Egypt ruling to reinstate ergot ban renews wheat import uncertainty

Egypt’s state grain buyer expecting to import around 7 million tons of wheat in the fiscal year that began in July. Egypt has to ship in wheat from other producers since local production is not enough for the production of heavily subsidized bread, the country’s main staple food. (Reuters)

DUBAI/CAIRO: Egypt's agriculture ministry is awaiting instructions from the cabinet after a court ruling reinstating a ban on wheat imports containing the common ergot fungus, it said on Wednesday, renewing uncertainty over the policy.
Egypt, the world's largest wheat buyer, stunned grain markets last year when it began imposing a zero tolerance level on ergot, leading suppliers to boycott state tenders until it adopted a 0.05 percent tolerance level, a common international standard.
Tuesday's court ruling cancelled that decree, according to a lawyer that raised the case.
The agriculture ministry, which heads a quarantine service that has argued that even traces of ergot can harm plant and animal health, said any policy adjustment was up to the cabinet.
"The ruling was against a decision that was issued by the cabinet so we have to await directions from there to know whether it will affect our process," Hamid Abdel Dayem, spokesman for the ministry told Reuters. "Until then it is business as usual," he said.
Dayim said the court ruling, if applied, would be retroactive, suggesting it could affect cargoes that have already been contracted for under the old specifications that allowed for up to 0.05 percent.
If implemented, the court order would restore a strict import rule that suppliers have said is impossible to guarantee and which has them led them to add hefty premiums to their tender bids to account for the added risk of cargo rejection.
The flow of wheat in Egypt is politically sensitive because it is used by the government to supply a sprawling bread subsidy program relied on by tens of millions of Egyptians at a time of economic austerity.