Egypt will contract directly for rice if traders do not lower prices
Rice plant - YOUM7 (Archive)

CAIRO: Egypt will seek direct contracts to buy rice from abroad if prices offered by traders are not reduced, it said on Wednesday in its latest attempt to overcome a local shortage of the grain blamed by the government on suppliers hoarding stocks.

Egypt’s state grain buyer GASC cancelled a rice tender last week after being unable to agree on prices with suppliers. The results of another tender held on Tuesday are expected to be announced on Thursday.

“We may resort to importing rice directly should the high prices of rice being offered at tenders continue,” Supply Minister Khaled Hanafi told Reuters.

But traders have said the government is insisting on prices which are unrealistic. “They might as well ask for the rice for free if it’s any cheaper. They won’t find anyone to sell directly to them,” one Cairo-based trader said.

The North African country produced 3.75 million tonnes of rice in the 2015 season and carried over 700,000 tonnes from 2014. With consumption at 3.3 million tonnes, that leaves a surplus of more than 1 million tonnes.

But the government’s failure to stockpile rice earlier in the season has left it at the mercy of traders, some of whom have been unwilling to sell to the state and are choosing to stockpile as domestic prices of rice are rising daily.

GASC has started to announce international tenders to import the grain as a way out of the problem. At its tender this week, it received just two offers for Indian rice, one for $350 per tonne and another for $390 per tonne, of 10,000 tonnes of 5 percent broken rice.

These offers are considered cheap compared with prices of between $370 and $380 per tonne that the rice goes for on the Indian market before shipping to Egypt, one German trader said.

Egypt said last week it would reinstate an export ban on rice to preserve stocks for the local market and control rising prices.

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