Monday,18 December, 2017
Current issue | Issue 1299, (9 - 15 June 2016)
Monday,18 December, 2017
Issue 1299, (9 - 15 June 2016)

Ahram Weekly

Rice price soars

The price of rice continues to soar as the domestic market remains in short supply, reports Nesma Nowar

Economy
Economy
Al-Ahram Weekly

The price of rice has skyrocketed in recent weeks amid shortages in the local market.

One kilogram of rice now sells at around LE8 instead of LE4.5, while higher quality rice now sells at LE10 per kg.

Commodity prices usually soar ahead of the holy month of Ramadan when family gatherings are a main feature. However, the prices of rice have been seeing a remarkable increase for the last two months.

Many people have been struggling to buy rice, a main food staple. “Rice is a main item in our daily meals, but it won’t be for much longer because of its soaring prices,” said Doaa Adel, a mother of two, adding that she had not been able to find rice at government stores selling subsidised food items.

Rana Essam, a government employee, had also been struggling to buy rice at a reasonable price. “I found rice at LE4.5 per kg at one supermarket, but the quality was so bad that I got rid of it,” Essam said.

Minister of Supply Khaled Hanafi said last week that the government had contracted for 20,000 tons of local rice that would be sold at government outlets and that it would send mobile stores to densely populated low-income areas to sell rice at LE4.5 per kg.

However, despite these efforts the problem is ongoing. The hikes have been partly blamed on local traders who tend to hoard rice causing shortages and pushing up prices.

Basha Idris, head of the Agricultural Crops Division at the Cairo Chamber of Commerce, said the problem lay in the fact that the government did not purchase enough rice from farmers, allowing some traders to hoard rice and opening the door to opportunistic price hikes.

He said the government should not lift its ban on rice exports unless the local market was fully covered and it had a sufficient strategic supply of rice.

The ban on rice exports was imposed on 4 April in order to provide the domestic market with its needs and bring stability for consumers. Rice exports were also 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.

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.

When there is a surplus the government lifts the ban on exporting rice. Before the ban on rice exports in 2007, annual exports reached 1.3 million tons and Egyptian rice was exported to 56 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.

Idris said that when the government lifted the export ban last year, only 40,000 tons of rice were exported, while some 180,000 tons were smuggled abroad by some traders to get round the export levy which amounts to LE2,000 per ton.

“Smuggling is a real problem because it allows large quantities of rice to go abroad unnoticed causing shortages in the local market,” Idris told Al-Ahram Weekly, adding that the government should deal firmly with smuggling and keep the export ban in place.

He said rice prices could be expected to stabilise when imports had provided the market with sufficient quantities of rice.

It is not yet clear when this will happen, however, since the General Authority for Supply Commodities (GASC) cancelled an international tender to import rice last month. A tender for domestic supplies on 19 March was cancelled because of high prices.

Idris said the government should sit down with farmers and local chambers of commerce before the start of the rice season to discuss ways to prevent the shortages that are crippling the market and causing price hikes from happening again.

Because the market is still short of rice, prices are continuing to soar with people still struggling to buy rice, he said.

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