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.

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