Haj Ahmed, a farmer in Izbat al-Saidi in Damietta Governorate, which is historically famous for rice cultivation, said, “I have 42 years of cultivation. We pay the rent and the expenses we incurred in cultivating it.”
The state of ambiguity is increased by the statements of officials confirming that rice production in the current season was good enough for local needs and increases, in addition to preventing the export of rice in a way that enhances its sufficiency locally, but this contradicts people’s search for it in the markets, limiting its sale to a quantity of only two kilograms to the customer in some malls, and the arrival of Its market prices range from more than 20 pounds to 25 pounds per kilogram.
People have become two teams, one team that follows the change in the exchange rate of the pound against the dollar, and another team that follows the exchange rate of rice, as some said, and the embarrassment that the government faced due to the lack of rice caused it to indulge in more issuance of decisions that complicated the problem and undermined the recommendations of the last economic conference on competitive justice
In the same month last year, its price reached 9 pounds for bulk and 15 pounds for a packed one. Most importantly, it was available at that time, which is the abundance that the ministers of the economic group, especially the ministers of supply and finance, kept boasting about with the Russian-Ukrainian crisis by saying that despite the high prices of commodities, they are available, which is the abundance that contradicts The ABCs of food security, that the prices of commodities be within the reach of the purchasing power of the public, and not an abundance without the possibility of acquiring them.
Rice came to break the rule by its disappearance from the market, coinciding with private bakeries raising the price of unsubsidized bread by 50%, and bakeries reducing the weight of French bread and increasing its price, which also coincided with the climate conference and the ministers’ talk about agreements worth tens of billions of dollars for renewable energy and hydrogen projects. Green, while households are suffering from a wave of price hikes following the recent devaluation of the Egyptian pound against the dollar.
Some follow the exchange rate of rice
People have become two teams, one team that follows the change in the exchange rate of the pound against the dollar, and another group that follows the exchange rate of rice, some said. The embarrassment that the government faced due to the rice shortage caused it to indulge in more issuance of decisions that complicated the problem and undermined the recommendations of the last economic conference on competitive justice.
But what is causing the problem?
Farmers and owners of private rice mills answer that the government is the cause of the problem. For more than 30 years, farmers have been selling the rice crop to whoever pays them the appropriate price for the costs they incurred, by comparing the supply prices to the government or to private traders and private mills.
However, the government surprised everyone in late August by obliging farmers to supply a ton of rice for each acre, at a value ranging between 6600 and 6850 pounds per ton, depending on the type of grain, and the penalties for non-supply increased to imprisonment from 6 months to two years, and a payment of 10 thousand pounds for each ton that was not supplied. and confiscation of seized items.
However, this price did not satisfy the farmers, so most of them refrained from importing, and while the Ministry of Supply was hoping to collect 1.5 million tons, only about a quarter of a million tons reached it.
One of the farmers presents the components of the costs of rice cultivation, that it begins with plowing the land, then what they call “damsah” or “salting” i.e. leveling the land, then the stage of bidar i.e. throwing seeds in some places or following the seedling method in other places according to the abundance of water, then the stage of purity and then the stage of shoveling with the transfer of seedlings From dense places to light places to make a balance, the stage of clearing the land from weeds, then harvesting through a compound with which 3 workers work, and finally packing in sacks, weighing and transporting to the places of sale.
The imported price exceeds 10 thousand pounds per ton
Each stage requires workers whose wages are not less than 100 pounds for a work that takes 3 hours, and the amount of rice obtained by the weigher and the price of packing sacks other than the land rent, which means that the value offered by the government is unrewardable, and therefore the private sector offered to buy at 9 thousand per ton, which then increased to 10 thousands.
Last month, according to World Bank data, the price of a good ton of Thai rice with a 5% breakage rate amounted to approximately $431, the lowest quality with a 25% breakage rate reached $420, and good Vietnamese rice with a 5% breakage rate reached $409, which is equivalent to more than From 10 thousand pounds per ton at the current exchange rate of the dollar in Egypt for all types, in addition to the cost of transportation from those geographically distant countries and the costs of insurance on shipments.
