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Wheat trade in limbo
Published in Al-Ahram Weekly on 09 - 02 - 2016

The General Authority for Supply Commodities (GASC), an affiliate of the Ministry of Supply and Internal Trade, last week cancelled a wheat tender because the prices offered were unsatisfactory, having earlier announced a tender for wheat to be shipped from 2 to 11 March.
The wheat was to be used to produce the subsidised bread provided to ration-card holders. However, only four suppliers offered to fill the order, at prices that were unsatisfactory to the GASC. As a result, the tender was cancelled.
The wheat suppliers have complained that although they were committed to the specifications on their contracts with the GASC, another shipment was recently been rejected. The contracts accept 0.05 per cent of ergot, a common grain fungus, but the Ministry of Agriculture has not permitted wheat imports unless they are certified as zero-ergot.
A 63,000-ton French wheat shipment was rejected by agricultural quarantine officials because the wheat contained ergot fungus. A high level of ergot in wheat can cause serious health problems when consumed. Both official Egyptian specifications, as well as international standards, accept 0.05 per cent ergot fungus in wheat.
Mohamed Abdel-Fadeel, a wheat importer, said it will be difficult for the GASC to find suppliers for its coming tenders if it insists on changing the regulations on the ergot fungus.
He said that a recent wheat shipment of his had been accepted, but the issue of specifications was not clear. A number of traders are confused and are refusing to join the tenders after the rejection of the French shipment, he said.
Abdel-Fadeel said that the French cargo contained an acceptable level of ergot (below 0.05 per cent), but the Ministry of Agriculture had announced that only wheat with zero ergot fungus would be accepted.
Tarek Hassanein, chairman of the Cereals Division at the Federation of Egyptian Industries, told Al-Ahram Weekly that the rejection of the shipment had no satisfactory justification because 185 countries worldwide accept the international standard of 0.05 per cent of ergot fungus.
He said that traders have already concluded deals to buy wheat with an acceptable average of ergot. Zero-ergot wheat is available in the international markets, but buying it would drive up the cost of supplying wheat, he said. The government move has led to confusion among wheat traders since they were meeting the specifications included in their contracts with the GASC.
“I will submit a question to the House of the Representatives accusing the minister of agriculture of wasting public funds since the GASC is now paying around half a million dollars in fines as a result of the rejection of the French shipment,” Hassanein added.
According to Hassanein, the insistence on refusing to apply Egyptian as well as international standards will lead to a delay in receiving imported wheat according to schedule.
Noamani Nasr Noamani, the former deputy chairman of GASC, said that such decisions are the result of a lack of communication in the concerned authority. Wheat imports are subject to quarantine inspections by three authorities: health, agriculture and the General Authority of Imports and Exports Control, he said.
“Any changes in the criteria and specifications on which imports are inspected should be notified early on and included in the imports contracts with the wheat suppliers,” Noamani said.
There were no memoranda from the Ministry of Health, the responsible authority for food safety, requesting zero ergot fungus in wheat imports as a potential danger for people's health, he said.
The Agriculture Ministry has the right to request zero tolerance of ergot only in cases of importing wheat seeds to protect local harvests and not for wheat used for consumption, according to Noamani.
“The French shipment has now been exceptionally accepted, but the Ministry of Agriculture will apply zero-ergot standards strictly on future shipments, and this will have a negative impact on the markets,” Noamani said.
This move will drive up the cost of imported wheat and its products in the private sector, and unjustified changes in quarantine regulations will negatively affect foreign trade deals, he said. In addition, the GASC has paid fines estimated at $12,000 per day since December, when the shipment arrived, and its policy will also have a negative impact on the number and prices of wheat suppliers responding to new GASC tenders.
Khaled Hanafi, the minister of supply and internal trade, announced that Egypt's strategic inventory of wheat is enough to last until the middle of May. In a press conference held on Sunday, Hanafi said that imports cannot be accepted unless they meet Egyptian standards and are approved by the health, industry and agriculture authorities as being safe for human consumption.
Hanafi said the government will introduce a new system for locally produced wheat starting in April 2016. It will provide wheat farmers with a cash subsidy estimated at LE1,300 per feddan at the beginning of the season, he said, and when the farmers gather their harvests they will deliver it to the government at international prices.
The move is expected to encourage local farmers to cultivate wheat. Egypt's annual wheat consumption is estimated at 20 million tons, of which eight are locally produced and the remaining is imported through the state and the private sector.
Egypt is a major player in the international wheat markets and is ranked first in the world in importing wheat.

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