All You Need to Know about Egypt’s New Wheat Policy

The Ministry of Agriculture and Land Reclamation’s (MALR) Central Administration for Plant Quarantine on November 14, 2017 came up with a new set of guidelines to regulate international wheat trade in Egypt. The move came after Supply Minister Ali Moselhy told media on October 2017 that the Government would soon come up with new wheat import policy in the country.

Egypt’s new wheat import policy details all procedures, specification and regulations for the Egyptian Wheat Traders in the country who import and sell wheat to the world’s largest wheat importer.

However, the think tanks around the world say that the latest wheat import guidelines issued by Egyptian Government actually aim at calming nervous suppliers who are irked by the inconsistent import rules and erratic inspection procedures.

“Majority of the Wheat Traders in Egypt have been adding high-risk premiums because of the uncertainty looming over the wheat trade in Egypt.” Said Ashraf- El Attal, the former president of Grain and Feed Trade association.

According to Ashraf El Attal, “The negative impact of the ‘baseless’ allegations discourage traders from importing wheat.

In the year 2017, several loads were allegedly found containing poppy seeds and Ergot Fungus. Some wheat cargoes were delayed owing to the costly additional procedures.

Supply Minister Ali Moselhy at an Event in Dubai told media that the new regulations combine relevant trade specifications and rules to avoid uncertainties. But most Egyptian wheat traders say that the new rules and guideline are inconsistent and abuse of power.

“Russia has a very good quality wheat and always up to the international standards,” said Ashraf El Attal, former president Grain and Feed Trade association. He is the current CEO of Fortuna DMC, a commodities trading house based in Dubai.

Moselhy said that with these new guidelines, the State aims at limiting wheat imports around 7 million tonnes in fiscal 2018-2019.

Here is the Egypt’s new Wheat import policy:

1. According to the Directive No. 48 released on October 31, 2017, now the importer has the right to demand from the Customs Authority in the country a custom certificate. The certificate should be issued before the cargo arrives at the port to facilitate easy inspection procedure.

2. For shipments weighing above 25,000 metric tons, shipment inspection can be done in the inner anchorage as well.

3. In consultation with the Atomic Energy Authority (AEA), carry out an initial inspection of the wheat cargoes and Vessel. The samples taken are tested in laboratories.

4. The wheat importers or their representatives and inspection company representatives can now attend the inspection along with tripartite committee AEA in the inner anchorage at the destination port.

5. And once the shipment arrives at the port, following rules need to be followed:

a) Radioactivity inspection of suspected wheat shipments. The rule applies to the Russian, Romanian, and Ukrainian wheat.

b) The visual inspection that is carried out by CAPQ will allow releasing the shipment if it contains dead insects, but the wheat importer has to give in writing that the particular purchase will be sieved during milling.

c) The wheat importer must commit to using proper sieves to remove dead insects from the wheat.

d) After separating, dead insect samples will be sent to labs for identification.

e)The mill will dispose of the waste material.

f) For the wheat shipments containing non- narcotic poppy seeds, ministry procedures will be followed and for narcotic poppy seeds, procedure will be followed as per regulating legislation.

Bottom Line

According to Ashraf El Attal, Egypt is the world’s largest importer of wheat in the world. It should cooperate with the countries that provide it the wheat. “Russia has a very good quality wheat and always up to the international standards. This year, Russia became the largest wheat exporter in the world with an estimated export volume of 36 MMT,” Attal said.

Excerpts from Ashraf El Attal’s Interview

Ashraf El Attal discusses how Egypt can become self-sufficient in Wheat Production

Ashraf El Attal is the former president of the Grain and Feed Trade Association (GAFTA). He is an influential business leader who has served on a number of positions in his 33 yearlong business career. Attal has a very strong track record of success in a number of professional fields.

Currently, he is the CEO of Fortuna DMCC, a Dubai based trading house which supplies commodities such as food grains, feeds and by-Products. It also supplies major UN agencies and NGO’s with commodities as well as food and hygiene parcels.

We talked with this popular Egyptian Wheat Trader at length how his nation can become self-sufficient in wheat production. Here are some excerpts from our Interview with Ashraf El Attal.

1. Did Russia really exported substandard wheat to Egypt in 2009 and 2017 or there is more to it than meets the eye?

Ashraf El Attal: Russia has a very good quality wheat and always up to the international standards. This year, Russia became the largest wheat exporter in the world with an estimated export volume of 36 MMT

 

2. How do you view wheat trade problem in Egypt?

Ashraf El Attal: Egypt is the world’s largest buyer of wheat as well as the largest buyer of Russian Wheat. Both countries rely on each other and this cooperation will continue provided that Russia is producing enough wheat.

