Cairo: Egypt’s supplies minister said on Sunday the government would accept offers to buy imported rice in its next tender for the subsidy programme, a sign that the door for Egyptian rice exports could soon be opened.
Khaled Hanafi, who was appointed last month after his predecessor sacked senior officials in the state’s main grain buyer and the silos and storage company, had previously said he would revisit the rice export suspension.
Egypt first imposed a ban on exports in 2008 saying it needed to save the rice for local consumption and wanted to discourage rice farmers from growing the crop to save water.
However, rice exporters have complained that the ban on free exports has led to the rise of a contraband trade by creating a large price difference between domestic and export markets.
Hanafi said in an emailed statement that imported rice offers would be allowed in the next local tender by the General Authority for Supply Commodities (GASC).
The deadline for offers for that tender is Sunday. The head of the rice committee of Egypt’s Agricultural Export Council told Reuters the move could be a way to test the Egyptian market and see whether consumers would accept the imported long grain rice in order to start exporting Egyptian medium grain rice.
“This is rice that has already been imported by local rice traders and is inside the country,” Mustafa Al Naggari said.
“It is a good step as it means they will test the local Egyptian market for its acceptance of other types of rice in order to free up some of the Egyptian rice for export,” he said.
Egyptians, like many in the Middle East, are used to consuming medium grain rice rather than the long grain version to make popular dishes and have been resistant to changing their eating habits.
The tender is being held to cover subsidised rice needs for April, May and June and imported rice offers will also be accepted for future tenders, the minister said in the statement.
The Supplies Ministry procures rice for the country’s subsidy programme through tenders held by GASC. Rice is then sold in the domestic market for as little as $220 (Dh808) a tonne to around 70 million Egyptians under that system. If sold abroad, Egyptian rice could fetch as much as $900 a tonne or more.
Egypt’s local consumption of rice amounts to around 4 million tonnes of white rice a year, of which around 1.4 million tonnes are used for the subsidy programme. Even if Egypt bought local rice for all its subsidy needs this 2013/2014 season there would still be enough for export.
Egypt has an exportable surplus of around 800,000 tonnes this year.
“They are not accepting offers for imported rice because there is not enough local crop to buy, they are doing it because they want to see whether Egyptians will eat it or not,” Naggari said.
Last month Egypt said the referral of a senior GASC official to administrative prosecution on suspicion of corruption had to do with local rice tenders and extension of deadlines for rice procurement without proper permission.
Export licences were sold in an auction at the trade ministry in November 2013 to sell 102,000 tonnes of rice abroad but the licences were suspended just days after being issued sending confusion to global markets.
Egypt started lifting the ban on rice exports in October 2012, through holding the export licence tenders at the Ministry of Trade.