Arab Emirates to build 25 modern storage silos.

However, it is unclear exactly how a logistics center will allow Egypt to capture a major share of the world wheat trade. Minister Hanafy’s reasoning rests on the country’s geostrategic location. 

In a press statement, Hanafy emphasized that Egypt has the potential to become a logistical center pivotal to global trade due to trade deals that give it access to a market of 1.6 billion consumers  in Europe, Africa, the Middle East and beyond, by virtue of the Suez Canal, through which more than 25 percent of the global container trade passes.

Egypt has a smaller share of bulk cargo, by which much grain is still shipped. Overall, about 8 to 10 percent of global trade passes through the Suez Canal.

The most important grain trade routes run across the Atlantic and Pacific Oceans or the Western Mediterranean rather than through the Suez Canal. Major exporters like Russia, the United States, Canada, Australia and the Ukraine have direct sea or land access to markets in East Asia, Europe and the Americas, although Egypt is a significant destination in its own right. 

Long-term, agricultural experts hope production in the Tigris and Euphrates river basins could help support a regional grain market within the Middle East. At present, conflict in Iraq and Syria has kept grain production at below subsistence levels.

A major grain trading center on Egypt’s Mediterranean coast could also compete with plans to develop nearby Suez Canal cities into global hubs for logistics and trade.


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