Egypt Government Rejects Fungus Ruling That Vexed Wheat Traders

(Bloomberg) -- Egypt’s government lodged an objection to a court ruling that confused traders over inconsistent standards for wheat imports by the world’s largest buyer.

The government is sticking to the international standard of allowing as much as 0.05 percent ergot -- a common fungus that’s toxic in high quantities -- in shipments of imported wheat, Supply Minister Ali El-Mosilhy said in an interview in Cairo. A court ruling last week banned imports of wheat containing any trace of ergot.

Egypt drew fewer offers than usual in a wheat tender that closed on Thursday, with two trading houses saying they refused to participate because of a lack of clarity over grain standards. Different authorities in Egypt have issued conflicting rules for tolerance of the fungus, causing sporadic halts in imports to the most populous Arab nation.

“We are the biggest importer of wheat in the world and must be in line with international standards,” El-Mosilhy said. “We respect the administrative court, but this ruling will not change in any way our working mechanism.” 

The administrative court is expected to consider the government’s objection to the latest ergot ruling as early as this week, El-Mosilhy said. The government is working with health, agricultural and other authorities to produce clear, written guidelines on the import process to eliminate confusion, he said.

Blanket Ban

Last week’s court ban on imported wheat with ergot raised concern that agricultural quarantine inspectors, who have pursued a zero-tolerance policy, could reject or delay shipments agreed to by the General Authority for Supply Commodities, the state grain importer.

The dispute between the Supply Ministry and quarantine authorities over the acceptable level of ergot dates back about two years when local news reports fanned worries that contaminated bread sold by state bakeries could make people sick.

Wheat products are an explosive political issue in Egypt, where millions of people rely on state-subsidized bread. When Egyptian inspectors halted cargoes suspected of ergot contamination, traders responded by raising prices to reflect the increased risk. It took a decree from the prime minister confirming the 0.05 percent policy to resolve the standoff.

But markets were thrust into confusion again in recent months after cargoes were detained for weeks because inspectors said they contained banned poppy seeds. The cargoes were later cleared after tests found the seeds were not narcotic.

Disgruntled Inspectors

Keen to secure the confidence of suppliers, El-Mosilhy promised a new era of transparency. He said the new guidelines would be issued in seven to 10 days and he was seeking buy-in from the different authorities involved in the import of wheat to avoid future challenges.

The guidelines will state explicitly who carries out inspections, the method used to take samples and which accredited laboratories can test the samples. It will also lay out the procedures that are carried out during site and laboratory inspections, at what point the prosecution becomes involved and who notifies prosecutors.

“Defining terms means that whether you read it or I read it, the result is the same so you won’t get a strict inspector or a lenient one depending on their interpretation,” El-Mosilhy said.

Once the guidelines are agreed on, inspections can potentially be carried out by export authorities in a source country without the need for Egypt to send its own inspectors to check shipments before they depart.

Traders have said that Egyptian quarantine inspectors, disgruntled that they are no longer sent abroad to inspect cargoes, were looking for other ways to pressure the government and have blamed them for confusion over poppy seeds in cargoes.

El-Mosilhy said that inspectors who weren’t happy with the new rules were free to transfer to a different department, indicating that he wouldn’t back down.

“Europe protects Europeans. America protects Americans. Every country protects its citizens and all of them allow up to 0.05 percent of ergot in wheat, so we cannot be more royal than the king,” he said.

To contact the reporters on this story: Abdel Latif Wahba in Cairo at alatifwahba@bloomberg.net, Lin Noueihed in Cairo at lnoueihed@bloomberg.net.

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Bruce Stanley

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