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Sunday, 19 June 2016

Egypt incurs cost of USD 860 mn due to ergot limit, unusual agricultural practices

It may seem unusual to flag something as seemingly dry as an agricultural report as worth reading for a general audience, but the latest report by the U.S. Department of Agriculture published a week and a half ago on Egypt is an eye-opener on bizarre and inexplicable practices. Egypt is staring down the barrel of USD 860 mn in extra costs and lost export opportunities this year as a result of "unorthodox agricultural measures,” according to the report.Also highlighted for criticism is Egypt’s export ban on rice. Egypt justified the measure “as a means to maintain an adequate domestic supply of rice at reasonable prices. Yet in the first half of 2016, rice producers and traders have held on to their stocks in an effort to force the government to lift the export ban… If Egypt allowed the market to work its course, it would be able to sell close to one mn MT of rice in the international marketplace at close to USD 600/Mt. However, using the past as an indicator, in 2016 Egypt will export just 200 thousand MT and sell the rest… domestically, at a significant discount of USD 300/MT.” (Read What’s the matter with Egyptian agricultural trade? How unnecessary regulation, burdensome tender requirements and misguided export taxes cost the economy and consumers, pdf)

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