Egypt yearly report

Rice is a major summer crop in Egypt, occupying 10 percent of Egypt’s total crop area. The entire rice crop is irrigated. Rice requires a special irrigation regime and its cultivation is largely restricted to the northern part of the Delta. It is often planted on low quality land where the soil is fairly saline and has varying degrees of productivity. A limited amount of rice is also grown in the middle Delta and in Upper Egypt. Farmers normally exceed the area targeted by the government for rice cultivation despite the prospect of fines (LE 600/ feddan) for those who violate their targeted areas. This is due to the much higher profitability of rice cultivation compared to other traditional summer crops (i.e. corn and cotton) and the higher potent for exporting the crop. The government is trying to restrict the area of rice and increase the area of corn to save water. Consumption: Egypt consumes medium grain rice and rice consumption is relatively constant, as consumers continue to prefer wheat-based products. Rice stocks in MY 2009/10 are declining due to the noticeable decrease in production compared to MY 2008/09. There is no stock-holding policy, with levels reflecting pipeline supplies. Buyers tend to avoid holding stocks and push them to the export market. Trade: Egypt is a net rice exporter. Exports in MY 2009/10 should recover slightly and reach 485 TMT. The government objective is to export between 500-600 TMT in 2009/10. The total quantity of rice exported through the end of February 2010 was 230 TMT. The leading import markets are: Syria (26%), Turkey (13%), Belgium (8%), Jordan (8%), Saudi Arabia (6%), and Sudan (5%). However, in MY 2010/2011, exports are forecast to decline even further as a result of government restrictions on the area cultivated with rice and the increase in local consumption. During MY 2008/09 rice exports were 452 TMT, much lower than previous years. On February 4, 2009, the Minister of Trade and Industry issued a decree which removed the ban on rice exports as of February 21, 2009. This decree (no.105) permits Egyptian rice to be exported provided that the exporter delivers through a tender an amount equal to the exported amount to the Government of Egypt and pays the government LE 1,000 per MT in export taxes. In the past, there were government to government deals with Jordan, Syria, and Sudan, but since the government set a system of tying the rice exports to the new tender system, only a shipment of 20 TMT was exported to Turkey through the Turkish Grain Board (TMO) to stabilize the prices there. There was an attempt to conclude a deal with the Syrian government but it stopped when this new system was introduced and because of the political tension between the two countries. Puerto Rico has imported 38 TMT of rice from Egypt in June 2009. Most of the EU (mainly Belgium) imports broken rice from Egypt. Small quantities of high quality name-brand rice are imported by up-scale supermarkets in Europe. Policy The removal of the export ban occurred much earlier than expected. The ban, which began on April 1, 2008 ended in Feb 2009. At the time the ban was implemented, rough rice prices had reached about $430 per ton, compared to about $200 at the beginning of the export season in October 2007. Similarly, export prices for milled rice jumped from $450/ton to $750/ton and by the end of 2009 it was about $ 680/ton. The decision to suspend exports had an immediate impact on prices, with rough rice prices dropping almost $100 per ton to $330 on the local market. This ban forced many countries in the region to source rice from other countries, including the United States. The government-owned rice mills are protesting the export quota auction scheme because they fear that they will lose money if they successfully bid on the export quota, but don't have an export contract locked in. At the same time, if they have an export contract but cannot obtain the export quota they will be in default to the importer or forced to buy the export quota at a premium from a successful bidder. The private trade is better able to operate in this environment and does not have any problems with the export quota auction except that Ministry of Trade and Industry may not reveal the quantity of quota available or the minimum bid. The quota ranges from LE 600 to LE750/ton. There has been some contraband exporting of rice as salt or broken rice, especially to Lebanon. According to the exporters, in order for the Egyptian government to maintain enough quantities for local consumption and, at the same time, reduce the area cultivated with rice, the government is planning to tighten the export restrictions and limit the export licenses issued. Export Trade Matrix Rice, Milled Year 2008/09 Exports to: U.S. 130 Syria 136,415 Libya 24,312 Turkey 59,630 Belgium 35,456 Saudi-Arabia 25,216 Sudan 27,450 Jordan 39,612 Ukraine 11,435 Puerto Rico 38,000 Lebanon 10,654