Romanian agricultural trader, Cerealcom Dolj, has asked Egypt to return back about $500,000 which was put down as a guarantee for wheat supplies that it can’t ship now due to the dispute over the level of ergot fungus allowed, reported Bloomberg.
In this context, Mihai Andrei Anghel, responsible for international trading at the company, said that Cerealcom’s agent in Egypt wrote to the state-run General Authority for Supply Commodities last week on behalf of the Romanian trader asking to get back the amount, known as the performance bond, after Egyptian inspectors at the port of Constanta insisted on supplies free from ergot.
Anghel said, “We will always stick to the contract terms and we had the intention to perform, but weren’t allowed to.”He said,”Since it was not our fault, we consider that we should receive the performance bond back.”
In July, Egypt agreed to buy 63,000 metric tons of wheat from Segarcea-based Cerealcom, before reinstating a ban shipments containing the naturally occurring fungus.
This year Egypt,the world’s largest wheat importer, has gone back and forth over whether to allow any ergot in grain cargoes, evoking confusion among traders and leading to fewer offers and higher prices at its tenders.
“GASC had to cancel its last international purchase in August after getting only one offer as traders scorned at stricter rules. At an earlier time,the authority usually gets more than 10,”said Bloomberg.
The country,which buys wheat to subsidize bread for its more than 90 million people, took a strict policy to allow ergot at the end of last month, saying” it would no longer authorize imports of wheat containing traces of the fungus.”
The decision reversed a previous stance to allow international standards of as much as 0.05 %, a level that the United Nation’s Food & Agriculture Organization in Rome said didn’t present a threat. Ergot can be toxic in high amounts.
Anghel said,”On Aug. 27, Cerealcom started loading the vessel a day before the zero-ergot policy was reinstated.”but the Egyptian inspectors asked the company to discharge the grain due to ergot.
“The company unloaded the ship and took it to another berth, where it tapped grain from different stockpiles before inspectors asked for it to be removed once again. The trader then decided to refuse to proceed with the shipment.”
“Cerealcom Dolj’s wheat was not rejected, it was Cerealcom Dolj that declined to deliver the goods under terms other than the ones initially agreed within the contract,” he said.
The Romanian trader, whose cargo was tested for ergot levels 100 times lower than international standards, said it’s still waiting for a reply from GASC and it will decide on further action depending on the state-run buyer’s response.
Anghel said that supplying wheat with zero ergot is almost impossible.
He said,“We are not going to participate in the tenders until they forget about this unusual law requiring zero ergot,” adding that Cerealcom was still unsure if it would go back to participating if Egypt went back to accepting international standards as the nation is constantly changing its rules.
Egyptian state inspectors have rejected a 63,000 ton shipment of wheat at its Romanian port of origin after checking for ergot, the first time Egypt has rejected a cargo at source since taking a zero tolerance stance against the common grain fungus,according to Egyptian independent.