Egypt's move to ditch government wheat inspectors upsets traders

Tuesday 27-09-2016 08:42 PM

Wheat harvest - Reuters

By Reuters

CAIRO/ABU DHABI, Sept 27 (Reuters) - Egypt has hired Swiss company SGS to inspect wheat cargoes before they are shipped, replacing government experts who have done this in the past, the agriculture ministry said on Tuesday.

The move has caused confusion among trading companies which have relied on the government quarantine inspectors to check the quality of the wheat before shipment to Egypt.

Egypt, the world's largest wheat buyer, has just reversed a zero-tolerance policy on the common grain fungus ergot after this effectively cut the country off from global grain markets. It has adopted instead a common international standard that permits up to 0.05 percent in imports.

Ergot can cause hallucinations when consumed in large amounts but is considered harmless in low quantities.

Egypt also decided to scrap the process of sending a team of six government officials to the port where the wheat was being shipped from. It will use a private company - SGS - instead to handle the inspections.

Agriculture spokesman Hamed Abdel-Dayem told Reuters that SGS was chosen for this role, but it was not clear whether the government's own agriculture quarantine inspectors would continue to play a part.

"SGS is the company assigned to deal with the inspection. That means it will have the freedom to see how it will carry out its work, which might include hiring or consulting with experts -- we don't yet know," Abdel-Dayem said. He did not give a reason for the change to a private company.

Abdel-Dayem also said that quarantine regulations would be revised to come into line with the 0.05 policy, though he did not specify when.

The decision to scrap government inspectors has upset traders, who said having these government quarantine inspectors sign off on wheat before it set sail reduced the risk that cargoes might be rejected on arrival in Egypt.

"The delegations (inspectors) work better as there are no surprises at discharge ... but now we have to wait for arrival surprises," one Cairo-based trader said.

The country's state grain buyer GASC purchased 240,000 tonnes of Russian wheat one day after the lifting of the ergot ban, but the number of participants in the tender was low because traders said they required clarity on how their shipments would be inspected.

After initially receiving no bids in the tender, traders said GASC assured them that the usual quarantine inspections could be restored, a pledge the government has backtracked on, one Cairo-based trader said.

"The atmosphere here is very bad and nothing is clear," he said.

GASC was not immediately available for comment.

Trading companies were told last week by the agriculture quarantine body they could also no longer hire Egyptian government inspectors to guarantee privately purchased cargoes from abroad, one supplier barred from doing so said.

"This moves my risk to the port of discharge, and this is a big problem for any trader," the supplier said.

Agriculture quarantine head Ibrahim Imbaby earlier in the year had urged trade companies to use the government inspectors to clear their shipments, a move he said would greatly reduce risk of rejection.

(Reporting by Maha El Dahan and Eric Knecht. Editing by Jane Merriman)

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