News
09.06.2009
Egypt suspends contracts with Egyptian traders
Egypt suspended all contracts with private grains importer Egyptian Traders Co on Sunday and told the firm to re-export a Russian wheat shipment quarantined over quality concerns, state media said. Egypt also ordered the firm to repay $9.6 million to the main government wheat buyer for the 52,500 tonne shipment the government has held since last month at the Red Sea port of Safaga, a statement from the Egyptian prosecutor's office said.
Wheat shipments from Russia have been under intense scrutiny in the most populous Arab country since mid-May, when the prosecutor ordered a probe following the detection of dead bugs and impurities in Russian wheat imported by Egyptian Traders. Over 100,000 tonnes of Russian wheat imported by various suppliers have since been reported held in ports in Egypt, one of the world's top wheat importers.
"The public prosecutor ordered officials of the Egyptian Traders Company, which imported this shipment, to re-export all 52,500 tonnes of wheat to outside the country," the Egyptian prosecutor's office said in a statement. It added that Egyptian Traders, a private trading company, should "return its value of $9.6 million to the General Authority for Supply Commodities (GASC)".
The prosecutor's office said it took the decision after investigations by prosecution, health and agriculture authorities into whether the wheat was fit for human consumption revealed conflicting results. State news agency MENA said the Trade Ministry later decided on a "cessation of dealing with Egyptian Traders Co in all its contracts" until the probe ends. Egyptian Traders, which earlier said it respected the decision to re-export the wheat from Safaga, said it had not been officially notified of the suspension of its contracts.
ANOTHER SHIPMENT SEIZED Egypt's Trade Ministry also ordered the seizure on Sunday of an additional 56,000 tonnes of Russian wheat at Safaga imported by Egyptian Traders but not yet unloaded at the port, MENA reported. Cairo has bought nearly a quarter of the wheat exported by Russia in the current marketing year and Egypt's Trade Ministry has said it had no plans to stop importing Russian wheat or change the specifications for its purchases.
But the scrutiny over Russian wheat has left importers apprehensive about the status of their future shipments to the North African country of 76 million people, which depends on imported wheat to make subsidised bread for the poor.
"Of course this is bad news because it just means importers will think twice before sending anything to Egypt as they don't know what might happen to their shipment," said one Egyptian wheat trader, declining to be named due to the sensitivity of the matter.
The Russian Grain Union has called the seizures of Russian wheat provocative and an attempt to lower prices offered by suppliers, and Russia's top agriculture official defended the quality of the grain it sends to Egypt. "We send high-quality grain to Egypt and these are insinuations. This is a deliberate delay which has nothing to do with us," First Deputy Prime Minister Viktor Zubkov told a news conference in St. Petersburg.
Egypt's agriculture minister said the prosecutor's decision to re-export was final but the problematic shipment was not a reflection of a wider issue with wheat imports.
"We can't generalise. We are talking about one shipment compared to thousands of shipments that come in," Agriculture Minister Amin Abaza told reporters. Egypt has bought more than 5 million tonnes of overseas wheat through GASC in the current fiscal year in addition to nearly 3 million tonnes procured locally.
Reuters
