EGYPT – The government of Egypt has announced the decision to import milled and paddy rice to increase supply of the commodity as well as prevent potential price shock to consumers.
A June 13 USDA report indicated that grain hoarding, which resulted in the decline in the volume of rice being offered to the country’s subsidy procurement system could have been caused by the decision by the Ministry of Water Resources and Irrigation to reduce cultivated areas in January 2018.
As a result, prices for both paddy and milled rice increased averagely from February through March to April.
Following the announcement of the government’s decision to import rice, FAS reports that the price of local paddy rice fell significantly while that of milled rice varied depending on the quality.
As Egypt anticipates the August/ September harvest and imports commencing, this is expected to heavily impact the pricing for both paddy and milled commodity.
While supply in the marketing year 2019/20 is expected to fall, USDA Foreign Agricultural Service Cairo suggested that paddy rice from the US may be competitive to Egyptian millers.
Though the government stated that imported rice must be of high quality and meet consumer preferences, it did not indicate when or the quantity to be imported.
Both traders and millers welcomed the government’s decision alluding to the fact that it was vital to supplement subsidies so as to prevent price shocks.
U.S.-Origin Paddy Rice Export Opportunity
A decline in supply in the marketing year 2019/20 may provide opportunities for paddy rice imports from the US, but U.S.-origin rice is regarded competitive on the international market.
However, Egyptian millers are reported to have indicated that they could work with the U.S.-origin medium grade paddy rice (i.e., Jupiter variety).
USDA says that volumes that could be absorbed by Egypt range from 100,000 MT to upwards of 300,000 MT as milled rice imports have averaged about 86,600 MT since MY 2010/11.
Egypt imports milled rice mainly from India as it benefits from competitive prices and shipping proximity with lower freight costs.
It imports other types of long grain rice from South East Asia but paddy rice has not been imported in recent years due to the surplus of the local rice production.
Egypt’s Rice Production, Consumption, and Trade
FAS Cairo forecasts Egypt’s marketing year (MY) 2018/19 milled rice production to drop to 3.3 million metric tons as planted area is forecast to drop to 588,000 hectares.
This was after the Ministry of Water Resources and Irrigation (MWRI) on January 26, 2018 reduced the allotted rice cultivated area for MY 2018/19 from 451,920 hectares to 304,080 hectares.
Rice consumption is projected to decline as a result of increasing retail prices and availability of other more affordable carbohydrate sources (i.e., mainly lower-priced pasta).
Imports for the year will rise to 200,000MT to compensate for an anticipated reduction in local rice production.
On the other hand, exports remain prohibited in the country.