Last Update 13:30
Sunday, 01 August 2021

Libya grains buying at standstill over trade chaos

Cash crisis and ongoing insecurity are deterring global players from supplying wheat to import-dependent country, claim trade sources

Reuters, Monday 7 Nov 2011
Wheat
Wheat: much in demand in Libya. But with cash low, who is willing to supply? (Photo: Reuters)
Share/Bookmark
Share/Bookmark

Libya's grains buying efforts are at a virtual standstill as a cash crisis and uncertainty over who is running tenders after months of war deter international players from trading with the food import dependent country, trade sources say.

Libya, a big food buyer before months of fighting broke supply chains, has tried to ramp up imports in recent weeks including those of French and Russian grain. However it cancelled the last tender for 100,000 tonnes of wheat in October due to growing trade chaos.

"We don't think it is safe to do business there at the moment as we do not know who is in charge," a trade source said. "If I can't say who my contract party is, how am I going to enforce it?"

Despite a slowdown in commercial grains buying, food security was improving with aid agencies continuing to provide assistance to vulnerable Libyans.

Trade sources said it was unclear if officials at the state grains board were still in charge, with speculation that a new team was being appointed as the country moves away from a past dominated by deposed leader Muammar Gaddafi who was killed last month. Officials from the grains board could not be immediately reached for comment when contacted.

"It is not clear if some people in the grains purchasing agency have been replaced," another trade source said.

"In a country which previously had a centralised grain purchasing system with only a modest level of private sector involvement, it will not be easy to suddenly find new people who know about the international grains market."

Traders said Libya had been absent from the global market for over three weeks.

"Some past deals appear to have been cancelled," a third trade source said. "There is no one in the purchasing agency to speak to at the moment. You cannot get an answer."

The country's central bank governor told Reuters last week its cash crisis is set worsen with the banking system needing a complete overhaul, adding that just US$1.5 billion out of around $170 billion of Libyan assets abroad had been unfrozen.

"The Libyans do not seem to have money. Letters of credit are not being confirmed. I think the major trading houses will not be willing to sell unless they are paid in advance," a trader said.

"There seems to have been a lot of disagreement about pricing of some recent Libyan wheat purchases and some seem to have not been confirmed."

Another trade source said it was difficult to make simple transactions including money transfers, which would hamper deals. "How can anyone operate in this environment?"

According to port data compiled by Reuters, since August 118,000 tonnes of soft wheat, just over 70,000 tonnes of maize and 25,000 tonnes of barley were loaded in France for shipment to Libya.

The volume of wheat exported is close to the 120,000 tonnes cited by sources as agreed in contracts with grain traders Nidera and Soufflet and financed by unfrozen Libyan funds.

"So long as there isn't a proper government in place in the country it will be difficult to do business with them," a French export trader said, adding that the contracts using the unfrozen funds had already proved complicated to organise.

FOOD STOCKS

Traders said in recent months Libya had made indirect purchases of grains and increasingly flour through intermediate companies via Tunisia and Egypt which were trucked over borders.

"The country has been extensively fed by the international aid agencies but as the frozen foreign reserves are freed up and the oil flows, the international community will no doubt expect the Libyans to feed themselves," a trader said.

Zlatan Milisic, head of the World Food Programme's operations in Libya, said food security was improving with public distribution systems slowly recovering. He said the U.N. agency was committed to continuing to provide "targeted food assistance" to those still in need of support including people displaced from their homes, returnees and foreign nationals that had been caught up in the fighting.

"Food is available at the macro level in the main cities and towns as the Tripoli and main ports are open and commodities have started flowing in more regularly," he told Reuters.

"However, accessibility to food is still affected by multiple factors: prices are still high and cash flow is still limited awaiting the recovery of the banking and financial systems."

Milisic said there was about a month's supply worth of food stocks for some commodities.

"For some others mainly grains, they are estimated between two and three months, that is our expectations," he said. "There is no food crisis in Libya and we do not expect one to happen."

Short link:

 

Latest

© 2010 Ahram Online.