Back to the complete issue
Tuesday, 27 March 2018

Our broken wheat policy may cost us an extra EGP 1.4 bn this year

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 This practice is particularly strange considering the government had rescinded its zero-ergot policy, but the CAPQ insists on sieving wheat shipments to remove foreign material including the fungus.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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.