Sunday,22 July, 2018
Current issue | Issue 1309, (25 - 31 August 2016)
Sunday,22 July, 2018
Issue 1309, (25 - 31 August 2016)

Ahram Weekly

Stocking up on rice

New rates for rice deliveries are no guarantee of a cooling down in consumer prices, reports Niveen Wahish

Al-Ahram Weekly

The government last week announced that it was seeking to buy two million tons of rice from farmers at a price of between LE2,300 and LE2,400 a ton during the harvest season that starts this month.

The move is aimed at securing stocks for sale at government-owned supermarkets at subsidised prices, said Al-Basha Idris, head of the Food Crops Division at the Cairo Chamber of Commerce. 

Last year, the government failed to stock up sufficiently on rice and ended up with severe shortages of the commodity. This pushed consumers who normally buy rice from government cooperatives with smart ration cards to seek rice elsewhere, thus pushing up prices. 

Idris said consumers could expect to see cheaper rice in the coming months. A kilogram of rice reached between LE6 and LE10 over the past year compared to LE4 to LE7 previously.

But not everyone is convinced consumers will be able to buy cheaper rice. Nader Noureddin, a professor of soil and water sciences at Cairo University’s Faculty of Agriculture, said the price the government was offering for rice was unfair to farmers. 

At the current market price of rice, the government should have offered farmers between LE3,500 and LE4,000 per ton, he said. “Traders had already promised to pay that sum before the government announcement,” Noureddin added.

He believes that in the same way the government had set a price for farmers, it should have agreed with traders on a suitable price to guarantee that they would bring their prices down. Instead, traders would likely buy rice from farmers at a cheap rate and sell it at a higher price later, he said. 

This is the first time in several years that the government has bought rice from farmers directly. The last time was in 2012, when the government received only 0.5 million tons. Noureddin said that farmers would likely refrain from selling their crop at the offered rate and would store it until the price picked up instead. 

Another factor the government hopes will contribute to cooling prices is the ban on exports. The decision to introduce the ban, in place since April this year, was reaffirmed by the government last week. 

A ban on rice exports has been imposed and lifted several times since 2008. The longest ban lasted for four years and ended in October 2012. Idris supports the ban, saying that exporting rice is “like exporting water at a time Egypt is facing water shortages”. 

According to Al-Shorouk daily, a meeting between representatives of the Ministries of Irrigation, Agriculture, Environment, Local Development and Trade and Industry had looked into cutting areas cultivated with rice from around one million to 700,000 feddans.  

Egypt produces roughly 4.2 million tons of rice a year, while consumption reaches roughly 3.3 million tons.

One issue Idris said the government must deal with was the smuggling of rice across borders. While he did not have an estimate of the amounts involved, he described it as “considerable”. 

This was the traders’ way of getting around the export ban, and it must be controlled, he said.

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