Tuesday,21 August, 2018
Current issue | Issue 1304, (21 - 27 July 2016)
Tuesday,21 August, 2018
Issue 1304, (21 - 27 July 2016)

Ahram Weekly

The case of the missing wheat

The unravelling of cases of fraud in the wheat delivery system may be just the tip of the iceberg, writes Niveen Wahish

The case of the missing wheat
The case of the missing wheat
Al-Ahram Weekly

Egypt’s wheat delivery system has been riddled with complications this year. At the beginning of the harvest season in April, farmers had difficulty delivering their crops to the government and receiving payment due to complicated bureaucratic procedures. Now that the harvest season is over, accusations of fraud in the delivery process are surfacing, and these are being investigated by a parliamentary committee. 

Members of the committee have been paying surprise visits to silos to monitor the quantities and quality of the wheat delivered, Medhat Al-Sherif, a member of the committee, told Al-Ahram Weekly. “We have found infractions worth millions of pounds of public money,” he said, adding that “there is evidence that there was false reporting of the delivered quantities.” 

Al-Sherif said that there were discrepancies between quantities listed in registers and actual quantities in the silos visited. Between 40 to 50 per cent of the wheat recorded was missing from some of the silos the committee had visited, Magdi Malak, head of the committee, said during a television interview. 

The committee had only visited a handful of silos so far, he said, but these had already been inspected by the relevant authorities which had not reported a deficit. Furthermore, some of the silos visited were not legal and lacked proper registers, he added. 

By registering quantities higher than the amounts actually delivered, the owners of the silos could pocket the difference in payment, said Essam Badawi, editor of Al-Ahram Al-Ziraai, an agricultural magazine. If the fraud was uncovered, the missing quantities could be made up with cheaper imported wheat and the owners could still pocket the difference, he said.

While farmers are paid LE420 per ton of local wheat, imported wheat costs less than half that sum. Last year, there were incidents of wheat mixing to capitalise on the price differential. However, this year the government stopped wheat imports during the harvest season in a bid to prevent this happening. Egypt’s consumption of wheat reached around 19.5 million tons in 2015, around 11 million of which were imported.

A number of silo owners have been detained in the wake of the fraud allegations by prosecutor-general Nabil Sadek.

Amin Selim, deputy head of the Holding Company for Silos, speaking during a television interview said that a committee with representatives from various ministries was in charge of approving receipt of wheat. If there was a deficit, those responsible were the members of the committee and the silo owners, he said. 

He said the parliamentary committee had “overestimated” the deficit, which should not go beyond 2.5 per cent. Another fact-finding committee formed by the Administrative Supervisory Authority to look into the case was said to have found a 3.5 per cent deficit in the 100 silos it had visited, Minister of Supply Khaled Hanafi told a press conference recently. There are 517 such silos in total in Egypt.

Selim said that public funds had not been wasted because the silo owners had not yet been paid in full for the wheat. Payment could be withheld if the quantities were found to be lower than reported, he said, and the government was insured against any deficits. 

The committee may not have measured the wheat in the silos properly, Selim said. The committee is made up of MPs, a representative of the army’s Engineering Authority, which took part in the construction of some of the silos, and a representative of SGS, an international company specialising in the inspection, testing and certification of agricultural products. 

The Cereals Division of the Federation of Egyptian Industries, to which the silo owners belong, held a press conference last week in which members expressed their doubts about the measurements made by the company employed by the committee. They said the wheat must be weighed, not calculated according to how much space it occupies in the silos.

But the alleged fraud showed that corruption ran deeply in the sector, Al-Sherif told the Weekly. He said corruption extended through the milling process to the distribution of bread. 

The wheat in question is used in the production of the subsidised baladi bread that is provided to consumers holding smart ration-cards. Allegations of fraud have also been made against the company managing the smart cards system, claiming it has been operating cards reported stolen and others not registered with the ministry of supply.

“There is corruption throughout the system,” Mohamed Said, an agricultural investor, told the Weekly. The way around it was to integrate technology in a manner that minimises human involvement, he said, and there should be a strict supervisory system that penalises those who commit infractions. 

“Those currently in charge should not be in charge of the new system, or it will also fail,” he said.

Malak said that corruption could also be avoided by giving farmers money directly and selling harvests at international prices instead of paying higher prices for the local crop in the form of subsidies.

That way, he said, there would be no chance of profiteering by passing off cheaper imported wheat as local wheat.

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