And with the government repeating the method of forced pricing by setting the selling price per kilo in stores, for loose 12 pounds and for packed 15 pounds, rice has disappeared from stores that say the cost of purchasing rice is higher than that, and some of them asked for a deadline to sell their rice, or supply the Ministry of Supply with rice. At those prices, he sold it at compulsory prices, but the ministry only supplies rice to its consumer complexes.
Merchants stored rice in the hope of selling it at better prices in the future, especially since it is a commodity that can withstand storage. If there is a shortage of rice during its harvest season, its price is expected to rise in the coming months. Even if the ministry imports rice to bridge the gap, the prices of the imported ones will also be high.
The Ministry of Supply was forced to retract. After it had been preventing private sector speculators from collecting rice, it allowed them to do so on the condition that they get half the amount they collect, and retracted with regard to pricing by allowing the sale of luxury packed rice at a price of 18 pounds per kilo, 9 weeks after its previous decision. Set it at 15 pounds.
Get half of the stored barley rice
The ministry resorted to threatening those who store rice and issue a decision to the Council of Ministers as a strategic commodity, and that those who have quantities of rice, whether barley or white, must notify the supply directorates in the governorates of these quantities and their types.
However, if the quantities are of barley rice with agricultural possession, then the quantity to be supplied will be deducted from it, at the prices set by the government, which are less than 7 thousand pounds per ton. If the barley rice is without agricultural possession, half of it will be transferred to the Supply Commodities Authority at government prices. Under the supervision of the Supply Directorates, according to the contract prices between the Supply Commodities Authority and the approved speculators.
The question remains: Will the Egyptian government's measures succeed in solving the rice shortage problem with these police methods by threatening imprisonment and a fine of 100,000 to 1 million pounds, and confiscation?!
We agree with what the head of the Rice Division of the Federation of Industries said that security methods have proven to fail. When the Ministry of Supply stopped compulsory importation since 1991, things were going normally. In the 60's and 70's it was like paying half the costs of a lawnmower.
Providing seeds (seeds) at a rate of 60 kilograms per feddan, a post-paid mechanism service, and ammonium sulphate fertilizers according to the decisions determined by the Ministry of Agriculture, in addition to a bag of super phosphate per feddan and cash advances from the Agricultural Development Bank.
Examination of compulsory importation procedures in the seventies indicates more just government procedures, as the Ministry of Agriculture Resolution No. 62 of 1977 refers to the supply of rice, to specify a period of 25 days for farmers to challenge the area of rice, and the quality of the land that the Ministry treats on it, and after sorting the rice to determine the degree of Its purity, quality and weight also allow him to challenge the existence of arbitration between him and the sorting authority.
While there are no stages of these appeals with the recent compulsory supply decision, which specifies one quantity for all, while the supply decisions in the seventies determined different quantities according to the producing centers in the governorates, linked to the quality of the land in each of them.
It is strange that the ministry did not learn from the lesson of its failure in compulsory pricing of bread and determining its weights, according to Cabinet Resolution No. 21 of 2022 issued last March 20, and the threat to punish violators with a fine of not less than 100 thousand pounds and up to 5 million pounds, and having to amend it by a decision of the Ministry. Catering No. 144 of 2022 issued on October 26, reducing the penalty to a fine of 10,000 pounds only, while providing flour at a lower price to bakeries.
Also, officials have forgotten what they used to say that forced pricing leads to the emergence of the black market, pushes merchants to offer inferior goods, and can push producers to reduce production, as some drug companies do when they see that forced pricing is not feasible for them.
It also scares investors and makes them suspicious of the investment climate, and completely contradicts the reform program that will be implemented with the International Monetary Fund in the next 46 months.