Egypt to hire inspection company, pay small premium, to deter local wheat smuggling

01.02.2017

Egypt will pay farmers a small premium on world prices for local wheat this season and hire an inspection company to prevent fraud in local procurement, a government statement said on Tuesday.

Earlier this month Egypt said it would pay farmers global prices for wheat as part of reforms aimed at curtailing fraud.

Grain industry experts and lawmakers who led an investigation into the fraud last year have said upward of 2 million tonnes of Egypt's reported 5 million tonnes of wheat may have existed only on paper.

As part of reforms aimed at ending fraud, Egypt would end the practice of allowing wheat storage in open air silos and appoint a company to conduct inspections to guarantee the quantities stored are not exaggerated, a joint statement from the agriculture and supply ministries said.

Egypt, the world's largest wheat importer, has in past years set a local buying price significantly higher than international markets to encourage growers. But the policy encouraged local traders to mix cheaper imported wheat into the subsidised local supplies, particularly as global prices dropped.

The new policy would calculate the price of wheat according to the prices at which state grain buyer GASC is buying, the minister said, a move intended to keep the price differential too narrow to encourage smuggling.

The government will pay at least 50 Egyptian pounds($2.60) per erdeb (150 kg) of wheat over current global prices, the statement said.

Egypt bought 410,000 tonnes of Russian wheat at its last tender for an average price of about $204.


nasdaq
 

Readers choice: TOP-5 articles of the month by UkrAgroConsult