Interview: U.S. Blumberg’s high-tech attempt to ease Egyptian grain drain

At the far corner of a faceless government building in Egypt an unusually high-tech attempt to stem the country’s waste-and-theft-riddled wheat market is quietly coming online this month.

A dimly lit room awash with the soft glow of CCTV feeds from around the country, Blumberg Grain’s command and control centre is the central nervous system of a fast-expanding network of grain storage facilities the company says will save Egypt nearly $2 billion in five years.

As Egypt begins its wheat harvest this month, storage systems from the grain logistics company will process and monitor about a quarter of the domestic crop for the first time.

If the government signs up for a second fleet of storage sites, a decision expected by May 1, Blumberg will handle the country’s entire crop by 2018.

“(The full system) will be able to save the Egyptian government approximately $550 million a year in wheat savings, value addition and additional labour benefits,” David Blumberg, CEO of Blumberg Grain Middle East and Africa, said in an interview with Reuters.

“It is all monitored and evaluated from this command and control centre,” he said, pointing to a monitor streaming live images from the interior of a steel hangar in the port city of Alexandria.

Egypt is the world’s largest importer of wheat but also a prolific squanderer of its own crop. About 3.5 million tonnes of the crop is procured by the government each year and much of it is stored in dilapidated open-air sites — known as “shounas” — that offer little protection against weather, pests and theft.

To promote greater self-sufficiency in a staple that feeds tens of millions of Egypt’s poorest citizens, the north African nation buys its domestic wheat at a generously subsidised rate. Egypt will pay farmers $370 a tonne this year, nearly twice the $190 paid for foreign wheat in its latest tender.

This premium makes any crop loss highly expensive, with the dollar-starved country also forced to dip into its dwindling foreign currency reserves to import additional grain to cover its domestic shortfall.

TRIMMING WASTE

Blumberg Grain estimates that Egypt loses 40 percent of its locally procured wheat because of inadequate storage and processing techniques — from pigeons helping themselves at open-air sites to some unscrupulous farmers boosting crop weight with rocks and water to increase their returns.

Part of a U.S. holding company that also does business in steel and real estate, Blumberg provides harvest protection systems for developing countries around the world. Its grains command centre was inspired by a control room that the real estate business uses to automate operations including security and temperature at its Miami offices.

Blumberg says its shouna storage systems — the first 60 of which have been constructed at breakneck speed since November — will reduce waste to less than 5 percent by sifting, weighing and tracking the crop in an enclosed environment.

It has also said that if the government signs on for a second batch of shouna sites, it will add security features to curtail suppliers’ ability to mix foreign wheat into deliveries.

Cheap imported wheat falsely described as domestic grain accounted for roughly 2 million tonnes of supplies bought by the government last year, equating to a loss of nearly 2 billion Egyptian pounds ($225 million), industry sources have said.

Blumberg says the shounas and command centre are part of a long-term plan that would anchor Egypt as the base of its operations in the Middle East, where it intends to roll out similar food security systems in Oman, Saudi Arabia, Yemen, Algeria and Tunisia.

If Egypt agrees to purchase the second fleet of shounas, the company will begin immediate construction of a sprawling export plant in East Port Said, employing 1,000 Egyptians to produce components for future projects across the region.

The plant would be the first located in Egypt’s much-touted Suez Canal Economic Zone, on which the government has pinned hopes of building a re-export hub that will draw badly needed hard currency but which has so far struggled to secure a single foreign investor.

“Blumberg Partners would be the first direct investment into the Suez Canal Zone and we would like to make a statement about the future of Egypt … of the future of industry, manufacturing and industrialisation of Egypt through the development of this manufacturing plant,” David Blumberg said.

Source: Reuters