Egypt hires Swiss firm SGS to inspect wheat following ergot U-Turn

Egypt says it will hire SGS SA, a Geneva-based inspection service, to review wheat cargoes, a move that may ease traders’ concerns about the country’s frequently changing import standards.

SGS will examine imported wheat at origin and arrival ports, Hamed Abdel-Dayem, a spokesman for the Agriculture Ministry, said by phone on Tuesday. Typically, the inspections have been carried out by six Egyptian officials, including two from the quarantine department, which rejected several cargoes this year for containing traces of the ergot fungus. It’s considered harmless in small amounts but toxic in large quantities.

The world’s biggest wheat buyer was in a standoff with traders this year after twice enforcing a ban on cargoes containing ergot, and then backtracking to the international standard, which allows for shipments to contain 0.05 percent of the fungus. The country is closely watched by the grain market because it buys large amounts of wheat to maintain a subsidized bread program for citizens.

Egypt’s procedure of sending a delegation overseas to clear wheat shipments is something that other importing countries don’t do, the U.S. Department of Agriculture wrote in a June report. The agency said the country’s unnecessary and burdensome food regulations will contribute to more than $860 million in direct costs and lost export earnings this year.

There are signs business is returning to normal after Egypt said last week that it would adhere to international standards for ergot. After three failed tenders, Egypt agreed to buy four cargoes of Russian wheat totaling 240,000 tons in a deal last week.

Source: Bloomberg