Egypt to issue guidelines to tackle wheat import problems

Egypt will issue a streamlined guide on wheat imports within two weeks that will detail all specifications, procedures, and regulations for traders selling to the world's largest buyer, Supply Minister Ali Moselhy told Reuters on Wednesday. Egypt is looking to calm nervous suppliers who have been adding risk premiums of up to $500,000 per cargo because of what they say are inconsistent import rules and erratic inspection procedures.
Two cargoes were halted in recent months for containing poppy seeds and dozens have been delayed for costly additional procedures. Speaking at an event in Dubai, Moselhy said a committee that includes the agriculture ministry has been putting together the compiled guide, which will not include new regulations but will combine all relevant rules and specifications, publishing them in one place to avoid uncertainties.
"It is our duty to publish this, and send it to all suppliers ...when you know what should be done, you will be immune to any abuse of power," Moselhy said. Wheat shipments to Egypt have been disrupted in recent months after inspectors were stripped of travel benefits related to inspecting cargoes abroad, part of an inspection system introduced this year after a nearly year long-row over import rules.
But traders say government inspectors at Egyptian ports, angered over the loss of the travel benefits, are now applying inconsistent rules in protest and driving up the cost of doing business. "We cannot bury our head in the sand. What happened is an abuse of power at an inconvenient time...This led to a misunderstanding between suppliers and the government," Moselhy said of recent trade disruptions.
Suppliers have responded with hefty risk premiums on cargoes. And with Egypt's state grain buyer expecting to import around 7 million tonnes of wheat in the fiscal year that began in July, that threatens to add millions of dollars to the government's food subsidy bill. "How will they actually apply the rules? That's what will matter," said one Cairo-based trader.
Specifications for wheat, such as payment terms, rejection clauses and penalties for late shipments, are "clear enough...(but) the fine print carried in terms scares suppliers," a second trader said. Moselhy said Egypt's state buyer aims to keep wheat imports stable at around 7 million tonnes in the 2018-2019 fiscal year and that current reserves suggest there is no need for additional stockpiling. "We are not a wealthy nation that can increase its stocks more than that level, so a three month stock is more than sufficient as long as you have that amount already in-country," said Meselhy.