Sunday,22 October, 2017
Current issue | Issue 1290, (7 - 13 April 2016)
Sunday,22 October, 2017
Issue 1290, (7 - 13 April 2016)

Ahram Weekly

Rice ban back on

A ban on rice exports has been resumed in an attempt to increase rice supply and control its price on domestic markets, reports Mona El-Fiqi

Al-Ahram Weekly

Last week the Ministry of Industry and foreign trade issued a decree to resume a ban on rice exports starting 4 April.

Tarek Kabil, the minister of industry and foreign trade, announced that the ban aimed at providing the domestic market with its needs. He said the ministry was coordinating with other ministries and concerned authorities to tighten controls on customs posts and borders to prevent rice smuggling and to take severe measures against violators. 

According to Kabil, the decree will mean stability in rice prices for consumers.  

Rice exports were banned on 1 September, but due to a decline in the prices paid to farmers at the beginning of the 2015/2016 rice season the ministry issued a decree that permitted exports for six months starting in October 2015 and ending in April 2016. 

During these six months exports were allowed on payment of LE2,000 per ton.

Over 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 has become available later, the government has lifted the ban on exports to sell the surplus. 

Rice exporters have been keen for the ban to be lifted this year so that they can sell the surplus and regain Egypt’s position on international markets for medium grain rice. Egyptian rice enjoys high demand, particularly in Arab countries. 

The average annual surplus of rice is almost one million tons. Total local consumption is estimated at three to 3.3 million tons, while annual production reaches 4.2 million tons, according to figures from the Rice Division of the Federation of Egyptian Industries.

Despite the surplus in production, the local market has witnessed a shortage of locally produced rice and an increase in prices over the past few weeks. Ahmed Mustafa, the owner of a supermarket in the New Cairo district, said that in two weeks a packed kg of rice had risen in price from LE6 to LE8, while a five kg bag had reached LE41, up from LE31.

 “It is expected that rice will soon reach LE9 per kg due to clear shortages in the market,” Mustafa said.

However, Hassan Al-Fiki, a trader in the Daqahliya governorate, said that the problem was not a shortage of rice. Instead, it was caused by traders who refrained from releasing rice to the market in order to push up prices.

 “Some traders collect rice from farmers but refuse to sell it on the local market, preferring to export it even if illegally,” he said.

According to Al-Fiki, such exports are the reason behind the increase in rice prices from LE1,700 per ton at the beginning of the season to between LE4,500 and LE5,000 per ton currently. 

He said the government’s failure to replenish its stockpiles had given traders the chance to collect large quantities of grain. “The government should buy its needs from farmers at the beginning of the season to keep a balance in the markets and avoid such problems,” he said.

He praised the decision to ban exports, expecting that this would help to ease the price of rice.

Consumers often pay the price for mistakes made by suppliers or government officials, observers say. “Rice is an essential foodstuff for my children, but its price now is too much. And what is worse is that I can’t find rice at government stores selling subsidised food items,” complained Abeer Hussein, a housewife and the mother of two children.

Millions of Egyptians depend on the subsidised food items provided by ration cards in the country. Over the past few weeks, stores selling subsidised food have faced a shortage in rice supplies.

A tender for domestic supplies on 19 March was cancelled because of the high prices offered, and the General Authority for Supply and Commodities (GASC), the state grain purchaser, announced that it would seek to buy rice in an international tender. 

The last time the GASC imported rice was in 2007 when it imported 100,000 tons from India.   

Noamani Nasr Noamani, the GASC former deputy chairman, told Al-Ahram Weekly that banning exports and allowing imports were the government’s tools to increase the supply of a commodity and control its prices on the domestic markets. 

“In shortages, the government should intervene at the appropriate time to help provide supplies or offer an alternative commodity,” Noamani said. 

The measures taken by the government would help to increase the supply of rice domestically because the problem was that rice traders held back supplies to increase commodity prices in the markets, he added. 

Khaled Hanafi, the minister of supply and internal trade, recently announced that rice was available at governmental cooperatives at LE4.5 per kg. 

To avoid shortages of rice, which is a strategic commodity, Noamani said that in future GASC contracts with suppliers should include an extra 25 per cent of total monthly needs so that these can be stored and used in such cases. 

“Rice is a grain that can be stored for a year or more,” Noamani added.

Experts blame the government for allowing the private sector to control the market, however. Omniya Helmi, a professor of economics at Cairo University, said that it was clear that some individuals were exercising monopolies in order to control rice prices since production exceeded consumption.

“The government should play a strong role in supervising and controlling the domestic markets,” Helmi said.

She added that the hikes in the prices of food commodities including rice had led the inflation rate to reach 11 per cent, and it was expected to increase further in the coming period. 

According to Helmi, the government should apply severe penalties on traders who are proven to have stored commodities in a bid to control market prices. 

“Planning is needed on rice, since the problem starts early when we cultivate more rice than local needs. Since Egypt is facing water shortages and rice needs a lot of water to be grown, exporting rice means we effectively export water,” Helmi explained.

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

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