Bunge wants resolution on Egypt wheat shipment

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International food commodities trader Bunge said it still intended to deliver a cargo of wheat to Egypt after the government rejected it in a case closely watched in the grain market.

The New York-listed company this week opened legal proceedings against Egypt’s grain authority, the General Authority for Supply Commodities (GASC), after the shipment was rejected by agricultural authorities due to grain fungus contamination.

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Soren Schroder, Bunge chief executive, said the 63,000-tonne shipment remained tied up outside the Egyptian port of Damietta.

“We expect to resolve this in an amicable way with our Egyptian customer in the very near future,” he said.

Mr Schroder said Bunge had challenged the rejection in court in Egypt, arguing that the cargo was compliant with the terms and conditions of the tender. He reiterated Bunge’s position that Egyptian inspectors had given the cargo a green light when it was loaded.

Egypt, the world’s top wheat importer, is dependent on shipments from companies such as Bunge to meet domestic food needs. The country rejected Bunge’s cargo last month on the grounds that it contained traces of the ergot fungus, even though the country’s grain authority allows levels of up to 0.05 per cent. The move sowed confusion and frustration in the wheat trading world.

The initial rejection by Egyptian authorities appears to have started due to a disagreement between the country’s agricultural and trade authorities.

Although the ministries of supply and agriculture last weekend held a joint press conference to announce that it was allowing 0.05 per cent ergot, it could take a while for this decision to filter through the Egyptian bureaucracy.

GASC is understood to have been working behind the scenes with Bunge in an effort to overturn the decision.

“GASC are not to blame. They did not change rules. They want to keep all good suppliers on board,” said one European grain trader.

One GASC official said the grain authority was stuck between the ministries of trade and agriculture. “We are under the ministry of supply. GASC is stuck in the middle,” said the official.

The official added that the issue might take some time to resolve. The agricultural quarantine agency needs a formal edict from the ministry of agriculture, to which it is affiliated, to sanction the delivery, the official said.

Mr Schroder said he wanted the wheat to go to the intended buyer but cited a “wide network of [alternative] destinations” if Bunge was unable to make the delivery.

“We have done business in Egypt for many, many years and we will continue to do that for many, many years,” he said. “Somehow this cargo has gotten caught in the middle but it looks to be more of an internal Egypt issue. We simply have to file a challenge in the court in Egypt to preserve our rights.”