Controversy plagues Egyptian wheat market

29.09.2016

In recent weeks Egypt has been in the news due to wheat policy changes and scandals. Egypt is the world’s largest wheat importer and is expected to import an estimated 11.5 million tonnes in 2015-16, according to the U.S. Department of Agriculture (USDA) and the United Nations Food and Agriculture Organization (FAO).

During an Egyptian parliamentary fact finding commission Khaled Hanfi, former Egyptian Minister of Supply and Internal Trade, was facing allegations of corruption in local wheat procurement. Hanfi resigned his post in late August to avoid a vote of no confidence by the Egyptian parliament.  The corruption scandal is estimated to have cost the government of Egypt approximately one billion Egyptian pounds (US $113 million), the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a Sept. 8 report.

Reports indicate that buyers authorized to procure wheat for the government may have inflated the purchases they reported to the government by as much as two million tonnes, out of the total five million tonnes. The Egyptian government pays high prices for wheat to encourage farmers to produce it domestically. The local traders who buy wheat from scores of small-landholders frequently have found opportunities to extract extra revenues from the government via this support system, according to the USDA.

In early September, Major General Mohamed Ali El-Shiekh was sworn in after the Egyptian House of Representatives, the unicameral parliament of Egypt, approved his nomination. El-Shiekh, a former army general, previously served as the chief of the Army’s Public Service Agency. He also served as the head of the Army’s Logistics Agency during the January 2011 revolution. At the time, El-Shiekh handled several crises resulting from a wave of labor stoppages, including a strike by public bus drivers, at which time he deployed army buses to substitute public buses, the report said.

“The Ministry of Supply is a service-orientated ministry that needs a personality having firmness and experience at the same time; he also enjoys a wide experience in management, organization and crisis management,” said Ali Abdul Aal, speaker of the Egyptian parliament.

According to the FAS, under the Egyptian constitution approved in 2014, new government ministers must be endorsed by parliament before they take office. The Ministry of Supply and Internal Trade in Egypt is responsible for providing the local market with subsidized food items, including bread, which is a staple for the majority of the country’s 91 million people.

Egypt’s changing wheat policy also has had an impact on the market. The country has flip-flopped ergot levels since the end of 2015. After three failed tenders the country once again said it will again accept ergot levels of up to 0.05%.  


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