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Strapped for dollars and flooded with rice, Egypt to import more anyway
(Reuters) Egypt is looking to import large quantities of rice this month as farmers refuse to sell the government their crops despite a plentiful harvest and an extreme shortage of dollars that should make buying from abroad a last resort.
Egypt’s 2016 rice paddy production is estimated at 5.1 million metric tons versus annual consumption of about 3.95 million tons, a United States Department of Agriculture report this week stated.
Farmers have however refused to sell their crops to the government, arguing that 2,400 Egyptian pound ($270.27) per ton state-mandated price is too low. That has forced up local prices and made supplies at local outlets scarce in recent weeks.
Egypt’s state grain buyer GASC will on Wednesday hold an international purchase tender for at least 100,000 tons of white medium-grain rice, the start of a government campaign to purchase 500,000 tons of the grain.
The tender comes despite an acute dollar shortage that has sapped the country’s ability to purchase from abroad and forced its central bank to ration dollars for essential commodities, the result of a 2011 uprising that chased away tourists, foreign investors and their hard currency.
Unlike wheat, sugar, and other staple commodities which the North African country imports to meet demand that outstrips local production, its bountiful rice crop far exceeds domestic needs. However, the price dispute means it has to import.
“Farmers don’t want to sell because in the previous years they saw that they sold cheaply and then prices increased and they didn’t profit,” said Mostafa al-Naggari, head of the rice committee of Egypt’s agricultural export council.
“In the free market (the price of rice) is around 2,900 Egyptian pounds ($326.58) and the government is offering 2,400, so there is a huge gap,” Naggari added.
Temporary rice shortages and price spikes have become common since the government failed to purchase stocks during its 2015 harvest, an omission that allowed speculating traders to buy up and hoard the country’s entire crop, sending prices soaring upward until the state called for tenders.
“The farmers are keeping in mind everything that happened last year…they sold the crop very cheap and the traders made a lot of money. This year the farmers want to store it,” said one rice trader.
Wednesday’s tender may be tactical, traders said, a shot across the bow to farmers holding stocks in hopes that they will release them to the market.
Prices fell by roughly 10 percent since the government announced its purchase tender last week, but this could jump back up if the tender isn’t completed, the rice trader said.
“I don’t think they will even buy….but the farmers are waiting, and if the government doesn’t book every time, they will increase the price again,” he said. ($1 = 8.8799 Egyptian pounds).
13.1 % decrease in trade balance deficit in July: CAPMAS
The value of Egypt’s trade Balance deficit reached 30.9 billion EGP during July 2016, comparing with 35.6 billion EGP for the same month of the previous year, with a decrease of 13.1 percent, according to a statement issued by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Wednesday.
“The value of exports increased by 15.5% as it reached 15.4 billion pounds during July 2016 versus 13.3 billion pounds for the same month of the previous year due to the increase of value of some commodities such as Crude oil by 33.1%, Apparel by 3.9%, fertilizer by 212.3%, variety of Slurries and food preparations by 6.4%,” the report read.
Meanwhile, the value of imports went down by 5.3 percent as it reached 46.3 billion EGP during July 2016, comparing with 49.0 billion EGP for the same month of the previous year due to the decrease of value of some commodities.
Suez economic zone chairperson meets with EU Commissioner for Neighborhood Policy
Chairperson of Suez Canal Economic Zone Ahmed Darwish met with European Commissioner for Neighborhood Policy and Enlargement Negotiations Johannes Hahn on Wednesday, Youm7 reported.
Hahn signed 6 cooperative agreements worth €129m with Egyptian government on Tuesday during his current visit to Cairo.
“This package of financial assistance clearly underscores the European Union’s strong support to the Egyptian people. It will boost socio-economic development and improve the living conditions of Egyptian citizens. In addition it foresees measures in favor of strengthening the role of the civil society,” Hahn quoted as saying during signing the agreement by a EU statement on Wednesday.
Egypt has strategic stock of oil enough for a long time: official
Egyptian Companies of Marketing Petroleum Products have strategic stock of oil enough for a long time, after Saudi Arabia’s Aramco notified Egypt it suspended petroleum production supply for October, according to an official from the Egyptian Ministry of Petroleum.
Petroleum sector pumps 70-77 million liters of diesel daily during winter season, he told Youm7 on condition of anonymity as he was not authorized to brief the media.