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Fraudsters fleece Egypt using foreign wheat

egypt wheat fraud

Top wheat importer Egypt's decision to increase the price premium paid to its own farmers has given fraudsters a golden opportunity to pass off cheap foreign grain as locally grown and profit at the country's expense.

June 2, 2012 8:00 by

Traders and a government official admitted that despite efforts to check whether local farmers really grow the grain they sell, the problem of disguising imported wheat to profit from the payments will remain or worsen this year as the rewards grow.

“In reality it happens every year, this year it’s happening even more because the spread is bigger (between cheap origins andEgypt’s local wheat price),” a trader said.


“It was Ukrainian, some Russian, some Argentine, but mainly Ukrainian this year.”


Evidence of the problem comes from the fact that purchases of local grain remain brisk even though a shortage of diesel for farm machinery since the start of the year should, in theory, be holding back local output.


Egypthas bought 1.1 million tonnes of local wheat so far in the 2011/2012 season despite the diesel shortages, the supply ministry said last week.


Local procurement increased in 2011 to 2.6 million tonnes from 2.1 million tonnes a year earlier.


And withEgyptraising the price it pays for local wheat in October to 380 Egyptian pounds ($63.60) per ardeb (140 kg) from 350 pounds during the last season, traders said wheat from several origins may have been imported since to be sold onto the government at a profit of around $100 per tonne.


Wheat purchased by the government is used to make subsidised bread that allows millions to survive on low pay. Egyptians pay as little as 5 piasters (less than one U.S. cent) to buy saucer-sized flat loaves.


Another trader said that the amount of imported grain, for whichEgyptwould pay the higher local price, could be as much as 700,000 tonnes.


“Egyptusually produces between 2 to 2.3-2.4 million tonnes of wheat,” the trader said.


“The last 2-3 years they’ve been talking about 3 million tonnes so you can kind of tell how much is coming in.”


“My own estimate (of foreign wheat sold as local) would be a minimum of 300,000-400,000 tonnes, up to maybe 600,000-700,000 tonnes,” the trader said.

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