Our broken wheat policy may cost us an extra EGP 1.4 bn this year: Egypt’s General Authority for Supply Commodities (GASC), the world’s largest wheat buyer. might be paying an extra EGP 1.4 bn on wheat imports this year as a result of “cumbersome import requirements,” according to a US Department of Agriculture report (pdf). At issue are regulations imposed by the Central Administration for Plant Quarantine (CAPQ) that require wheat shipments to be sieved upon arrival at Egypt’s port at USD 3 per tonne. “Sieving is a practice done normally as part of the milling process, meaning that Egyptian authorities are mandating and charging for a process that would be carried out by processors regardless.” This practice is particularly strange considering the government had rescinded its zero-ergot policy, but the CAPQ insists on sieving wheat shipments to remove foreign material including the fungus. The sieving process also takes time, which drives up demurrage fees — the tariff charged to suppliers for vessels sitting at ports past the contracted period.

Traders are (shocker) adding these additional costs to their offers in GASC’s wheat tenders, which means the government ends up footing the bill. These increased costs are evident in the prices GASC ends up paying for shipments: Between October 2017 and February 2018, the state grain buyer paid around USD 10.26 (EGP 182.63) more per metric tonne than the global average. “This indicates that importers or traders are adding an additional risk premium to offset the high risk of doing business in the Egyptian market,” the report says.