Egypt said last week that in the latest procurement season it bought
nearly 5 million tonnes of local wheat from its farmers, the second
highest figure on record and well above the 3-3.5 million tonnes per
year farmers had delivered in the past decade.
Egypt's local wheat purchases thrown into question amid fraud allegations(Yahoo)
Egypt has
launched a government-led recount of its wheat silos after an unusually
high procurement figure spurred widespread fraud allegations from top
industry officials, traders and parliamentarians.
Egypt
said last week that in the latest procurement season it bought nearly 5
million tonnes of local wheat from its farmers, the second highest
figure on record and well above the 3-3.5 million tonnes per year
farmers had delivered in the past decade.
Wheat
millers and traders told Reuters the high figure was a result of private
suppliers misreporting their stocks to collect government payments for
highly subsidised local wheat not actually in their silos.
Those
millers and traders said they drew that conclusion based on their close
knowledge of the grain business in Egypt and monitoring of wheat
cultivation and procurement figures over the years. Reuters could not
independently verify their claim.
If the numbers
were misrepresented, the world's top importer of the grain may have to
spend more on foreign wheat purchases to meet local demand, even as it
faces a dollar shortage that has sapped its ability to import, industry sources say.
A
series of new regulations - from banning wheat transport across
governorates to requiring land documentation by farmers selling their
crops - was supposed to prevent cheap foreign wheat from being mixed
into subsidised local supplies.
The agriculture minister has said wheat mixing cost the country more than 1 billion Egyptian pounds ($112.6 million) last year.
But two private-sector millers and four traders told Reuters the new measures had all but failed to stem the losses.
Local
suppliers, they said, have circumvented the tighter rules by simply
misreporting the quantities in their storage sites. Reuters could not
confirm this.
Wheat silos in four areas outside
Cairo have already been found short in the range of tens of thousands of
tonnes of wheat over the past week, according to state news reports.
The
millers and traders told Reuters that these silos are an early
indication that more than 1 million tonnes of the reported local
procurement may not exist. Some in the industry put the figure even
higher.
"I don't think they (the government) collected more than 2.5 million (tonnes). The rest is just on paper," said Amr Elheeny, a board member of Egypt's Chamber of Grain Industries, which advises the supplies ministry on policy.
SWEEPING RECOUNT
To
secure food for tens of millions of its poorest and encourage
cultivation of a crop it considers strategic, Egypt spends billions of
pounds each year on a wheat and bread subsidy programme, part of which
entails paying farmers a higher set price for their crop.
This
high price has for years encouraged local traders - who act as
middlemen, buying wheat from scores of small-landholding farmers before
selling it on to the government - to mix cheaper imported wheat into the
subsidised local supplies.
Last year the mixing
reached a head when Egypt said it had procured a record 5.3 million
tonnes from its farmers, up to 2 million of which was believed to be
foreign, bought on the cheap following a collapse in global wheat
prices.
The supplies ministry has repeatedly denied such smuggling occurred although the agriculture minister acknowledged it publicly.
Almost immediately after this year's procurement figure was announced last week, scepticism began to mount.
A
lawyer representing a group of businessmen in the grains industry, who
say market manipulation cuts into their profits, filed a formal legal
complaint, seen by Reuters, to the country's general prosecutor.
It
asks for an independent committee to inspect storage areas to avoid the
possibility of squandering public funds intended to subsidise farmers.
Egypt
contracts with private-sector suppliers to store and deliver wheat to
government mills as the government lacks adequate capacity to stockpile
the grain.
"There is manipulation in the
quantity of local wheat being stored in most private-sector shounas
(open-air storage sites), which are falsely recording the amounts of
local wheat they have received (from farmers) several times over," the complaint filed by the lawyer, Mohamed Heikal, stated.
Supply Minister Khaled Hanafi rejected the allegation that numbers were inflated.
"This is a claim based on pure imagination, what is the evidence that he has to back this up?" Hanafi told Reuters in response to the legal filing.
Still,
one day after the filing of the legal complaint, Egypt's state grain
buyer, the General Authority for Supply Commodities, ordered widespread
inspections at wheat silos and storage areas. ($1 = 8.8799 Egyptian
pounds)
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