 

3. What can be the ultimate solution to end the Wheat problem in Egypt once forever?

Ashraf El Attal: Egypt should work on 2 strategies:

1) Remove the bread subsidy and replace it by cash subsidy. This by default will decrease the consumption per capital from 178 kg to max 100 kg.

2) This will reduce the total wheat importation to 4-5 MMt instead of the current 12 MMt.

3) Encourage Egyptian farmers to grow more wheat, to reduce the dependency on imports. Also the need to improve the yield

 

4. Is smartcard system a success or failure? Was there really a need to introduce smart card system in the country?

Ashraf El Attal: Cash subsidy is the best form of subsidy as it gives the money to the qualified people. It also creates a better consumption pattern and reduces the waste

 

5. What if Russia blocks wheat to Egypt?
Ashraf El Attal: I don’t see a reason Russia would attempt to such act since Egypt is its largest customer. Nevertheless, there are other alternatives in the black sea or the Americas

 

6. Are Egypt’s domestic wheat reserves sufficient enough to meet the food needs of its citizens?

Ashraf El Attal: Egypt normally keeps 3-4 months supplies in stock. Next month the local harvest will start which will increase the local stocks by default

 

7. According to experts, Egypt’s ambition to transform the nation into global commodities hub has not so far yielded any convincing results to attract global companies. Is it true?

Ashraf El Attal: This idea was put on the table a few years back. In my opinion, the double handling cost won’t make sense.

Wheat Problem In Egypt And The Deep Rooted Corruption In The Country

One major reason behind the wheat problem in Egypt is said to be the deep-rooted corruption in the country. According to experts it is hampering wheat trade in the country badly. Despite showing doubts about the quality of the Russian Wheat, the Government in the country seems helpless in the matter.

Egyptian Government often blames Private Wheat Traders in the nation for issuing forged quality certificates to suppliers for bringing in cheap quality ergot fungus wheat from Russia, France, and Rome. But the private dealers in Egypt called these allegations levelled by authorities false.

“The negative impact of the ‘baseless’ allegations discourage wheat traders in the country from importing Russian wheat, which is cheapest anywhere in the world,” said Ashraf El Attal, former GAFTA president and the CEO of Fortuna DMCC Company.

In 2015, when Egyptian lawyer Ahmed Gad threatened to exposed Government officials who according to him are involved in corruption, an attempt was made to silence him. He was shot thrice at outside a café.

“These men were trying to silence me for my attempts to expose corruption in the wheat trade,” he told media after surviving the attempt on his life.

Significance Of Wheat For Egyptian People

Wheat is one of the essential nourishment sources in Egypt. Egyptians get more than 33% their everyday calories and 45% of their day to day protein from wheat, for the most part as bread.

Egyptian domestic wheat reserves are very far from adequate to fulfil the nutrition needs of the People. It is because land in Egypt is not fertile and the economy of the country is not that good to grow wheat in sufficient quantity in the country.

Egypt is the most populated nation in the Middle East and North Africa. According to 2016 census, the population of the country is 92 million with a growth rate of 2.7% per annum.

The government in the nation runs a subsidized bread program to feed its poor population. According to Ashraf El Attal, the dependency of Egypt on foreign wheat doesn’t seem to end anytime soon in the future.

Between July 1, 2015, and March 2, 2016, the aggregate sum of wheat obtained by the General Authority for Supply Commodities (GASC) was 3.97 million tons, marginally under GASC imports amid a similar period in the showcase year 2014-15 which added up to 4.22 million tons.

Agrarian Reforms And Some Major Challenges Before Egyptian Farmers

Wheat really is a matter of life and death in Egypt. The country is exporting tons of wheat from Russia, France, Rome and USA. According to Ashraf El Attal, the ever-increasing wheat needs in the country have turned it into the biggest importer of the food grain.

This reliance makes the nation defenseless against expanding costs of wheat in the global market. In order to streamline the supply, Egypt has a history of falling into arguments with the nations that sell it wheat.

In November 2017, Egypt’s Administration chose to reinstate the previous zero-tolerance level for the ergot fungi in imported Russian wheat shipments. However, according to Ashraf EL Attal it had to back down immediately from tough restrictions on wheat trade when Russia decided to stop the importation of citrus fruits from the country on sanitary grounds.

