CAIRO: The Ministry of Trade and Industry this week announced plans to curb its ban on exporting broken rice, while also extending its ban on cement exports.
The extension of the cement ban is part of a broader strategy the ministry seems to be employing to boost supply locally to meet an increasing domestic appetite.
In deciding to extend the ban, Minister Rachid Mohamed Rachid took an aggressive tack, announcing that the ban would stretch on to October 2010.
“The decision was made, said the Ministry in a press release, “in light of the continued increase in the demand in the domestic market, which has increased by 26 percent.
Demand for cement has remained healthy despite the slowdown in the global economy. Part of the reason for this, say experts, is because steel prices fell dramatically and therefore boosted the construction industry.
While renewing the ban that was set to expire in the middle of the month, the ministry reiterated its commitment to keeping domestic supply high and prices stable.
“The increased demand in the domestic market had led to the introduction of several measures to ensure that the local production meets the demand including green-lighting cement imports. Egypt’s construction sector has grown by an estimated 20 percent despite the international economic crisis. It is expected that cement imports will exceed 300,000 tons, the ministry wrote in the release.
The government last month passed a measure allowing the import of cement from abroad. It also changed the holding period for imported cement from 30 days to 3, an effort to streamline the process and encourage international companies to compete in Egypt.
The Trade Ministry also mandated that all companies print the factory price of cement on each bag in order to help prevent market manipulation.
Prices spiked dramatically at the beginning of the year and showed signs of leveling only in April of this year. Prices increased 23 percent in January – versus the same month a year earlier – 18.8 percent in February, and 27 percent in April.
In a scaling back of Egypt’s rice export ban, Minister Rachid green lit the exporting of rice fragments and broken kernels. The ministry reiterated, however, that the broader ban on exports would remain in place.
Despite loosening the ban, the government appears eager to keep a tight handle on the process so as not to risk domestic price inflation.
“According to the ministerial decree, the size of the fragment and broken kernels cannot exceed more than half the length of a full grain of rice and is to be exported raw and unprocessed, the ministry wrote in a press release.
The ban was originally implemented in March of last year as a result of domestic unrest over soaring food prices. Clearly still wary of the impact that high prices have on low-income segments of the population, the government has imposed LE 300 per ton tax on the exported fragmented rice.
But this is the second time this year that the government has loosened its grip on the rice export market. In February of this year, the government decreed that companies could export as much rice as they sell to the General Authority for Supply and Commodities (GASC), which purchases rice on behalf of the government subsidy program.
The ministry attached a LE 1,000 tax on those exports.
But this led to some amount of price manipulation, with companies distorting prices to earn export licenses, according to experts.
“We believe the Minister’s decision aims to undermine some of the manipulative practices by the traders while maintaining the ban on rice exports for as long as possible, to help curb food inflation, wrote investment bank Beltone Financial in a statement. “The second half of the year is usually a time when inflationary pressures rise with the increased consumption in summer, Ramadan and religious holidays.