EGYPT – Egypt made an official trade agency responsible for inspecting imported wheat, a step that could end disruptions in the purchases of world’s biggest wheat buyer by replacing quarantine officials who rejected several shipments this year for containing the ergot fungus.
The General Organization for Export and Import Control, or GOEIC, will be the sole state body authorized to inspect wheat at shipping and arrival ports, according to a prime minister’s decree published Sunday in the government’s official gazette.
Until now, inspections have typically been carried out by six Egyptian officials, including two from the quarantine department, which rejected a shipment of French wheat from Bunge Ltd. and several other cargoes this year.
The decree is the government’s first announcement of a new inspection system that traders have said will probably be easier for them to navigate and may lead to lower prices.
Egypt was in a standoff with traders this year after twice enforcing a ban on cargoes containing ergot and then backtracking to adopt the international standard, which allows for shipments to contain up to 0.05 percent of the fungus.
The months-long dispute over quality standards damaged confidence among traders and resulted in canceled tenders, higher prices and fewer offers.
Egypt is closely watched by the global grain industry not just because it buys a lot of wheat, but also because its discloses details about the purchases, such as price and origin, providing a reliable benchmark for physical trading.
The process of sending a team of six officials to a port will be scrapped and replaced by a system in which the GOEIC can hire inspection companies on behalf of suppliers to scan wheat at the ports of origin and can assign local inspectors at Egyptian ports.
GOEIC is part of the Trade Ministry and responsible for testing imported and exported products to ensure they meet quality standards. It will also oversee inspection of corn and soybean imports.
Bunge Ltd., one of the world’s largest crop traders, said in February that it had begun legal proceedings over Egypt’s rejection of a wheat cargo.
Egyptian purchases in the wheat market are starting to pick up. On October 25, the country bought 420,000 metric tons of Russian and Romanian grain, the biggest purchase in two years.
It’s expected to buy 11.8 million tons in the current marketing year compared with 11.9 million in the prior season, the U.S. Department of Agriculture said in a report in October.