To increase the domestic wheat production in the country, Egyptian Government came up with Agrarian reforms in 1987. Agriculture reforms in the nation were aimed at increasing domestic wheat reserves in the country.

For few years, the new reforms yielded results and the production of wheat in the country increased. Amid the period from 2004 to 2013, grain creation went up from roughly 6.8 million in 2004 to 8.5 million in 2013.

But the local generation of wheat reserves is still inadequate by a wide margin to fulfil the food needs of its People which is very nearly 20 million tonnes.

“The most constraining variables are a shortage of agrarian land and water. Other reasons include high expenses of seeds, pesticides and manures,” says Ashraf El Attal.

Fluctuating costs of these seeds, manure and pesticide discourage local farmers from putting resources into new innovation and in enhancing wheat creation in the country. The quality of wheat seeds is very low which results in very less production of wheat.

The farmers in Egypt say that they have never faced such a hard time in the country. The farmers in the country are blaming authorities of social injustice.

“There is no water, we are irrigating our land with sewage. The use of sewage water for agricultural purposes is leading to health problems. We are facing huge social injustice, the facilities are being provided to rich, the poor farmers are being pushed to black market to purchase seeds, fertilizers and other essentialities for wheat forming, “said a group of local farmers.

‘There is nothing for the farmers to celebrate in the country. There is no fuel, water, seeds and manure. The unavailability pushes farmers to the black market, “said Ashraf El Attal.

“Government is expecting farmers in Egypt to produce a bumper harvest of wheat. First of all, due to the economic crisis, it is not possible. Even if agriculture production is increased, due to poor storage and transportation facility, half of the wheat we cultivate is not reaching the market,” Ashraf El Attal adds.

One of the authorities in the Government Hatem Saleh said Egypt imports roughly 10 million tons of wheat in one calendar year and the Administration in the country is aiming to bring down this to 5 million tonnes.

“We are improving storage and transportation system in the country. We are trying to increase domestic wheat reserves in the country, “he said.

Bottom line

The chances of Egypt becoming self-sufficient in Wheat ever again in the future still seems bleak. The only solution to tackle this problem remains to import wheat from the global markets. Egypt has been doing it for last many years. Egypt imported 54% of its wheat in 2009.

The countries which Egypt imports wheat from include Russia, France, Ukraine and Romania. Together 52% of the aggregate wheat imported by Egypt comes from these nations.

“Middle East needs role models. We need to have people who come in and try to introduce new concepts in life. They should have success stories to share with. Our younger generation will take a cue and work for the welfare of the people,” Former GAFTA president Ashraf El Attal says in a YouTube Video.

How will Major Exporter of Rice Egypt Become a Rice Importer In 2019?

Wheat field - egyption trader

Recent developments in Egypt is likely to turn the country into a rice importer after decades of being a major exporter of the crop.

Egyptian traders say that the intense ban and crack down over rice cultivation is affecting the livelihood of farmers in the country who have depended on the river Nile for millions of years to irrigate their strategic crops mainly wheat and rice.

According to Egyptian authorities, the restrictions are aimed at conserving water but farmers in the country allege that the forcible changes in farming laws is affecting them very badly,” As per the media reports, some farmers are defying the imposed restrictions on rice cultivation.

“Some farmers in the region continue to grow a medium- grain variety of the crop because it is their livelihood,” said an Egyptian trader on the basis of anonymity.

A group of farmer told Reuters news agency recently that police is raiding their homes and putting them behind bars until they pay the fine for defying the restrictions.

On the other hand, Egypt’s Neighbor Ethiopia is preparing to fill its Grand Renaissance Dam reservoir. According to MR. Ashraf El Attal, the CEO of Fortuna DMCC, a commodities trading house based in Dubai, it can have deadly consequences for the farmers in Egypt who depend on Nile water to irrigate strategic crops to feed 96 million population of the country. The population of Egypt nation is set to grow to 128 million by 2030.

Many Egyptian traders say that the responsibility to safeguard Egypt’s share of the Nile, on which country relies for drinking water as well as farming has come on the shoulders of President Abdel Fattah.

“But he seems to do nothing except imposing restrictions on its own farmers to grow water-intensive rice crop showing a sense of urgency, “says an Egyptian trader.

Rice is a very valuable commodity in Egypt after Wheat. Egyptian Government has reportedly decreed that farmers in the country can plant 724,000 feddans of rice which is less than the half of what they were allowed to plant in 2017.

