- Cerealcom Dolj has asked Egypt to return its tender deposit
- Trader won’t load 63,000-ton wheat cargo on ergot dispute
Romanian agricultural trader Cerealcom Dolj has asked Egypt to return about $500,000 it put down as guarantee for wheat supplies it can no longer ship due to a dispute over the level of ergot fungus allowed.
Cerealcom’s agent in Egypt wrote to the state-run General Authority for Supply Commodities last week on behalf of the Romanian trader requesting to get back the amount, known as the performance bond, after Egyptian inspectors at the port of Constanta insisted on supplies free from ergot, said Mihai Andrei Anghel, responsible for international trading at the company. Egypt agreed to buy 63,000 metric tons of wheat from Segarcea-based Cerealcom in July, before reinstating a ban shipments containing the naturally occurring fungus.
Egypt, the world’s largest wheat importer, has gone back and forth this year over whether to allow any ergot in grain cargoes, sowing confusion among traders and leading to fewer offers and higher prices at its tenders. GASC had to cancel its last international purchase in August after getting only one offer as traders balked at stricter rules. The authority usually gets more than 10. Ahmed Youssef, GASC’s vice chairman, didn’t answer a call seeking comment.
“We will always stick to the contract terms and we had the intention to perform, but weren’t allowed to," Anghel said by phone Tuesday. “Since it was not our fault, we consider that we should receive the performance bond back," he said.
Egypt, which buys wheat to subsidize bread for its more than 90 million people, took a U-turn on its policy to allow ergot at the end of last month, saying it would no longer authorize imports of wheat containing traces of the fungus. The decision reversed a previous stance to allow international standards of as much as 0.05 percent, a level that the United Nation’s Food & Agriculture Organization in Rome said didn’t present a threat. Ergot can be toxic in high amounts.
Cerealcom started loading the vessel on Aug. 27, a day before the zero-ergot policy was reinstated, Anghel said. Egyptian inspectors then asked the company to discharge the grain due to ergot. The company unloaded the ship and took it to another berth, where it tapped grain from different stockpiles before inspectors asked for it to be removed once again. The trader then decided to refuse to proceed with the shipment.
“Cerealcom Dolj’s wheat was not rejected, it was Cerealcom Dolj that declined to deliver the goods under terms other than the ones initially agreed within the contract," he said.
The Romanian trader, whose cargo was tested for ergot levels 100 times lower than international standards, said it’s still waiting for a reply from GASC and it will decide on further action depending on the state-run buyer’s response. Supplying wheat with zero ergot is almost impossible, Anghel said.
“We are not going to participate in the tenders until they forget about this unusual law requiring zero ergot,” Anghel said, adding that Cerealcom was still unsure if it would go back to participating if Egypt went back to accepting international standards as the nation is constantly changing its rules.