The General Authority for Supply Commodities (GASC) at the Ministry of Supply has recently announced a tender to import natural, fully milled, short-grain white rice packed in 50 kg packages to be received by the Holding Company for Food Industries.
The announcement set the delivery period from 20 March to 20 May and the quantity at a minimum of 25,000 tons. Bids should be submitted by 14 February.
According to Ibrahim Ashmawi, first assistant minister of supply for investment and head of the Internal Trade Development Authority, Egypt produces four million tons of rice a year, which yields a surplus, as domestic consumption is around 3.6 million tons.
“But because of poor practices on the part of grain suppliers and dealers, the government has decided to increase the amount of imported rice in order to create a larger supply,” he told Al-Ahram Weekly.
When several popular brands of rice vanished from the shelves last autumn, the prices of this strategic commodity shot up, leading the cabinet to issue a decree, effective for three months, to regulate the retail price of rice.
The decree, dated 6 September 2022, set a LE15 and LE12 per kg price cap on packaged and unpackaged rice, respectively. On 14 December, the cabinet decided to extend the decree for another three months, while adding a higher price cap for high-grade white rice of LE18 per kg.
Despite the surplus in the domestic rice crop, some farmers have been stockpiling it, said Ragab Shehata, a MP and head of the Rice Division at the Chamber of Grain Production at the Federation of Egyptian Industries.
This is why the government has decided to increase rice imports and why the Ministry of Supply has announced tenders towards this end, he said. The private sector is also entitled to import rice, with the overall purpose being to increase the quantities of rice available on the market, create an alternative to the stockpiled quantities, and regulate prices.
In autumn, the government issued a decree penalising vendors for stockpiling rice. It gave them until 15 January to supply their quotas of domestically produced barley rice to the Ministry of Supply, according to Ministerial Decree 14/2022 published in the Official Gazette in November.
According to the Minister of Supply and Internal Trade Ali Moselhi, Egypt’s strategic stock of rice is sufficient for 6.6 months of consumption.
It is not in farmers’ interests to stockpile rice, Hussein Abu Saddam, head of the Farmers Syndicate, told the Weekly. “Normally, rice farmers retain only as much as meets their families’ needs for the season. This is because the harvesting season is also the time they repay their debts for production costs or personal expenses. So, it is not in their interests to hold on to the rice and subject it to the risks of storage, as well as bear the costs of storage space.”
Abu Saddam noted that some small farmers or vendors had stockpiled some quantities of rice in anticipation of the approaching Ramadan season when the demand for all food commodities and therefore prices goes up.
However, this could prove a mistake on their part because the strategic reserve at the Ministry of Supply is enough to last until the 2023-24 harvesting season. Most of the contracted quantities of imported rice will have arrived in March and April, before or during the peak consumption period. As a result, the stockpilers might lose out by waiting, especially if imported Indian rice comes on to the market at less than the current price of domestically produced rice, forcing down prices.
At the outset of the 2022-23 season, the ministries of supply and agriculture directed that the amount of land allocated for rice cultivation should remain the same as during the previous season at around 1,074,200 acres, of which some 724,000 acres were to be allocated for paddy farming and the rest to water-saving techniques, or to strains resistant to high salinity.
A joint statement from the ministries advised that the cultivation should be spread across eight governorates: Alexandria (2,000 acres), Beheira (106,650 acres), Gharbiya (40,600 acres), Kafr Al-Sheikh (189,800 acres), Daqahliya (182,550 acres), Damietta (42,000 acres), Sharqiya (127,850 acres), and Ismailia (2,000 acres).
Nader Noureddin, a former UN expert and former advisor to the Ministry of Supply, believes that much of the problem surrounding the supply and pricing of rice could be solved by addressing the gap between the price domestic suppliers receive from the ministry, which is around LE6.80 a kg, and its retail price of LE15-18 a kg.
It is this difference that makes farmers reluctant to deliver the required quotas to the ministry, he said.
Rice farmers are required by law to supply one ton of barley rice for every acre cultivated (an acre generally yields 3.5 to four tons). In return, they receive LE6,600 per ton for short-grain barley rice and LE6,859 per ton of long-grain rice, according to the Ministry of Supply’s pricing policy for 2022-23.
“Most farmers who have refrained from delivering their quotas are anticipating that the government will bring the price it pays them closer to the free-market level, which is around LE10,000 per ton, or LE3,000 more than the current set price,” Noureddin said.
“But most of them now face a predicament because of the tighter monitoring of rice shipments. Inspectors will confiscate any quantities of rice being transported from one governorate to another if the driver cannot show documents proving that the shipper has already submitted his required quota of rice to the Ministry of Supply’s branch in his governorate.”
Noureddin believes that the government should increase the price it has set for suppliers. Not only would this encourage them to submit their quotas, but it would also give a boost to Egyptian famers as a whole.
A ton of imported rice from India costs around $400 a ton, plus $50 for shipping. When the costs for unloading shipments at the ports and transporting them to their destinations in Egypt are added, the cost approaches the free-market price.
* A version of this article appears in print in the 16 February, 2023 edition of Al-Ahram Weekly
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