Saturday,22 September, 2018
Current issue | Issue 1261, (3 - 9 September 2015)
Saturday,22 September, 2018
Issue 1261, (3 - 9 September 2015)

Ahram Weekly

New rice exports ban

The rice exports ban, an annual scenario in the summer season, is to be resumed in September, reports Mona El-Fiqi

rice exports
rice exports
Al-Ahram Weekly

Minister of Trade and Industry Mounir Fakhri Abdel-Nour announced this week that the government has decided to resume the ban on rice exports starting from 1 September.

According to the minister’s statement, exporters who have already got rice export licenses will be given a three-month grace period starting from 1 September to meet their commitments and carry out their export deals. The contracts are estimated at 3,000 tons, according to figures from the Rice Division at the Federation of Egyptian Industries.

Exporting locally produced medium grain rice was allowed for ten months ending on 31 August 2015, according to cabinet decree 776 issued in October 2014. During the period of the lifting of the ban, the maximum amount of rice exports could not exceed 500,000 tons, and the exports would be halted when the figures reached this ceiling even if this was before the end of August 2015.

Egyptian medium grain rice is in high demand internationally, particularly in Arab countries, Turkey and Eastern Europe.

The ban on rice exports has been imposed and lifted several times since 2008 with the aim of ensuring that production meets domestic needs. The longest ban lasted for four years and ended in October 2012. Before the ban on rice exports in 2007, annual rice exports reached 1.3 million tons and Egyptian rice was exported to 56 countries.

During the past few years the government has imposed a ban on rice exports at the beginning of the harvest season to ensure that local market needs are covered. When a large amount of rice became available later, the government lifted the ban on exports to sell the surplus. Rice exporters have been keen for the bans to be lifted in order that they can sell the surplus and regain Egypt’s position on international markets for medium grain rice.

The average annual surplus of rice is almost one million tons since total local consumption is estimated at three to 3.3 million tons while annual production reaches 4.2 million tons, according to Ragab Shehata, head of the Rice Division at the Federation of Egyptian Industries.

Since October 2014 and until the end of August 2015, exporters were allowed to export rice provided that they sold the government one ton of rice at LE2,000 for every exported ton, in addition to paying $280 per ton in tariffs. These terms helped the government meet its needs of 1.3 million tons of rice annually for the subsidy programme directed at nearly 70 million people and add foreign currency to the state coffers.

Due to what has been seen as the unfeasible terms set by the government, the total amount of rice exports during the period when the ban is lifted is estimated at 30,000 tons, however, according to Shehata.  

“The problem is that more than 250,000 tons of rice were exported illegally to avoid paying tariffs and selling rice to the General Authority for Supply and Commodities (GASC) at LE2,000 per ton,” Shehata added. He said that allowing rice exports to resume was necessary to benefit from the surplus of 750,000 tons from last year’s harvest.

Moreover, banning rice exports would have a negative impact on industrial investments of LE40 billion in 2,000 rice mills across the country, according to Shehata.

The Division took action a few months ago when it sent 25 memos to the minister of trade and industry to explain the current situation of rice exports, but there has been no response. It had requested the reduction of tariffs from $280 to $200 per ton and the halting of the delivery of rice to the GASC.

Resuming the ban on rice exports would not benefit any of the concerned parties, but it would lead to storing large amounts of rice that could be added to the new crop, according to Shehata. Unless the rice surplus was exported, these large amounts of rice would be lost and used to feed livestock, he said.

Shehata suggested that the government permit the rice exports and hold follow-up meetings every two or three months to examine the situation according to market changes. At these meetings the government would have the right to re-impose the ban or increase the tariffs.  

Mohamed Al-Sweidi, chairman of the Federation of Egyptian Industries, is also in favour of lifting the ban on rice exports and has announced that this would provide foreign currency to help reduce the budget deficit. It would also help farmers to sell their harvests at good prices, he said.

Shehata explained that the existence of the surplus in the local markets led to price reductions which were against farmers’ interests. “Farmers are suffering because the cost of cultivating rice is estimated at LE2,000 per ton, while the price in the local markets is currently LE1,800 per ton,” Shehata said.

Poor marketing of summer crops such as cotton and corn has also pushed some farmers to cultivate rice, violating the rice-cultivation area regulations set out by the ministry of agriculture.

Al-Sweidi explained that even if the ban was lifted, the government would still have the upper hand by charging farmers who do not follow the regulations. Lifting the ban on rice exports would help to achieve social justice for all parties, he concluded.

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