According to the supply ministry, the Egyptian government has agreed to pay private mills EGP 6.3 ($0.3784) per kilogram for white rice, which the government would then sell at its outlets for EGP 6.5 per kg thereby ending a potential standoff between itself and the rice farmers. Farmers last year had refused to sell government mills their crops despite a plentiful harvest over the buying price, arguing that the buying price of EGP 2,400 ($270.27) per tonne of rice paddy was too low, which had led to millions of tonnes of paddy sitting idle since the harvest. Therefore the long-held paddy stocks forced up local rice prices and intermittently made supplies at government outlets scarce, forcing state grain buyer GASC to import 75,000 tonnes of medium grain rice despite a local surplus and a hard currency shortage.
According to the United States Department of Agriculture report, Egypt’s annual consumption of rice is about 3.95 million tonnes whereas production is about 5.1 million tonnes. The new agreement means that private mills will instead buy up the paddy at the current market price of about EGP 4,200 before selling it on to the government. Mostafa El-Naggari, head of the rice committee of Egypt’s agricultural export council, estimates that about 3.9 million tonnes of rice paddy remains in the hands of farmers and traders as a result of the standoff. Any subsequent jump in the local paddy price, however, could make the recently struck deal untenable given the tight profit margin agreed to by the private mills under the new deal. “If the price of paddy jumps 100 or 150 pounds, the mills will not be able to distribute it,” Naggari warned.