USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed
12 January 2012
USDA GAIN: Egypt Rice Up-date
Post expects that GASC will continue to purchase imported long grain rice for the ration card program, with the next tender expected in February.Report Highlights:
Traditionally, an important rice exporter, Egypt is likely to import at least 500 TMT in MY 2011/2012. At the same time, contraband exports of rice are proceeding despite the official export ban due to limited security presence. Post increased the forecast of rice exports from 500 to 600 TMT.
General Information:
While the Ministry of Agriculture and Land Reclamation has updated
their estimate of the area cultivated with rice in MY 2011/12 to about
610 TH (thousand hectare), the Ministry of Irrigation and Water
Resources as well as the traders estimate the rice area at about 730
TH. Post accepts the latter estimate. Reports also indicate that
yields were well below normal, resulting in a lower than earlier
forecast rice crop.
Based on last year’s prices of paddy rice of about $580/MT,
farmers switched about 250 TH from corn to rice. There was no control
on water usage and on the cultivated area during the period following
the January 25 Revolution. Since officials did not want to upset the
farmers at that time, fines on the farmers who plant rice in areas
that are not supposed to be planted with rice were lifted. The
government announced that it will not allow the rice area to exceed
460 TH in the next season, but Post expects farmers will react more to
paddy prices prior to the planting season as well as any decision to
lift the ban on rice exports. Currently, paddy prices are about
$380/MT, which should discourage planting.
Egypt tendered for imported or locally produced rice in December 2011
and purchased 234 TMT for delivery on January –March, 2012 of
which 221 TMT was imported rice and the rest was locally produced rice
(see
FAS Cairo GAIN report on the tender and potential implications).
According to the local trade about 90% of this quantity is imported
from India and the rest is imported from Pakistan, Vietnam, and
Thailand. It is expected that the General Authority for Supply
Commodities (GASC) will announce another tender in mid February to
cover the ration card needs of rice for the months of April-June.
Egypt needs about 88 TMT/ month or about 1 MMT/year. Post estimates
that Egypt will import at least 500 TMT in MY 2011/12 depending on the
acceptance of long grain rice by the ration card holders. If there is
wide acceptance, the quantity imported this year may reach 750 TMT.
The imported rice has not been delivered to the ration card holders
yet, so consumer attitudes are as yet unknown. However, with ration
card rice selling at LE 1.5/kg ($1.00=LE 6.03) and retail rice prices
at LE 6.70/kg, there is a great deal of incentive to consume long
grain rice.
For GASC and the GOE, the provision of imported long grain rice
through the ration card system provides significant savings over
purchasing local medium grain rice. Instead of paying LE 5/KG or more
for ration card rice, GASC purchased long grain from local traders at
LE 3.1-3.3/KG. With a worsening budget situation, the savings on the 1
MMT ration card program are welcome.
The ban on rice exports is still in place, but lack of police
enforcement and minimal penalties when detected have led to a massive
contraband trade. Smuggling is occurring to the south into Sudan and
from Sudan to Saudi Arabia and other Gulf countries, to Libya which
imported over 100 TMT of U.S. medium grain last MY, and to Gaza, Syria
and Jordan. There is no official data about smuggling but according to
some traders, at least 1,000 –1,500 MT is smuggled daily. Egypt
also exports broken rice to some European and African countries. Post
believes contraband rice trade is on the high side of this estimate,
as evidenced in part by the relatively high retail prices prevailing
in Egypt. Many experts believe that Egypt should officially allow rice
exports since it is already smuggled.
Farmers are still holding a large quantity of rice at their homes
waiting for the prices to increase. They still keeping in mind last
year’s prices and comparing that to this year’s prices of
about $380/MT. The impact of the imported long grain rice, the ability
of the farmer to store the rice without affecting their cash needs for
their agriculture and their living, the time left before the new crop
is marketed, the pace of the smuggling process in the next few months,
and the price offered by the traders for the smuggled rice are all
factors that can determine the imports and exports of rice in the
coming period.
January 2012
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