Cairo, Sept 7 - Egypt wants to reduce its domestic rice production to 2 million tonnes per year from 2.4 million tonnes to save water, and is also concerned over higher sugar prices, Trade Minister Rachid Mohamed Rachid said on Monday.
Rachid told Reuters Egypt, the world's largest wheat importer, was satisfied with supply diversification for wheat imports to the most populous Arab country.
Rachid put domestic rice production at about 2.4 million tonnes, consumption around 1.4 million, and previous exports at around 1 million tonnes. "So obviously we would like to reduce that from 2.4 (million) to maximum 2 million tonnes," he said.
The trade minister said earlier this month that Egypt expected to export 400,000 tonnes of rice in the new season, which usually starts at the end of September. In Monday's interview, he said this would be the upper limit for export.
The Agriculture Ministry is trying to encourage farmers to grow crops that consume less water.
"The reason we are reducing our exports is the worry we have about water consumption," Rachid said, adding part of the drive was aimed at producing more corn instead of rice.
Egypt imposed a rice export ban in March 2008 but eased it in February this year to allow exporters to sell rice abroad if they delivered the same amount under tender to the state buyer.
This created a market for rice export licences, as some traders who did not export rice sold their licences to exporters. Local prices tumbled as a result, as some traders bid low in state tenders so they could secure licences to sell on.
Egypt's water supply is about 860 cubic metres per person a year, well below the water poverty line of 1,000 cubic metres. Agriculture uses more than 80 percent of Egypt's water supply.
SUGAR PRICES CONCERN
Rachid said Egypt was also concerned by higher world sugar prices and feared they could affect inflation, at around 10 percent in the year to July.
"With this price increase, we are just concerned because it will have an impact. It will unfortunately reflect on local prices and inflation," Rachid said.
The Trade Ministry said in August it had agreed to import 300,000 tonnes of sugar for its subsidy programme this year and had enough supplies until the end of 2009.
The Finance Ministry also said it would exempt raw and refined sugar imports from duties from Aug. 15 to end-December to decrease the price of sugar available in the local market.
Investors drove sugar prices to a 28-1/2 year peak at the start of September because of a shortage of the sweetener in India following weeks of weather reports showing a lack of monsoon rains to nurture India's large crop.
Officials have previously said Egypt consumes around 2.2 million tonnes of sugar a year, including about 1.4 million tonnes produced domestically. About 60 percent of its imports come from Brazil. Those figures suggest imports of around 800,000 tonnes a year, but Rachid put the number at 600,000.
On wheat, Rachid said Egypt was satisfied with its current diversified sources for imports.
"At the moment, as you have seen, we are buying from the U.S., France, Russia, Ukraine and Kazakhstan. Of course, we would like to resume with Canada and Australia too," he said, adding that Australian drought had driven prices too high.
"At the end of the day we are now satisified that we have enough diversification in our supplies. We welcome any supplier. Argentina is more than welcome," he added.