CAIRO: Egypt’s main government grain buyer said on Thursday it would issue international tenders to buy rice if local producers continue stocking up on the commodity.
"We are issuing a tender next week to buy both local and imported rice that is already in the country through private importers," Nomani Nomani, Vice Chairman of the General Authority for Supply Commodities (GASC), told Reuters.
If local traders continue to store their rice to push up prices, "international tenders will be the next step because if I import directly I can get better prices," he said.
The Arab world’s most populous nation spends around $5.5 billion each year on food subsidies, a burden it can ill afford as the economy falters and foreign reserves tumble after the uprising that ousted president Hosni Mubarak in February.
Foreign reserves have plunged from $36 billion at the end of 2010 to about $20 billion at the end of November.
Several Asian countries had already expressed interest in selling the commodity direct to Egypt’s government.
"There is interest from Thailand and several other southeast Asian origins such as the Philippines and Vietnam that have also said they want to export their rice to Egypt," Nomani said.
A meeting with Thailand’s ambassador to Egypt has already taken place, he added.
Egypt, once a major medium-grain rice exporter, has had an export ban in place since March 2008 to head off shortages on the local market.
In 2007, Egypt exported 1.25 million tons of rice and provided around 35 percent of the medium-grain rice sold on the world market that year. Others, such as Russia, have grabbed Egypt’s share since.
The government started procuring rice directly from local farmers in October in order to build reserves. The move was intended to smooth out the exaggerated prices that were offered during tenders for local rice.
"Despite that, the traders are stocking up on the rice and making the amount on offer in the market shrink," Nomani said.
Egypt needs 1.1 million tons of rice a year for its subsidy program, around a third of its total consumption of 3.34 million tons.
Farmers cultivated 1.7 million feddans (714,000 hectares) of white rice in the current season, placing production at around 4 million tons.
The repeated extension of the rice export ban has meant traders are prevented from selling the country’s niche medium-grain rice at higher prices abroad.
"They are stocking up on the rice as they want to get a higher price for it. If they are not going to export then they want the price that is equivalent to what they would get if they were exporting," Nomani said.
Nomani said if he was presented with suitable prices and a quantity of around 250,000 tons in the coming tender, he will not issue an international tender.
"If I find the prices and quantities are not good then I will start importing directly, exactly like wheat," he said.
