04-03-2025
Rice export ban for everyone but Argany
In early February, the Egyptian Customs Authority renewed its ban on rice exports, which has been in place for over eight years per the given rationale that it will help conserve the country's scarce water resources. Yet, just six days later, Sons of Sinai for Trading and General Contracting, a subsidiary of the Organi Group, 'proudly' announced it is exporting rice to 18 countries.
Official data published in January showed a 3,808 percent increase in the value of Egypt's rice exports during the first ten months of 2024 compared to the same period in 2023.
Traders and farmers speaking to Mada Masr attribute this surge to undisclosed exemptions granted to Sons of Sinai, owned by business magnate Ibrahim al-Argany, whose political and economic influence has grown significantly in recent years, in close collaboration with the state. According to sources in the rice trade, the company leveraged these privileges to impose compulsory fees on every ton of rice exported through them.
While the government insists the export ban remains in effect, officials tell Mada Masr that these shipments are designated as humanitarian aid. But rice industry insiders tell a different story — one of a trade entangled in political and economic interests, benefiting a select few.
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For over two decades, successive governments have imposed restrictions on rice cultivation and exports in response to the country's water scarcity crisis. Rice is a water-intensive crop, consuming what the government estimates to be 25 percent of Egypt's annual Nile water allocation of 55 billion cubic meters. Despite the ban, the government periodically allowed exports under pressure from traders, in exchange for fines of up to LE2,000 per ton, which were to be paid to the Supply Ministry.
Since 2016, however, authorities have taken a stricter stance, imposing a ban on rice exports of all kinds, which has been renewed annually, particularly as concerns over the Grand Ethiopian Renaissance Dam grew. In 2018, the government restricted rice farming, limiting cultivation to designated plots — the majority of which are highly saline — based on an annually renewed decree. Farmers caught planting rice beyond these plots faced fines and penalties up to imprisonment.
Egypt's allocated rice farming areas — spanning over one million feddans — produce around four million tons of white rice annually, exceeding domestic demand, which stands at 3.6 million tons. Yet farmers continue to expand cultivation beyond imposed limits, drawn by rice's high profitability compared to costs, its guaranteed market, as well as concerns over soil salinity, as rice irrigation helps reduce salt levels in soil. This has led to a surplus of up to one million tons annually, according to official estimates, plus the 130,000 tons of Basmati rice imports each year.
In July 2024, just a month before the August harvest season, reports began circulating among farmers and traders that rice exports would be permitted. While some dismissed the claims, others confirmed that exports had been allowed, prompting traders to rush to stockpile rice from the market. Some hinted at exemptions granted to select traders, while others described what was happening as 'organized smuggling' on a scale 'larger than all previous years.'
The issue reached parliament when Nation's Future Party MP Mohamed Abdallah Zein Eddin formally questioned the government that same month about reports of rice exports benefiting 'certain companies,' warning of the potential impact on domestic prices.
At the time, Mada Masr reached out to leading rice traders, who denied that exports were officially permitted. They said that rice leaving the country did so through two main channels: smuggling operations and humanitarian aid officially exported by the state. The latter was exempt from the export ban, they said, and was either donated or sold to international relief organizations for redistribution. However, a single industry source told Mada Masr that one company received an exemption allowing it to export rice for commercial purposes, beyond the bounds of humanitarian aid. The source attributed the company's selection to its ties with what they described as 'sovereign entities.'
After a period of quiet, the rice export controversy resurfaced in January when the Central Agency for Public Mobilization and Statistics (CAPMAS) published official data. Mada Masr reviewed the figures, which showed that the value of rice exports surged to US$9 million in the first ten months of the previous year — a leap of 3,808 percent compared to the same period in 2023. In October alone, the spike exceeded 4,527 percent.
Despite the Egyptian Customs Authority's insistence that the export ban remains in effect, six sources in the rice trade sector tell Mada Masr that the state allowed certain companies to export rice. At the forefront was Sons of Sinai, followed by smaller allocations to the Egyptian-Sudanese Company for Development and Multiple Investments, founded in 2021 and jointly owned by Egypt's Holding Company for Food Industries, the National Service Projects Organization and Sudan's Etegahat Group affiliated with the Sudanese military-owned Defense Industries System.
'Any trader who wants to export goes to Sons of Sinai, pays them US$150 per ton, gets a permit, signs over the shipment, collects their payment and the company exports under its own name,' says a rice trader speaking on condition of anonymity.
But weeks before Sons of Sinai 'proudly' announced it exports rice, several sources, particularly those in official positions, insisted that exports were strictly limited to humanitarian aid for countries like Libya, Palestine, Sudan and Syria.
MP Magdy al-Waleely, a member of the Federation of Egyptian Industries' (FEI) Grains Chamber, told Mada Masr that exports were restricted to 'specific entities' granted special permits, often with links to official institutions such as the Defense Ministry, which he said made the issue 'non-negotiable.'
