Egypt Wheat Buyer Moves Markets As He Ensures Bread Supply

Nomani Nasr Nomani is arguably the most powerful figure on the global wheat market; he is also the man who ensured Egypt’s revolution for freedom didn’t turn into “a revolution of hunger”.

A short walk from Tahrir Square, cauldron of last year’s uprising, Nomani works in a run-down Cairo building as chief grains buyer for Egypt, the world’s biggest importer of wheat.

Beyond a tarnished entrance plaque reading General Authority for Supply Commodities (GASC) and up a scruffy staircase next to a pile of broken shelves, the unassuming 58-year-old sits in his office, watching grains prices flashing over his trading screen

However out-of-date GASC’s Cairo headquarters look, when Nomani announces a tender to import wheat or declares he has made a purchase, the impact is felt across the globe: prices can swing on futures markets in Chicago, Paris or Sydney.

For Nomani, though, the test of his skill is not how far futures shift but whether he keeps 83 million Egyptians fed. After all, the uprising which toppled President Hosni Mubarak was as much about poverty as political reform, and began with chants of “Bread, freedom, social justice!”.

Aware that any disruption to subsidised bread supplies could provoke unrest – as it has over the years – he describes his role without understatement as ensuring “the revolution for freedom would not turn into a revolution of hunger”.

“We protect the covenant of keeping Egypt intact,” Nomani told Reuters, speaking from behind his large wooden desk at GASC where he is vice chairman.

Once the granary of the Roman Empire, Egypt can no longer feed its modern population which is mostly crammed into the fertile Nile valley and delta, a narrow strip hemmed in by huge expanses of arid land.

Egypt therefore has to buy abroad about half the 18.8 million tonnes of wheat it consumes a year. The U.S. Department of Agriculture estimates it will import 9 million tonnes in the year 2012/13, ahead of Brazil on 7 million tonnes.

To the relief of many traders, there is no sign for now that Nomani, a civil servant at GASC for almost all his career, will be moved from his post despite profound changes since the end of Mubarak’s 30-year-rule.

No Egyptian leader, including the new Islamist President Mohamed Mursi, can afford to disrupt the nation’s bakeries. These churn out the subsidised saucer-sized flat loaves selling for just 5 piastres (less than 1 U.S. cent), a staple for many Egyptian families struggling to make ends meet.

Mursi has, like rulers before him, promised to keep bread subsidies for all even though he is reviewing ways to target fuel and other price support to the most needy.

AFFILIATION TO EGYPT

Nomani – who has served under Mubarak, the military and now Mursi – stresses his role as the veteran civil servant.

“GASC is responsible for food security in the country,” he said. “Therefore I have no political affiliation to a particular faction … My affiliation is to Egypt.”

Even when tear gas canisters and rubber bullets flew through the streets around the GASC headquarters, Nomani and his team maintained wheat stocks throughout the uprising.

Each Egyptian tender, under which GASC invites offers from traders to supply wheat, has an effect far beyond the country’s borders. On Sept. 6, Chicago wheat futures jumped more than 2 percent after GASC bought almost half a million tonnes.

The government spends more than $5.5 billion a year on food subsidies, which also cover items such as rice, oil and sugar. Despite the heavy cost, food subsidies have been a pillar of Egyptian economic policy since socialist President Gamal Abdel Nasser began them in the 1950s.

Later, riots broke out when his successor President Anwar Sadat tried to raise bread prices, forcing a U-turn.

As recently as 2008, Mubarak also faced protests over bread shortages. Yet subsidised supplies were not disrupted even during the most tumultuous days during and after the 2011 uprising. Traders say that is in large part thanks to Nomani.

“He knows what he’s doing and I would say that the work done by GASC so far has been impressive. They know when to enter the market and they give themselves a lot of flexibility,” said a Cairo-based trader, who has known Nomani for over a decade.

NIGHT AND DAY

Nomani, once a keen soccer player who now prefers reading and playing chess, has worked at GASC for more than 30 years. As vice chairman since 2009 he leads a dealing room where specialist staff cover every region from which Egypt buys wheat, working around the clock.

“They live according to the timings of the countries they cover. Some come very early, some later, some stay at night till the exchange in question closes,” he said. “I stay in front of the screens all day and the team brings their analyses to me.”

GASC announces it is seeking wheat late at night in Egypt, and decides about its purchases the following afternoon. Once Nomani has reviewed the bids GASC announces its purchases, making a burst of headlines on the terminals of Reuters and other news agencies.

Some people criticise this system, saying that Japan for example has a better model in holding tenders on a set day each week. Nomani defends GASC’s method, explaining that Japan buys smaller quantities than Egypt and seeks a different quality.

Some traders worry that the vastly experienced Nomani could be swept away in Egypt’s revolutionary fervour, although there is no imminent sign of that.

“I would hate to see him go or be replaced by someone who doesn’t have his background in dealing with the organisation and what it involves,” said another Cairo-based trader said.

“After they appointed the new supply minister though, we were reassured that the GASC team, at least Nomani, were here to stay,” said the trader, who like others did not want to comment openly on a man they do business with regularly.

President Morsi appointed Abu Zeid Mohamed Abu Zeid as supply minister in August, a veteran of another government food purchasing agency, the Food Industries Holding Company.

Abu Zeid also sat on the committee that decides Egypt’s wheat purchases with Nomani. This put the minds of many traders at ease and dampened speculation about Nomani’s future.

Nomani himself is sanguine, saying even if he were to go GASC’s work would not be disrupted. “I am an entity that deals with the outside world,” he said. “So I believe in change, even at the level of my own entity.”

“Even if change arrives to my own position, there are fixed files I would give to the next person, as well as all my experiences and all the market directions because Egypt is going through change,” he said.

However, Nomani seems well-suited to navigate difficult waters, with his inside knowledge of GASC accumulated since he joined in 1979 as the head of a research unit

Nomani and his team at GASC have snapped up almost seven months’ wheat stocks for Egypt, buying more than 1 million tonnes in September alone, mostly from that region.

He seems unflappable even as global markets grapple with worries about exports from Black Sea nations suffering drought such as Ukraine and Russia, Egypt’s top supplier. “A commodity like wheat transcends all political and ideological differences,” he said. “Dealings here are at the human level.”

Reuters