CAIRO: Minister of Trade and Industry Rachid Mohamed Rachid announced this week his intention to repeal a four month-old ban on rice exports. Exports, which were banned in March, are expected to resume in September. Egypt is the world s fourth largest exporter of rice, and the resumption of exports will infuse the international markets with much needed supply at a time when food prices around the globe are skyrocketing. The export ban was initially instituted to curb rising food prices domestically. The inflation rate for food prices had jumped from 8.6 percent in December, 2007 to 20.5 percent in March of this year, according to a report by Beltone Financial. The rising cost of rice substitutes, like pasta and bread, also contributed to pushing up rice prices. Egypt annually produces roughly 4.6 million tons of rice, consumes 3.2 million tons, and exports around 700,000 tons per year. High export levels have meant a much diminished domestic surplus, which resulted in price increases. These increases proved prohibitive for many of the country s poorest. The export ban, though, seems to have served its purpose in making rice more accessible. Since March, domestic stockpiles have increased to 600,000 tons and prices have tumbled 13 percent to $512 per ton. Having made significant domestic gains, the government now hopes to export up to 1 million tons of rice during the 2008-2009 crop year. While government officials tinker with rice policy to keep prices generally accessible, they have launched a set of initiatives aimed at broadly transforming Egyptian agriculture. The long term plan, announced by Agriculture Minister Amin Abaza last month, is to transition the economy away from rice, which uses water inefficiently and places a significant strain on Egypt s antiquated irrigation system. The move would be towards greater corn production. The government announced a plan in June to reduce rice fields from 1.7 million feddan to 1.1 million. In its effort to boost corn production, the government estimates that corn acreage will grow from 1.7 million to 2.1 million. Minister Abaza said he expected corn to cover 3 million acres within 10 years. Countries around the world, faced with similar problems stemming from rising food prices, have also reined in rice exports to boost supply at home. India, which produces nearly 100 million tons of rice annually, banned exports in April to increase domestic supply. Vietnam, which is second in the world in rice exports, this month imposed a 13 percent tax on rice exports for the sake of making the grain more accessible at home. Efforts by many countries to curb rice exports have sent prices soaring on the international market. Repealing Egypt s export ban should serve to soften this worrisome trend.
