Unnecessary and burdensome regulations will leave Egypt, the world’s largest wheat buyer, with more than $860mn in direct costs and lost export earnings this year while its citizens pay more for their food, according to the US Department of Agriculture.
Costly tender requirements, confusion over wheat-import policies and curbs on the export of rice were cited by the US agency’s Foreign Agricultural Service in a June 8 report that was published on Thursday. The country could increase earnings and lower import costs if it complied with international standards, according to the report.
“Egypt’s unorthodox agricultural measures lead to spending cash it cannot afford and missed market opportunities for some of its key commodities,” the USDA said. “The end result is higher food prices paid by Egypt’s overburdened consumers, in complete dissonance with the government’s efforts and trumped up claims that it’s trying to make food more affordable.”
The country subsidises wheat for its 88.5mn citizens and buys the grain in regular tenders. Those tenders, closely watched by the global commodities trade, have been disrupted this year after Egypt rejected some cargoes because of new limits on the permissible amount of ergot, a fungus. It turned away shipments of Canadian and Polish grain as recently as this month.
A zero-tolerance policy on ergot “puts Egypt out of step with the rest of the international trading community,” and traders are submitting bids at a premium to market prices amid the confusion, the USDA said. The country also incurs extra costs by regularly sending six-member teams overseas to clear wheat purchases, something that other importing countries don’t do, the agency said.
Restrictive trade policies on rice are estimated to cost about $500mn in lost revenue this year, the USDA said.
“The government implores producers to avoid price hikes, instead of focusing its efforts aligning its practices to those of the global trading community,” USDA said.
No one at the Egyptian embassy in Washington could be reached for comment.