Egypt’s 2015 Record Local Wheat Purchases Point Toward Smuggling

Egypt, the world’s top wheat importer, usually fixes a domestic wheat price above global prices in an effort to encourage higher domestic production. But this practice has led to smuggling, where foreign wheat, mostly from Russia is labeled as Egyptian and resold at a higher premium.

Egypt’s inflated local price of up to $200 per ton above market price, and the country’s reported record local wheat purchase of 5 million tons this season, have led traders to believe that the persistent problem of smuggling has become even worse.

Traders believe that up to 1 million tons of the 5 million tons supposedly bought from local sources could in fact be foreign, and that up to 400,000 tons could be old Egyptian wheat from 2014.

In 2014, Egyptian bought 3.7 million tons of local wheat – but this year, the supply ministry has raised its target for local purchases to 5.3 million tons – 1.6 million tons more year on year. And although traders are claiming that Russian, Ukrainian, and possibly French wheat is being mixed in with locally sourced wheat, the ministry rejects the claims that smuggling is occurring, stating that all wheat is being thoroughly inspected by the agriculture ministry, the committee for supervision on imports and exports, and other government bodies to ensure against smuggling.

But without set grading and quality standards, there is little that can be done to stop the practice.