Egypt's poorest struggle to find rice amid hoarding

ABU DHABI/CAIRO: The price the government pays for rice has surged by about 50 percent in the past two months because traders are holding back supplies and expect prices to rise further following the government's failure to replenish its stockpiles.

Imported commodities such as cooking oil have been in short supply for weeks at outlets that offer subsidised goods to poor Egyptians as a dollar shortage makes it harder for state importers to secure regular supplies. But rice is widely grown in Egypt and farmers are actually producing a surplus.

Mostafa al-Naggari, head of the rice committee of Egypt's agricultural export council, estimates the country produced 3.75 million tonnes of rice in the 2015 season and carried over 700,000 tonnes from 2014. With consumption at 3.3 million tonnes, that leaves a surplus of more than 1 million tonnes.

But the government's failure to stockpile rice has left it at the mercy of traders, who are unwilling to sell when prices are rising daily, Naggari said.

With an eye to the overall rice surplus, the government has allowed exports to resume, but its failure to accumulate its own stocks has encouraged traders to hold back supplies in the expectation of rising prices while discouraging exports.

At the same time, the government has imposed a tariff of 2,000 Egyptian pounds ($255) per tonne tariff, which has kept exports low.

"One of our vital recommendations to the government before opening the door for rice exports in October was for it to stock up on around half a million tonnes," Naggari said. "But that didn't happen and hence we find ourselves in the situation we are in today."

Stockpile

Previous governments have stockpiled between 200,000 to 500,000 tonnes of rice, but Naggari said supplies minister Khaled Hanafi had refused to buy any reserves.

Critics say Hanafi ignored advice to stockpile rice, saying it was plentiful and he could buy it when he needed it. Hanafi and the Supplies Ministry did not respond to calls for comment.

Growing shortages and rising prices carry immense political risk for President Abdel Fattah al-Sisi, as tens of millions of the country's poorest rely on state subsidies for their basic food. Economic discontent helped stoke public unrest instrumental in unseating two presidents in the last five years.

"This month I couldn't get any subsidized rice at all," Cairo resident Sabrine said after returning from a government food outlet empty-handed. "They said we can take juice instead of rice — what are we going to do with juice?"

The more desperate the government gets in its attempts to buy rice, the more traders are likely to hold back. "The rice is there but it's being stockpiled, traders are storing it as they can see the prices go upwards and they are waiting to sell at the highest price," said one trader, who declined to be identified.

The government has this week tried to strike back, imposing penalties on suppliers it finds are hoarding, said Adham El Welely, managing director of Unicom for Investment and Development, a rice supplier that has been visited by government officials.

"We've had several visits in the past two days," he said. "They are just trying now to push you to sell or make some movement."