Indian Wheat Exports to Egypt May Face a Difficult Challenge, as per Traders

Despite the fact that Egypt has added India to the list of countries from which it purchases wheat, exporters are concerned that Cairo's sanitary and phytosanitary measures, which are set to take effect in 2019, will be a major impediment to shipments.

Exporters are concerned about more than just phytosanitary measures, as trading with Egypt will be difficult, with the possibility of the importer at the delivery port playing spoilsport. They believe that some of the conditions are stacked against India.

"One of our traders in Dubai says you have to negotiate with Egyptians while holding your gun." It's a skill that the Russians have mastered. "No one knows how Indians will handle this," said a trade analyst based in New Delhi.

On April 15, Egypt added India to its list of wheat-buying nations, and New Delhi stated that it would try to export three million tonnes (mt) of wheat this fiscal year. India is attempting to export at least 10 million tonnes of wheat this fiscal year, up from an estimated 7.85 million tonnes last year.

Aside from including India on its purchasing list, Egypt has included a provision for "other origins" in which the protein content in wheat should be 11.5 percent, though it could be acceptable at 11%. In comparison to Ukraine and Russian wheat, which have protein contents ranging from 12 to 12.5%, Indian wheat has a protein content ranging from 11.5 to 12.5%.

Egypt relied on wheat from these two former Soviet Union members until Russian troops invaded Ukraine on February 24. Wheat prices had also skyrocketed as a result. Foodgrain prices have risen 37% since the beginning of the year, with the majority of the gains occurring after the outbreak of the war.

"Phytosanitary conditions are difficult. There are two problems with this. "A phytosanitary declaration alone may not be sufficient," said Rajesh Paharia Jain, a Delhi-based exporter.

Mandatory Compliance

When asked about the traders' concerns, official sources stated that the phytosanitary conditions are "country-specific requirements, and compliance is mandatory."

Obtaining phytosanitary certificates (PSC) from the National Plant Protection Organization (NPPO) is a standard procedure, and the NPPO will do so if exporters send their products in accordance with the quality requirements of the importing countries. According to the sources, the Commerce Ministry will assist any exporter who encounters a problem.

Because the condition of import is not "port of loading," there is always the risk of the consignment being rejected at the port of delivery, according to Jain. "Can the government guarantee that no consignments will be rejected at the port of delivery?" he wondered.

Egypt decided to purchase wheat at the tender after cancelling the previous two due to high bids, as its reserves had dwindled to just over 2.5 months. "Despite the fears, we are quoting a very low global market price of around $350 per tonne." "Freight will be at least $70 per tonne, with ships paying $10 per tonne to cross the Suez Canal," Jain predicted.

India is attempting to push wheat into the global market with two goals in mind. One goal is to establish itself as a dependable and high-quality wheat supplier on the global market. The second step is to try to reduce its inventories in the country.

It is being helped in this by estimates of a record 111.32 million tonnes (mt) of wheat this year. Despite having 19 million tonnes of wheat on hand at the start of April, the Food Corporation of India is currently having difficulty obtaining the supplies needed for the public distribution system.

Currently, its procurement is 30% lower year on year, with farmers either holding back or selling to private traders.

According to industry insiders, if the FCI is unable to procure at least 25 mt of wheat this year, India may face problems. Domestic wheat prices are currently ruling above $2,050 per quintal, compared to the minimum support price of $2,015.