Who is to blame for the ongoing rice crisis in Egypt?

Amr Kandil , Tuesday 3 Jan 2023

Rice stocks at many companies have been dwindling for a long time with the finger of blame not only being pointed at the government but also at retailers’ monopolistic practices.

File photo: Egyptian farmers plant rice in a field of the Mit al-Ezz village, near Mit Ghamr town in
File photo: Egyptian farmers plant rice in a field of the Mit al-Ezz village, near Mit Ghamr town in the Nile Delta, some 80Km north of the Capital, on June 25, 2022. AFP


Housewives and customers have found themselves forced to buy relatively lower quality rice or unpacked rice after the products of several well-known rice companies, including Al-Doha, Al-Sa’aa and Zamzam, have almost vanished from markets.

Some large retailers have been offering one rice pack of these well-known companies per each citizen, while other supermarkets have not seen these companies’ products for months.

“These products have become extinct. I almost forgot their names,” one retailer humorously told Ahram Online.

Another retailer has echoed widely-circulated claims that blame the government for a part of the crisis, saying some of the companies, including Al-Doha, have halted production after the government forced them to sell rice at lower prices.

However, Al-Doha company has denied the claims in a statement circulated on media in October, saying it supports all the decisions of the Ministry of Supply and Internal Trade that regulate the circulation of rice in the market.

Failure to collect enough rice

Late in August, Minister of Supply and Internal Trade Ali Moselhi said that the ministry intends to collect 1.5 million tons of rice this year. Only 300,000 tons have been collected, however, according to remarks made by TV Presenter Ahmed Moussa late in December.

Moussa said that the decisions taken by the government over the past two months, with the aim of regulating the rice market, have failed to secure the collection of the required rice and have had a negative impact.

He added that rice is sold in the free market for EGP 9,000 per ton; whereas the government announced that it would buy the rice quantities from farmers for only EGP 6,600 per ton. Therefore, the farmers refrained from supplying rice to the government.

Moussa urged the government to explain the reasons for its failure to collect the rice required for consumption, particularly since Egypt already has a surplus of 400,000 tons in wheat cultivation.

Egypt produced around 3.6 million tons of white rice this year, while local consumption of white rice stands at 3.2 million, Head of the Internal Trade Sector at the Ministry of Supply and Internal Trade Abdel-Moneim Khalil said in November.

Confronting price hike, monopolistic practices

Since September, the government has set a maximum price for 1 Kilogram of unpacked and packed rice, ranging from EGP 12 to EGP 15 respectively. In mid-December, the government extended the decision for another three months but raised the maximum price to EGP 18 for a 1 Kilogram pack that contains almost no broken rice.

Violators are punished by a fine ranging from EGP 100,000 to EGP 5 million under the Law on the Protection of Competition and Prohibition of Monopolistic Practices.

In November, the cabinet said rice will be considered a strategic commodity, which means that the government is entitled to regulate its trading in the market for a specific period of time as per the country’s consumer protection act.

Egypt's cabinet also issued in November a three-month decree penalising vendors who monopolise or stock up on rice with at least one year in prison and hefty fines of up to EGP 2 million to prevent any shortages in the strategic commodity in the market.

The decree obligates rice traders, including producers, suppliers, distributors, and merchants, to notify the directorates affiliated with the supply and internal trade ministry of the types and quantities of rice they have.

In October, The government extended the ban on rice export to “meet the local market's needs,” a decision that has been taken several times especially since 2008 to meet the demands of local consumption.

In August, the supply ministry mandated that farmers must supply one ton of barley rice for every feddan cultivated with rice, which amounts to 25 percent of a typical 3.5 to 4-ton yield, to regulate the trade in local barley rice during the current season.

Stocking up on rice and failing to sell it after the deadline is punishable by a jail term of no less than one year and a fine of EGP 100,000 to EGP 2 million, the ministry warned.

In addition, the ministry warned that farmers who do not abide by the decision will not be allowed to plant rice during the following year or be granted subsidised fertilisers and pesticides for a period of one year.

The ministry noted that violators would also be required to pay the cost of the undelivered quantities (EGP 10,000 per ton).

Blaming retailers

Over the past months, authorities have confiscated dozens of tons of rice whose owners have attempted to trade on the black market. These movements by the authorities are in tandem with the intensified market monitoring campaigns -- launched by the government’s Consumer Protection Agency -- to prevent price gouging in strategic commodities.

Head of the Egyptian Farmers Syndicate Hussein Abu-Saddam told Al-Ahram in November that monopolistic practices are behind the current crisis in rice prices.

Speaking to the media, Abu-Saddam said that the government must intensify its monitoring campaigns to fight such monopolistic practices by big retailers. These retailers, he said, reap huge profits as a result of such practices.

The government has been fighting unreasonable price hikes on commodities to ensure that there are no variations in the price of commodities.

In mid-December, Prime Minister Mostafa Madbouly announced that a two-week deadline has been set for all retailers nationwide to place price-tags on their wares.

Madbouly said that inspection tours would be carried out periodically to ensure retailers adhere to the regulations. He encouraged members of the public to report shops that do not use price tags.


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