Majority of the Egyptian rice and wheat traders including former GAFTA president Ashraf El Attal believe if the authorities in the country stick to this current approach, the country will be forced to import at least 1 million tonnes of rice from next year.

Egypt Wheat Import Problems and Solutions

Inconsistent import rules

Due to inconsistent import rules and inspection procedures, the wheat trade in Egypt comes to halt time after time. In 2009, Egyptian Government ordered re-export of Russian wheat supplements brought to the country claiming its quality was very low and not fit for consumption. This was not the first time when wheat trade in the nation had come to halt because of one or the other issue.

Inspection Procedures

In 2016, Egyptian Government once again ordered re-export of foreign wheat shipments and arrest orders of an Egyptian trader citing the reason that there were traces of ergot fungus present in it.

Egyptian Government decided to reinstate its previous policy on wheat imports and decided it would accept only up to 0.05 per cent of the ergot in wheat shipments, in accordance with international standards.

But it had to back down from its earlier claim immediately as it angered its wheat exporting partners. Russia, the largest wheat exporter to Egypt had announced to stop exporting wheat to Egypt.

“The halt in the wheat trade between the two nations would have caused serious social, political and economic crisis in Egypt,” said an Egyptian Trader.

Too much dependency on subsidized wheat

Though authorities in Egypt recently issued guidelines to streamline the wheat trade in the country, the chances of the nation becoming self-sufficient in Wheat ever again in the future still seems bleak. The only solution to tackle this problem seems increasing wheat imports from the global markets.

To decrease its dependency on wheat imports, Egypt is looking to cultivate 3.25 million acres of wheat in the country. This was Agriculture ministry spokesman in 2017 via a statement given to the press.

The food needs of Egypt is above 20 million tonnes but local generation is still inadequate by a wide margin to meet the food needs of the people in the country.

“Government is expecting farmers in Egypt to produce a bumper harvest of wheat. Due to the economic crisis in the nation, it is not possible. Even if agriculture production is increased, due to poor storage and transportation facility, half of the wheat we cultivate is not reaching the market, ‘said Ashraf El Attal, accomplished Egyptian Trader and former President of GAFTA.

Social, Economic And Social Crisis

The farmers in Egypt say that they have never faced such a hard time in the country. They are blaming authorities for social injustice.

“There is no water, we are irrigating our land with sewage. We are facing huge social injustice, the facilities are being provided to rich, the poor farmers are being pushed to black market to purchase seeds, fertilizers and other essentialities for wheat forming,” said a group of Egyptian traders.

Corruption

The hardest plague to eradicate in the country, though, has been the much deep-rooted corruption. To end the corruption, in 2015, the smart card system was introduced in the country.

Authorities claim that the introduction of smart card system in the country has been a big success saving millions of dollars, reducing dependence on imports and ending wheat shortages, but Egyptian traders believe the reforms taken have failed terribly.

“The system card system has been compromised,” the Supplies Minister Hanafi recently acknowledged it in an interview given to international news agency Reuters

Ashraf El Attal is an Accomplished Egyptian Businessman

Ashraf El Attal is an accomplished Egyptian businessman who has a strong track record of achievement and vision in a wide array of professional fields and life experiences. He graduated from Alexandria University with a degree in mechanical engineering in 1985.

In 1992, he founded Egyptian Traders Co. which is one of the major trading houses in Egypt and the Middle East. In his 33 years long career, he sat on different boards. He served as the President of Grain and Feed Trade Association (GAFTA) till 2009. In 2009, after retiring from the post, he became the CEO of Midgrain. It is a Trading House which deals in Commodities Trading and Food Aid supplies.

In 2013, he became CEO of Fortuna DMCC. The company is trading in Commodities like Animal Feed, Wheat, rice, Corn, and Cotton Seeds etc. Fortuna supplies UN organizations and many Global NGOs with Humanitarian Supplies including food.

With so much experience in Humanitarian Supplies, Supply Chain Management and Commodities Trading, Mr Ashraf El Attal decided to share his knowledge and experience to drive Individuals and Organization in Middle East Forward. Through this site, you have a great opportunity to benefit from his experience and innovative thinking process.

Among the issues that interest Ashraf El Attal is Disasters and humanitarian assistance.

“Middle East needs role models. We need to have people who come in and try to introduce new concepts in life. They should have success stories to share with. Our younger generation will take a cue and work for the welfare of the people,” Ashraf El Ettal says in one of his YouTube Video.