In order to ease delays that make governments pay more for imported food, US agribusiness giant Cargill Inc. sees a pressing need for more investment to relieve port congestion in the Middle East and North Africa (MENA) region, Reuters reports.

 

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 there.

 

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, Johan Steyn said.

 

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.

 

Egypt, the world's largest wheat importer, operates its ports at near full capacity, handling up to about 20 million tonnes 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.

 

Before the army ousted former President Mohamed Mursi in the summer of 2013, the funding crunch triggered a stream of smaller grain shipments, clogging up ports, as traders purchased on a hand-to-mouth basis.

 

Since then, more than US$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.

 

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 security.

 

The UAE expects within months to start operating new grain storage facilities at the port of Fujairah that can hold up to 275,000 tonnes. This will bring to 850,000 tonnes the total grain storage capacity of the country, which imports over 90% 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.

 

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," Steyn added.

 

Cargill bought a stake in a Russian grain terminal in December 2013 to strengthen its access to Black Sea export facilities. The firm purchased a 25% 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.