Egypt’s Parliament to Submit Proposals to Reform Wheat Purchasesby
Fact-finding committee to highlight need to improve system
Purchases from local farmers reported to have been inflated
An Egyptian parliament fact-finding committee will next week submit a final report with recommendations to improve how the government buys wheat from farmers amid allegations purchases have been inflated.
“The report will display the shortcomings of the local wheat program and suggest ways to reform the sector, including modernizing the procurement and the silos system,” Magdy Malak, head of the committee, said by phone. The report will be discussed in a public session on Monday, he added.
The push to develop the purchasing system comes after suppliers were said to have misreported inventories in order to gain bigger payments. Egypt annually fixes a price for local supplies above global rates to encourage farmers to grow the crop. The public prosecutor said suppliers delivered 221,800 metric tons worth a total of 621 million Egyptian pounds ($70 million) based on false documents, according to an Aug. 13 statement. It ordered travel bans and froze funds of 13 people pending investigations.
The world’s biggest wheat importer reported buying 5 million tons of the grain from local farmers last season, exceeding an initial target of 4 million. A year earlier, it said it bought 5.3 million tons after aiming to buy 3.7 million tons.
The current system encourages suppliers to bring in foreign wheat and label it as local grain, so it can be sold to the state for a higher price. In April, the government banned trading of imported wheat to prevent smuggling.
Wasted grain is a big problem for Egypt, where rising food prices intensified unrest that led to the overthrow of the government during Arab Spring protests in 2011. The country spends billions of dollars on grain each year through international tenders and from local farmers to provide subsidized bread for its 90 million people.
The General Authority for Supply Commodities, the state’s trading arm, announced a tender for Tuesday to buy foreign wheat for Sept. 21-30 shipment. It’s the third tender since the marketing season began in July.