Analysis of Egypt"s rice marketing system

An analysis of the 1994/95 rice marketing year is presented in this study. Study findings are as follows. (1) Rice production has increased as a result of increased profitability, primarily due to higher prices--more comparable to border prices than in the past. (2) Egyptian rice producers are becoming more market-oriented, as reflected in the larger sales made to rice dealers, and the fact that nearly all sales are made through the private sector. They appear to be sensitive to market conditions and make their production and marketing decisions based upon available information. (3) Paddy rice dealers have increased the share of their purchases that they have milled. The average trader margin for paddy rice was 83 LE/MT which compares to an estimated margin for milling the paddy rice of 110 LE/MT. Rice dealers who purchased and sold milled rice reported an estimated trader margin of 137 LE/mt. (4) Egypt has four mill types: small village mills, older small commercial mills, newer small commercial mills, and large public mills. A comparative analysis indicates very different milling margins for these four mill types: 38, 181, 20 and 154, respectively. The newer commercial mills are the most technically efficient but have not established profitable paddy procurement and milled rice and by-product markets. Most surprising, however, is that the public mills surveyed reported a significant recovery and participation in the rice market. (5 Export trade appears to involve relatively small transactions, by international standards. The average export price of $444/MT compares with an estimated border price of $420/MT. Thus it appears that, for at least part of the 1994/95 crop year, Egyptian price levels exceeded world prices, making Egypt"s rice less competitive on the world market. (6) Analysis of internal price relationships using a co-integration framework found that retail and wholesale prices at the national average levels and across markets appear to be reasonably integrated, i.e., there exists a stable, long-run equilibrium relationship among internal rice markets. (Author abstract)