After wheat, why does the Egyptian government require farmers to supply rice?

With fears of a food crisis and high prices due to the war in Ukraine and global inflation, will the policy of compulsory supply of strategic agricultural crops approved by the Egyptian government in wheat first and then rice now succeed?

Cairo -

The Egyptian government has reintroduced the policy of compulsory supply of rice for the first time since the liberation of the agricultural sector in the early nineties of the last century and the introduction of market mechanisms, and forced farmers to supply specific quantities.

A few days ago, the Egyptian Minister of Supply Ali Al-Moselhi issued a ministerial decision to organize trading and dealing with local barley rice for the 2022 harvest season, which began on August 25 and will continue until December 15.

The decision stipulated the obligatory import of one ton of barley rice for each cultivated acre (equivalent to 25% of the productivity of an acre) for the Supply Commodities Authority, with a total target of 1.5 million tons of barley rice during this year's supply season.

The Ministry of Supply justified the compulsory re-supply of the rice crop with the government's desire to support the strategy of enhancing food security of basic commodities, in addition to achieving self-sufficiency in rice, and securing the needs of ration cards of this strategic commodity.

Rice is a main meal for Egyptians, and one of the food commodities that the government is disbursing on about 23 million ration cards among some subsidized commodities, such as oil, sugar, pasta and tea, in addition to subsidized bread.

Fine rice was priced at 6,600 pounds per ton, and broad rice was priced at 6,850 pounds per ton (a dollar equals 19.19 pounds), and the ministry described the supply prices as rewarding and bearing a fair profit margin for farmers, and that it came after calculating the actual cost.

What if the peasants refused to deliver?

The farmer shall be penalized as follows:

Not to allow him to plant rice the following year.
Non-disbursement of subsidized fertilizers and agricultural pesticides for one year to all types of crops.
The value of undelivered barley rice is calculated at 10,000 pounds per ton and he is obligated to pay it.

The total cultivated area of barley rice this year amounted to 1.5 million feddans, and the productivity of one feddan reached 4 tons, with a total productivity of 6 million tons of barley rice, and the target is to supply 1.5 million tons on behalf of the Supply Commodities Authority.

Government motives and troubles for farmers

The Egyptian government's tendency to return to the compulsory supply of some strategic agricultural crops comes against the backdrop of the outbreak of the Russian-Ukrainian war, which affected Egypt's sources of some food grains such as wheat and corn, and their prices rose dramatically.

This coincides with the government's desire to secure its stock of grain in general and provide it on the ration card for citizens, according to Gamal Siam, professor of agricultural economics at Cairo University.

Siam - speaking to Al Jazeera Net - believes that the price set by the government for a ton of rice-barley remains low compared to the world price, noting that many farmers own between one and three acres only, which means that they will pay an implicit tax;

Because they bear the difference between the two prices.

He believed that the role of the farmer appeared strongly with the exacerbation of the crisis of shortage and high prices of food commodities globally, so the state must support him in a way that achieves a fair profit for him, and ensures his continuity in the agricultural sector, especially that the self-sufficiency rate does not exceed 40%, in light of the pressures on water sources and the area of agricultural land which did not witness an increase consistent with the population increase.

Siam criticized the violating farmers' threat not to allow them to grow rice, indicating that this punishment harms the land before the farmer;

Because rice cultivation is mostly located in the delta and its north, in order to preserve its lands from the salinity of sea water, because rice is a water crop.

Egyptians rely on rice as a nearly daily meal (Reuters)

Between self-sufficiency and helplessness

During the past years, Egypt's production of the strategic rice crop varied between deficit and self-sufficiency;

Because of the restrictions imposed by the government on rice cultivation in order to rationalize water consumption, and the growing fears of building the Grand Ethiopian Renaissance Dam, where the agricultural sector consumes 75% of the country's water imports.

Here are some clues:

On December 30, 2020, Egypt achieved self-sufficiency in rice with a production of 6.5 million tons, and the strategic reserve of rice increased to 11.1 months, according to a cabinet statement.
In August 2021, Egypt's production of rice reached 4.8 million tons annually, with a self-sufficiency rate of 79%, according to the Central Agency for Mobilization and Statistics.
Last Sunday, the Chamber of Grain Industry of the Federation of Industries announced achieving self-sufficiency in local rice throughout the year, with expectations of a decline in prices during the current September, and the price of a kilo ranged between 15 and 19 pounds.

rice after wheat

This is not the first time that the government has obligated farmers to supply a specific crop to secure the strategic reserve of it in its stores. In March, it obligated them to supply 12 ardebs (one ardeb equals 160 kilograms) for each acre of wheat planted to secure the country’s needs for subsidized bread, but the price came Much lower than the world price, despite the high quality of Egyptian wheat.

In order to ensure the supply of wheat to its granaries, the government obligated farmers not to dispose of any quantities without a permit, and approved several measures;

Such as allocating a minimum for sale, prohibiting selling to third parties without a license, and pledging not to disburse subsidized fertilizer for the summer planting season to those who supply at least 60% of their crop, and imprisonment for violators.

The government had hoped to collect about 5.5 million tons, down from the 6 million tons it aimed to collect, to fill the deficit in wheat imports arising from the Russian-Ukrainian war, but with the end of the season, it was unable to collect the targeted quantities.

In press statements, the Minister of Supply said that it is expected to receive 4 million tons of local wheat by the end of the current season, noting that about 3.9 million tons of wheat have been received so far.

The minister stressed that the strategic reserve of wheat is sufficient for 7 months, oil is sufficient for about 7 months, and sugar is sufficient for about 6 months, adding that there is self-sufficiency in rice besides the start of the rice harvest season.

Does the government reap the target of rice?

The former advisor to the Ministry of Supply, Dr. Abdel Tawab Barakat, expected that the government would fail again to achieve the target of the rice crop, as happened with wheat.

"Because it is less than the global local market price, and does not take into account the increase in production costs and the devaluation of the pound, so farmers will prefer to sell the bulk to traders," as he put it.

The expert in agriculture explained that the farmer at these prices supports the state from his money and labor instead of the state supporting him, and it encourages him to continue farming so that the food gap does not increase in a country with a population of more than 103 million people.

Barakat called on the Egyptian government to take into account the conditions of farmers in light of high production prices such as fuel, fertilizers, seeds, pesticides and labor, which constitute a financial burden on them, and not to exploit them as the weakest link in the agricultural and food production chain.

Achieving self-sufficiency

On the other hand, the head of the Chamber of Grain Industry in the Federation of Egyptian Industries, Representative Tarek Hassanein, praised the "new strategy for supplying rice, as happened with the wheat crop," and considered that the government price is fair based on the actual cost.

He explained in televised statements that "the farmer will make 8,000 pounds, per acre, which costs 15,000 pounds, according to the statistics of the Ministry of Agriculture, and that he will earn about 50% of his capital, to provide a reserve for ration cards that is sufficient throughout the year."

Hassanein stressed that this step would achieve self-sufficiency for the government, and it would not need to import rice from abroad throughout the year after obtaining one and a half million tons of rice from farmers.

That is about 25% of the total production.