On the export side, Cargill is interested in new ideas for
investment to get more Black Sea region grain exports to the world
market while overcoming limitations of space for new facilities
A 20-30 day delay to discharge goods is now commonplace in Morocco's
Casablanca while similar problems face Egypt's Dekheila port on the
Mediterranean, the managing director of Cargill in the Middle East
and Africa said on Tuesday.
"This is an interesting area that governments should look at, as
many ports in the Middle East and North Africa today have very long
line-ups of vessels as the port capacity to get the commodities into
the supply chain is not sufficient," Johan Steyn told Reuters in an
As well as holding up goods for longer at ports, the congestion
ultimately pushes the price of imports higher because slow discharge
rates are factored into freight calculations.
"It puts a time lag on the supply chain but it also raises the
cost," said Steyn, who was in the United Arab Emirates capital Abu
Dhabi for an agricultural innovation conference.
Egypt, the world's largest wheat importer, operates its ports at
near full capacity, handling up to about 20 million metric tons of
grain and oilseeds a year.
Port congestion has been particularly pronounced in Egypt since
three years of political turmoil triggered a currency crisis that
made it hard to finance food and fuel imports.
In the summer of 2013, before the army ousted former President
Mohamed Mursi, the funding crunch triggered a stream of smaller
grain shipments, clogging up ports, as traders purchased on a
Since then, more than $12 billion of aid from Gulf countries
including Kuwait, Saudi Arabia and the UAE has made funding less of
a problem but some ports remain backlogged.
"It is absolutely still a concern," Steyn said.
Port expansions should take priority over onshore storage projects
that have attracted considerable investment since the 2008 food
crisis pushed governments to stockpile more to increase food
The UAE expects within months to start operating new grain storage
facilities at the port of Fujairah that can hold up to 275,000
metric tons. This will bring to 850,000 metric tons the total grain
storage capacity of the country, which imports over 90 percent of
its food needs.
But should the trend of increasing storage capacity for strategic
reserves continue, it could lead to food price inflation as buyers
import more than they need for consumption, Steyn said.
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"You just create an artificial food price inflation due to that
scenario," Steyn said.
Instead the focus should be on purchasing from the market more
efficiently, allowing supply and demand fundamentals to work. "That
way you can have faster access to food crops and at a lower cost,"
"If you look at the geographic layout of Eastern Europe and Black
Sea exports there is very little land available to put ports in to
create export channels and people, including Cargill, are actively
seeking investment opportunities in that origin," Steyn said.
"It's not a shortage of dollars for investments, it's more a search
for ideas of how we can innovatively do that," he said. One area of
interest was floating terminals, he added.
In December 2013, Cargill bought a stake in a Russian grain terminal
to bolster its access to Black Sea export facilities.
The firm purchased a 25 percent plus one share of indirect interest
in the Kombinat Stroykomplekt (KSK) terminal from privately held
Russian firm Deloports Limited.
The Middle East and North Africa have increasingly shifted grain
buying to Black Sea origins which are more competitively priced than
traditional suppliers in North and South America.
"Eastern Europe will continue to increase in importance on the
supply side of the global food and feed industry, it is present
structurally now as an exporter and it won't go away," Steyn said.
(Editing by Veronica Brown and Anthony
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