* Egyptian farmers garner surplus but won't sell
* Government plans to import 500,000 tonnes amid dollar
* Traders awaiting results of import tender on Wednesday
By Eric Knecht and Maha El Dahan
CAIRO/ABU DHABI Oct 12 Egypt is looking to
import large quantities of rice this month as farmers refuse to
sell the government their crops despite a plentiful harvest and
an extreme shortage of dollars that should make buying from
abroad a last resort.
Egypt's 2016 rice paddy production is estimated at 5.1
million metric tonnes versus annual consumption of about 3.95
million tonnes, a United States Department of Agriculture report
this week stated.
Farmers have however refused to sell their crops to the
government, arguing that 2,400 Egyptian pound ($270.27) per
tonne state-mandated price is too low. That has forced up local
prices and made supplies at local outlets scarce in recent
Egypt's state grain buyer GASC will on Wednesday hold an
international purchase tender for at least 100,000 tonnes of
white medium-grain rice, the start of a government campaign to
purchase 500,000 tonnes of the grain.
The tender comes despite an acute dollar shortage that has
sapped the country's ability to purchase from abroad and forced
its central bank to ration dollars for essential commodities,
the result of a 2011 uprising that chased away tourists, foreign
investors and their hard currency.
Unlike wheat, sugar, and other staple commodities which the
North African country imports to meet demand that outstrips
local production, its bountiful rice crop far exceeds domestic
needs. However, the price dispute means it has to import.
"Farmers don't want to sell because in the previous years
they saw that they sold cheaply and then prices increased and
they didn't profit," said Mostafa al-Naggari, head of the rice
committee of Egypt's agricultural export council.
"In the free market (the price of rice) is around 2,900
Egyptian pounds ($326.58) and the government is offering 2,400,
so there is a huge gap," Naggari added.
Temporary rice shortages and price spikes have become common
since the government failed to purchase stocks during its 2015
harvest, an omission that allowed speculating traders to buy up
and hoard the country's entire crop, sending prices soaring
upward until the state called for tenders.
"The farmers are keeping in mind everything that happened
last year...they sold the crop very cheap and the traders made a
lot of money. This year the farmers want to store it," said one
Wednesday's tender may be tactical, traders said, a shot
across the bow to farmers holding stocks in hopes that they will
release them to the market.
Prices fell by roughly 10 percent since the government
announced its purchase tender last week, but this could jump
back up if the tender isn't completed, the rice trader said.
"I don't think they will even buy....but the farmers are
waiting, and if the government doesn't book every time, they
will increase the price again," he said.
($1 = 8.8799 Egyptian pounds)
(Reporting by Eric Knecht and Maha El Dahan; Editing by Keith