Egypt’s local wheat purchases thrown into question amid fraud

CAIRO: Egypt has launched a government-led recount of its wheat silos after an unusually high procurement figure spurred widespread fraud allegations from top industry officials, traders and parliamentarians.
Egypt said last week that in the latest procurement season it bought nearly 5 million tons of local wheat from its farmers, the second highest figure on record and well above the 3-3.5 million tons per year farmers had delivered in the past decade.
Wheat millers and traders told Reuters the high figure was a result of private suppliers misreporting their stocks to collect government payments for highly subsidized local wheat not actually in their silos.
Those millers and traders said they drew that conclusion based on their close knowledge of the grain business in Egypt and monitoring of wheat cultivation and procurement figures over the years.
If the numbers were misrepresented, the world’s top importer of the grain may have to spend more on foreign wheat purchases to meet local demand, even as it faces a dollar shortage that has sapped its ability to import, industry sources say.
A series of new regulations — from banning wheat transport across governorates to requiring land documentation by farmers selling their crops — was supposed to prevent cheap foreign wheat from being mixed into subsidized local supplies.
The agriculture minister has said wheat mixing cost the country more than 1 billion Egyptian pounds ($112.6 million) last year. But two private-sector millers and four traders told Reuters the new measures had all but failed to stem the losses.
Local suppliers, they said, have circumvented the tighter rules by simply misreporting the quantities in their storage sites.
Wheat silos in four areas outside Cairo have already been found short in the range of tens of thousands of tons of wheat over the past week, according to state news reports.
The millers and traders told Reuters that these silos are an early indication that more than 1 million tons of the reported local procurement may not exist. Some in the industry put the figure even higher.
“I don’t think they (the government) collected more than 2.5 million (tons). The rest is just on paper,” said Amr Elheeny, a board member of Egypt’s Chamber of Grain Industries, which advises the supplies ministry on policy.