Keeping the lid on rice

Safeya Mounir , Tuesday 20 Sep 2022

The government has intervened to control the rise in rice prices.

Keeping the lid on rice

 

The government has decided to put a cap on rice prices, an Egyptian food staple, after the local market saw sharp fluctuations in the crop’s price, reaching LE22 per kg for premium rice.

The decision is in line with Article 10 of the Law on the Protection of Competition and the Prevention of Monopolistic Practices, promulgated by Law 3/2005, which says that “the cabinet can place a price cap on one or more staple products for a period after consulting with the Competition Protection Authority.”

According to a cabinet statement, practices in the local market had led to an unjustified increase in rice prices, both packed and unpackaged types. These had led to price instability and added additional economic burdens, the statement said, adding that rice is a staple commodity.

“It is the end of the season, and the new harvest has yet to be made available to consumers,” said Abdel-Aziz Al-Saltisi, head of the Rice Division at the Chamber of Grain Production at the Federation of Egyptian Industries.

The harvest season begins in September.

This year, some 1.4 million feddans of rice were planted, up from 1.1 million feddans last year, said Magdi Al-Walili, head of the Export Committee at the Chamber of Grain Production. He said he did not expect to see a rice shortage this year.

Egypt consumes some 10,000 tons of rice per year, Al-Saltisi said, explaining that last year’s harvest had not met demand because of a decision to limit the amount of cultivated land to conserve water.

The Chamber of Grain Production said that 4.5 million tons of rice had been harvested in 2021-22, compared to six million tons the year before. The harvest this year should rise to six million tons after an expansion of the areas slated for rice cultivation.

A Ministry of Supply and Internal Trade study says that a fair price for an unpackaged kg of rice is LE12, with LE15 being fair for a one kg premium pack.

The ministry has made it mandatory for rice farmers to deliver 25 per cent of their crop in the new harvest season, or one ton per every feddan cultivated with rice. If they fail to deliver, they can be fined and denied subsidies.

The ministry has also issued Decree 109/2022 to regulate the trade in local barley this season, saying that it will receive this from farmers until 15 December. Farmers should deliver a ton of barley to the General Authority for Supply Commodities for every feddan cultivated, or 25 per cent of their total production, with the goal of delivering 1.5 million tons this season.

Al-Walili said non-compliant farmers would risk being denied subsidised fertilisers and could see fines of up to LE10,000.

Ali Moselhi, the minister of supply, told the media that the prices paid to farmers this year were “rewarding” and provided a “fair” profit margin at LE6,600 per ton of long-grain rice and LE6,850 per ton of short-grain rice.

Money due to suppliers would be disbursed within 48 hours, he added.

Last year, suppliers received LE4,000 and LE4,500 per ton of long- and short-grain rice, Moselhi said, noting that Egypt has built up a good stock of rice.

He explained that the recent price hike was the result of unfortunate practices on the part of some barley and rice producers, with some rice mills and traders unjustifiably stocking up on the crops.

*A version of this article appears in print in the 15 September, 2022 edition of Al-Ahram Weekly.

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