Egyptian military agency takes over wheat buying from decades-old supply group

An Egyptian military agency has taken over the country’s import of strategic commodities, a letter seen , replacing a decades-old state institution to take over international buying tenders and also conduct direct purchases which have in recent weeks shaken the wheat market.

As one of the world’s largest wheat importers, Egypt had relied on the General Authority for Supply Commodities (GASC), part of the Ministry of Supply, to buy the grain for a country where subsidized bread is a staple for 70 million people.

A letter from the ministry to Oksana Lut, Russia’s Minister of Agriculture, said that the Mostakbal Misr Agency for Sustainable Development of the Egyptian Air Forces had become the exclusive body responsible for importing food commodities.

The letter, said that the new agency had plans to employ direct purchase agreements alongside international tenders, a strategy aimed at streamlining processes but which has raised concerns among global traders.

Firms owned by Egypt’s military have flourished under President Abdel Fattah al-Sisi, unsettling some business leaders and foreign investors. The Egyptian government has said these companies were filling gaps in the market.

“Mostakbal Misr Agency will assume all jurisdictions previously held by GASC,” the letter said.

“The Supply Ministry guarantees that the agency has the financial capacity to honor all commitments arising from tenders and direct purchases,” it added.

GASC told Reuters in a written response that the letter is intended to introduce the officials of the new agency.

“This aims to ensure the import of wheat without any difficulties,” it added, citing a cabinet decision to activate the role of Mostakbal Misr’s Authority for Unified Procurement.

The Russian Grain Exporters and Producers Union said it “cannot confirm or deny the existence of this letter.”

“We have not yet received any information through the official channels traditionally used for exchanging information of such importance,” the Russian agency added in a statement.

New agency

Founded in 2022 by presidential decree, Mostakbal Misr serves as the development arm of the Egyptian Armed Forces. While initially focused on land reclamation projects, its remit has since expanded to include major sectors of the economy.

The new agency has been taking over some projects from other military organizations as well as civilian bodies.

It made its first attempt to procure wheat and vegetable oil through direct purchase agreements in November. However, procedural ambiguities led to confusion among traders, prompting calls for greater clarity and forcing a postponement.

Egypt has long relied on GASC as a trusted intermediary for international trade.

Mostakbal Misr is little known in the global world of wheat trading. In May 2022, it said it intended to lower Egypt’s wheat imports bill, by supplying about 1 million metric tons of local wheat to the government in 2024.

But this year, the local harvest only reached 3.42 million tons by closure in August, marginally increasing from 3.41 million tons in 2023 and even less than the 3.7 million tons supplied to the government by farmers in 2022, data from Egypt’s supply Ministry seen by Reuters show.

Traders are skeptical about the new agency.

“GASC terms for deals in international tenders have been built up over many years. They are trusted and only when there is trust can big purchases be made with many millions of dollars involved,” one German trader said.

“In the long run, the new organization will no doubt be able to make purchases. In the short term it may face difficulties.”