However, after Sons of Sinai's post, Waleely revised his stance, saying that the state had initially granted the Argany-owned company a permit to export rice to Gaza due to wartime circumstances. 'Then it expanded to Syria, Jordan, Iraq and other countries facing political issues. Later, it extended to regular trade with countries like Turkey and Morocco,' he said.
The decision to export rice despite Egypt's severe economic crisis and acute water shortages, particularly to countries that do not appear in need of aid, was attributed by some sources to political and strategic considerations.
Among these was Ragab Shehata, the head of the FEI's Rice Division, who told Mada Masr that the exports carry political dimensions tied to Egypt's foreign relations, within the framework of regional policies aimed at strengthening political influence and security cooperation, particularly given Egypt's rice surplus.
Shehata said that escalating political crises in the region led the government to reassess its export policies, whether for humanitarian purposes or diplomatic gains, while firmly denying the exports were for commercial purposes.
When Mada Masr reached out again to Shehata days after Sons of Sinai's post, he said: 'Maybe some stupid employee posted that. I'll call them and tell them to take it down. If this spreads, it'll only cause trouble and drive prices up.' He also advised our reporters to 'not to ask about things that might upset you if you knew the answer. Even if they posted it, it's best to turn a blind eye.'
A major rice trader exporting through Sons of Sinai tells Mada Masr that the company has been allowed to export for months as a reward for Argany's role in Sinai, albeit unannounced. However, the source criticized the company's public declaration as 'provocative.'
'They were specifically granted this exemption under special circumstances. We live in a state governed by law and a Constitution that guarantees equality — you can't grant privileges to some while excluding others. They are publicly saying that the state gave him special treatment, and that will create problems,' the trader said.
Beyond these semi-official exports, Egyptian rice continues to leave the country through smuggling, a practice that has surged since the export ban was imposed in 2016. Smuggling occurs either via informal border routes or through ports under the guise of other grains permitted for export, according to three sources speaking to Mada Masr — a grain trader, an Agriculture Ministry official and a prominent farmer in the Delta.
The smuggled shipments have been particularly noticeable in Gulf markets, where demand for Egyptian rice has surged. 'Before the ban, we exported around one million tons of Egyptian rice to 64 countries,' the Agriculture Ministry official says. 'It's a unique variety with no equivalent except a very expensive American type, which is why smuggling increased. Plus, some shipments leave informally with state approval,' they added, declining to provide further details.
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The two rice traders, who exported through Sons of Sinai last year and this year, tell Mada Masr that the government initially allowed the company to export 100,000 tons in mid-2024. This was raised to 250,000 tons this year after it became clear that rice surplus increased due to cultivation beyond the designated areas, meaning that these exports would not impact prices or availability in the local market, one of the traders says.
While the government saw this surplus as an opportunity for exports, the Supply Ministry removed rice from ration cards in August 2023. Former Supply Minister Ali Meselhy justified the decision by stating, 'The subsidy per person is LE50, which is not enough to buy rice — only oil and sugar. Should we just send rice over to [food subsidy outlets] and have it go to waste?'
The fact that a non-governmental entity was granted the profits from surplus rice exports, at least officially, comes at the expense of the 61 million Egyptians reliant on food subsidies. For nearly two years, they have had to purchase rice from the open market at up to LE35 per kilo instead of LE12.5, after it had been scrapped from ration cards. It also comes at the expense of farmers, who were forced to sell their rice at low prices due to pressure from major traders looking to maximize their profits from exports, which reached up to $750 per ton.
'A large number of farmers, especially those with small plots, sold their crops early in the season to traders or mills for LE14,000 per ton because they lacked storage space,' another prominent Delta farmer said. 'Now, the price has risen to LE18,000 per ton due to increased market demand. Meanwhile, traders who bought rice early and stockpiled it are now trying to maximize their gains by raising prices after learning about the exports.'
Moreover, rice exports encourage the arbitrary expansion of rice cultivation, which depletes Egypt's already limited natural resources in Egypt, such as water. The country's per capita water share has already fallen to 500 cubic meters annually in 2024, the threshold the United Nations defines as 'absolute scarcity.'
Most rice fields rely on flood irrigation, which consumes massive amounts of water. This reduces supply available to crops in neighboring fields, disrupts water distribution through irrigation canal networks and prevents adequate water from reaching many lands, as the water resources and irrigation minister said last year.
For over a decade, farmers have voiced complaints about hundreds of feddans drying up due to water shortages, which have led to recurring crop damage, and hence, annual financial losses.
MP Mohamed Abdallah Zein Eddin tells Mada Masr that he has yet to receive a response to his parliamentary inquiry on rice exports, submitted last July. 'If Egypt issues export permits to Sudan or Gaza as aid, that's fine. But the exports come from Egyptian companies selling to foreign companies and countries like Turkey — does Turkey need aid? If the decision is meant to serve the state's political interests, then no one can object, but it's important for us to know,' he explains. 'Some people advised me not to speak up, telling me not to dig into the matter,' he adds.
Mada Masr reached out to the ministries of investment and foreign trade and supply, as well as the Egyptian Customs Authority, but received no response as of the time of publication.
