“We can produce corn at a lower cost so it ultimately means less cost in the production of bread,” Abdel Khaleq said.

Egypt consumes around 14 million tons of wheat annually and imports half of its needs.

It spent 33 billion Egyptian pounds ($5.53 billion) on food subsidies in the fiscal year ended on June 30, including wheat, oils, sugar and rice.

State finances have come under pressure from a sharp drop in economic growth after a popular uprising unseated the country’s president in February.

A loaf of subsidized “baladi” bread, which weighs around 130 grams and costs 5 piasters (less than one US cent), is currently made from a mix of 90 percent wheat and 10 percent corn.

“We have an intention to raise the corn mixed in to 20 percent,” Abdel Khaleq said.

Egypt will buy local corn at 300 Egyptian pounds ($50.29) per ardeb (140 kg) in the current 2011-2012 season, compared to 240 pounds per ardeb the previous year, Abdel Khaleq said.

“These prices are to give incentives to farmers,” he said.

Traders said the strategy was tried before in the late 1990s but failed as it had a negative effect on the quality of bread.

“It will be difficult to implement as the starch will make the quality of the bread go down and ultimately people will complain,” one trader said.

But the minister insisted quality would not be affected.

“If you can control the humidity levels then you can mix it successfully,” Abdel Khaleq said.

He said the ministry also plans to build a rice stockpile equal to 50 percent of its requirement for subsidized rice.

The government will start procuring rice from local farmers at prices ranging from 1,920 pounds per ton to 2,000 pounds per ton in October to build reserves.

“This is the first time we do this... We want to buy a strategic reserve that allows us space to maneuver in the market,” said Abdel Khaleq, adding that rice would also continue to be purchased through tenders announced by the state-owned General Authority for Supply Commodities.

The move is intended to prevent exaggerations in the prices offered during tenders.

Egypt needs 1.1 million tons of rice a year for its subsidy program, around a third of its total consumption of 3.34 million tons.

Production this year is expected to be 4 million tons.

A ban on Egyptian rice exports was introduced when food prices spiked in March 2008. The ban, which aimed to keep the domestic supply of rice cheap, has been extended.