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Egypt’s wheat imports: Case study in ineptitude

02 Oct 2016 1:01 am

 

 

 

 

Problems on hold

 

 

Youssef Sidhom

 

 

 

 

Next Tuesday 4 October will see Egypt’s House of Representatives embark on its second round following a brief recess that was markedly shorter than the customary parliamentary recess during the summer months. The short recess was dictated by the excessive legislative load which parliament had to handle during its first round, on account of its being Egypt’s first lawmaker body since 2014. The country had remained more than two years without a legislative body, an outcome of the political turmoil it had been caught in since the Arab Spring uprising in 2011.

No question, Egypt’s political circles and media are all in a bustle attempting to discover the main features of the upcoming parliamentary round. A number of bills that had been on the first round’s agenda but were never debated for lack of time remain to be handled. New laws need to be passed, and parliament should supervise and monitor government performance, all of which are among its major tasks.

Observers will not fail to see that the government appears to have spared no effort to whet parliament’s appetite for taking officials to account. Issues and problems that call for account-taking are not few; topping the list is the predicament of wheat imports that has been on the political and trade scenes for the last four weeks. Egypt had to cancel a zero-tolerance policy for the common type of grain fungus known as ergot, and return to international standards that allow wheat cargoes with up to 0.05 per cent of the fungus, after international traders boycotted tenders for the supply of ergot-free wheat. It was the second time this year that Egyptian officials changed and then quickly reversed import standards for wheat, leaving traders sceptical about participating. Once the ergot ban was eased Egypt, the largest wheat importer worldwide, received offers from four traders to supply wheat. This is a far cry from the more than 10 offers Egypt was used to receive, but it is also an improvement over the recent past three tenders for supply of ergot-free grain for which Egypt received no offers at all. Traders say the offers include a premium of about USD10 a ton owing to wariness about doing business in Egypt after the country rejected several cargoes this year, including vessels from Romania and Russia, because of ergot.

What took place on Egypt’s external trade scene was a reflection of the confusion and indecision that prevailed on the official level inside the country. According to Bloomberg, the renowned website that delivers business and markets news, data, and analysis: “Egypt has been a headache for traders this year because of frequent rule changes.” This should come as no surprise, seeing that the ministries concerned—the ministries of agriculture, supply, and internal trade—adopted contradictory policies regarding the import of wheat. The outcome, apart from the boycott by international traders that ultimately led Egypt to go back on the zero-tolerance ergot policy, was that Russia ‘retaliated’ by temporarily suspending the import of Egyptian fruits and vegetables. The Russians said the new decision would not affect already-concluded contracts with Egyptian suppliers, or shipments of Egyptian fruit and vegetables on their way to Russia. So Russia met Egypt’s ‘non-professional’ behavior with ‘professional’ retaliation. Once Egypt went back on the zero-tolerance ergot decision, the Russians last week lifted the ban on Egyptian agricultural products provided they met safety and quality specifications. According to a government statement, Egyptian agricultural products exported to Russia stand at USD350 million annually. 

It is remarkable and amazing that, at the height of the wheat import crisis, Egypt’s Cabinet appeared unconcerned at the contradiction and non-coordination of the decisions taken by the three ministries concerned. This is not a first on the part of the Cabinet; the same confusion and lack of coordination governs the diverging policies of the ministries of finance and investment and the Central Bank of Egypt, and have led to an out-of-control economic situation.

In case of the wheat import crisis, Egypt’s Cabinet woke up to the fact that it had shot itself in the foot when it turned a blind eye to the confusion and indecision among its members. It tried to save face by claiming that the correctional move to allow wheat imports with 0.05 per cent ergot was a return to policies that go back to 2010, and that these had been based upon careful research into the matter and upon internationally recognised specifications. But the Egyptian public was not taken in, and the government failure rose to the level of scandal. It was obvious there was no coordination between the various government bodies and, worse, that cabinet ministers were terrified of venturing on any decision that might even remotely touch upon the health of Egyptians, no matter the disastrous consequences of refraining from taking necessary decisions. In the wheat import case, it was sad for the public to finally find out that there had been no health hazard in the first place.

I expected Cabinet to exercise self-monitoring and question the Agriculture Minister about his decision of zero-tolerance ergot wheat import. But this never took place; or more precisely the public was told nothing of the sort. A number of MPs, however, found the matter preposterous and vowed that they would question the government about it.

It looks like the new parliamentary round promises to tackle thorny issues. I hope the debate would be conducted in an objective, non-hysterical manner and that it would establish the supervisory role of the legislative authority. May it be a step towards the democratic maturity we so much aspire for.

 

Watani International

2 October 2016

 

 

 

 

 

 

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