CAIRO: Global furor over rice export bans – which many accuse of swelling global prices, warping farmers’ incentives and starving neighbors for the sake of domestic stability – has adopted an increasingly urgent tenor over the past weeks as the estimated number put at risk by mounting food prices continues to climb.
As one in a set of major rice sellers to curb exports over the past two months, Egypt has not avoided criticism. Last week United Nations secretary general Ban Ki-moon added his voice to the call for countries to lift restrictions, urging states not to “jeopardise the supply, reported AFP in an article specifically listing Egypt’s ban.
“I’m not very proud of it, Minister of Trade and Industry Rachid Mohamed Rachid said of the ban on food exports, “but we have a responsibility towards the people.
The Minister said that worldwide rice prices have tripled and if the government hadn’t instituted this ban, the price of 1 kg of rice would have been more expensive than the current LE 3-LE 4 price range. It could have reached up to LE 10, the minister said.
With the cost of rice falling nearly 25 percent here over the past month, many Egyptian policymakers and economists have remained unruffled.
Magdy Sobhi, an economist at the Al-Ahram Center for Political and Strategic Studies, said Egypt’s exports are too small to cause much more than a ripple in global supply. “You can’t say Egypt is a big exporter of foodstuffs, he said.
Egypt exports about 1.5 million tons of rice per year, he said – less than one-sixth of the 9 million exported by Thailand, the world’s largest rice seller. Over the past two months, Argentina, Cambodia, Brazil, India and the second largest exporter of rice, Vietnam, have employed similar curbs.
“We are not the United States, Russia, Argentina, Australia or Canada, Sobhi said, listing major food suppliers. “You cannot put all these countries in the same box.
Rachid also criticized the use of biofuels. “Egypt has a very different position to Europe and the US vis-à-vis the food the crisis. We urge Europeans to reconsider biofuels because . we think the effects are catastrophic, the minister explained.
Egypt is also a large importer of wheat, Sobhi said, making the ban particularly vital. “You have to balance the increases in price for wheat and rice, he said.
According to World Food Program (WFP) statistics, Egypt has raised its aid to the poor from LE 20 billion to 30 billion since last year, including an LE 6 billion boost to bread subsidies.
Rachid said that food subsidizes in general have risen from LE 7-8 billion to about LE 20 billion from 2004 to 2008.
“Rice is one of the main foodstuffs in every Egyptian meal, Sobhi said. “The price of macaroni and other substitutes is going up too, so there is no other solution but to ban exports of rice.
The ban has done obvious good here, he added. The cost of a kilogram of rice slumped from about LE 4.5 to LE 3.5 over the past month.
But such measures still garner scrutiny. Days before Egypt’s ban was imposed, The Economist criticized food export limits, labeling them “politically expedient but “economically self-defeating quick fixes.
While the WFP has not been a vocal critic of export bans, it has implored states to spend on what it considers more sustainable answers, such as developing agriculture.
But “safety-net programs are often necessary while longer-term policies incubate, said Heba Kandil, the Program’s regional representative.
“School feeding at a cost of 25 cents a day can be a particularly powerful tool, she said. “Government responses to higher prices – such as export bans, import quotas and promises of subsidized imports – can be highly unpredictable and unless they are preceded by proper analysis they can be counterproductive.
In February the WFP pled for an extra $500 million to make up for towering food costs. It has since revised the figure to $755 million and abandoned services such as its free breakfast program in Cambodia.
Average rice costs have tripled over the past 10 months, endangering an estimated 73 million of the world’s poor, according to the WFP.
Protectionist food policies, particularly from states facing civil discord, have been common. Last week, Thailand suggested Vietnam, Cambodia, China and India should form an OPEC-style trade cartel to better control over global prices.
Following the relatively serene strikes scheduled for President Hosni Mubarak’s 80th birthday last Sunday, cheaper foodstuffs seem to have at least somewhat dampened the disquiet displayed here last month.
“This is important to the people and especially the regime, said Sobhi. If the export ban and other policies, like lifting tariffs on imported food and steel, can beat back inflation – reckoned at 14.4 percent in March – they could curtail unrest as well, he said.
Speaking prior to the latest hike in fuel prices, Sobhi said, “These are the policies that are contributing to the quiet in Egypt today.
“At least for now.
Price bill info box
The following are the major effects of the bill passed in Parliament Monday evening.
– The prices of 90, 92, 95-octane gasoline will all be raised. Ninety-octane fuel to LE 1.75 from LE 1.30, 92-octane fuel to LE 1.85 from LE 1.40, and 95-octane fuel to LE 2.75 from LE 1.75.
– The prices of diesel and kerosene will rise to LE 1.10 from LE 0.75.
– Natural gas for “energy-intensive industries such as cement and steel will rise to LE 0.57 per cubic meter from LE 0.36.
– A development tax of LE 35 per ton will be charged on clay extraction.
– Registration fees on vehicles will be increased.
– Tax exemptions for private schools will be eliminated.
– Free-zone status for energy-intensive industries will be removed.
– Banks will no longer receive a tax exemption on treasury bill yields.
– The sales tax on local and imported cigarettes will rise between 10 and 33 percent.
