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Sunday, 18 September 2016

Egypt’s agricultural policy last seen jumping off a cliff with insane smile on its face

The Agriculture Ministry’s wheat ban just (predictably) blew up in our faces, and the implications could be far-reaching: The General Authority for Supply Commodities (GASC), the nation’s wheat importer, received exactly zero offers in response to its tender on Friday, Reuters reports, noting, “Friday’s cancellation comes amid a flurry of cargoes either rejected or held from export since Egypt reinstated a zero tolerance policy on ergot last month and applied it retroactively to all outstanding contracts.”

The news came after Egyptian inspectors rejected a 60k tonne cargo of Russian wheat in Novorossiisk and an earlier failure to accept a 63k tonne shipment from Romania last week, for which the Romanian trader is demanding the return of its USD 500k performance bond, Bloomberg adds. Reuters suggests Egypt will be cut-off from the global grain market for the foreseeable future, quoting a trader as saying “The risk of offering in GASC’s tenders is simply too high at the present time. It is foolish to offer something you know you cannot deliver and zero ergot is not possible.” Last Friday’s tender is GASC’s third since it began implementing a zero tolerance policy on ergot.

GASC’s next tender for a 15-25 October shipment closes on Friday, and traders say they expect that offers on the tender may once again be limited. As one industry insider told us: “Egypt won’t get real offers for another 2-3 months.”

The wheat flap is threatening Egyptian fruit and vegetable exports, the Associated Press reports. Russian food safety watchdog Rosselkhoznadzor “said Friday that imports of Egyptian plant products will be banned starting [this coming] Thursday until Egypt’s authorities take steps to ensure their safety.” The newswire suggests the ban is retaliation for the rejection of Russian wheat shipments, noting, “Russia often slapped bans on agricultural imports amid political or economic disputes with other nations, citing sanitary reasons.”

A prime example of this retaliatory behavior was in November of last year when the diplomatic flap between Russia and Turkey over the latter’s downing of a military aircraft resulted in Russia tightening controls on Turkish agricultural imports. Just one month later, Egypt had hoped to capitalize on the short-lived fallout between Russia and Turkey by moving to increase its agricultural exports to Russia to fill the gap. However, even this goal was, at least initially, foiled due to an aviation technical malfunction for the first export shipment, Al Mal reported at the time.

Kabil meets Russian ambassador: An Egyptian delegation will visit Moscow by the end of the month to discuss the Russian ban, Trade and Industry Minister Tarek Kabil told Al Mal after meeting with Russia’s ambassador to Egypt, Sergei Kabachenko, on Saturday morning. Cabinet also held an “emergency meeting” Saturday morning, Agriculture Ministry spokesperson Eid Hawash told Al Borsa. Hawash denied a connection between the incident and the ergot policy, while former head of the Agricultural Export Council Ali Eissa said that a “crisis” is expected, adding that Russia takes in more than 40% of Egypt’s agricultural exports.

Global dragnet on Egyptian strawberries expands: While the state-owned domestic media has in the past blamed the US Hepatitis A outbreak linked to Egyptian strawberries as part of a conspiracy to destroy Egypt, Saudi has reportedly long maintained an import ban on Egyptian agricultural products, Okaz reported. The Saudi Food and Drug Authority was apparently among the first to institute a ban on a number of Egyptian fruits and vegetables earlier this year after testing allegedly found them to not be suitable for consumption, Saudi importers tell the newspaper. The UAE has now implemented tightened controls on imports of Egyptian strawberries, the UAE’s state-owned The National reported on Saturday, citing the UAE Ministry of Climate Change and Environment. Jordan’s agriculture ministry is also investigating Egyptian strawberries following the US outbreak and the Russian ban, the Jordan Times reported on Saturday. We’d previously noted just last month that Egypt and Jordan were set to sign an agreement for the export of Egyptian strawberries to Jordan.

This comes as the Agriculture Ministry denied reports that the US Food and Drug Administration (FDA) imposed new bans on the entry of some Egyptian dairy products into the US, correctly noting that the FDA had merely reposted bans on Egyptian products that were made in 2009, 2010 and 2014 as part of a routine update to the FDA’s website, as noted by Al Mal.

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