Chicago | Reuters –– Egypt, the world’s top wheat importer, faces US$860 million in extra costs and lost export opportunities this year because of “unorthodox agricultural measures,” including a zero-tolerance policy on ergot fungus in wheat, the U.S. Department of Agriculture said Thursday in a report.
The report, from a USDA attache in Cairo, criticized the government’s policy on ergot, which has upset global grain trading and sparked a legal challenge against the government from global trader Bunge Ltd.
It also said Egypt will expend up to $100 million because of unusual inspection and sampling policies for wheat shipments and other “burdensome tender requirements” that make government wheat imports more expensive (all figures US$).
The estimates show how government policies that are out of step with international standards can hamper imports of critical foodstuffs and lead to higher prices for consumers.
The end result of some of Cairo’s agricultural policies, the USDA attache said, “is higher food prices paid by Egypt’s overburdened consumers, in complete dissonance with the government’s efforts and trumped up claims that it’s trying to make food more affordable.”
Earlier this year, Egypt rejected wheat it had contracted for import after the country’s agriculture quarantine authority began to apply a zero tolerance policy for ergot, a common grain fungus.
The ministries of supply and agriculture later assured global traders they would follow a 0.05 per cent tolerance policy, a widely applied international standard. But the pledge has been called into question after more rejections.
In February, Bunge said it had launched legal proceedings over a rejected cargo of French wheat, highlighting uncertainty among suppliers.
A company spokeswoman could not immediately be reached for comment on Thursday.
Wheat can be a matter of life and death in Egypt, where the government runs a bread subsidy program that feeds tens of millions of poor people. Wheat shortages have triggered riots in the past, and when Egyptians rose up against autocrat Hosni Mubarak in 2011 one of their signature chants was “Bread, freedom and social justice.”
Egypt also faces added costs from an “excessively restrictive” zero-tolerance policy on ambrosia, a weed, in crop shipments, according to the USDA report, titled “What’s the matter with Egyptian agricultural trade?”.
Quarantine authorities rejected four U.S. soybean cargoes in the first quarter of 2016 due to ambrosia, it said.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago.