By John Irish and Valerie Parent | Reuters
Source: Yahoo News
PARIS (Reuters) - France has received a formal request from Egypt for free grain storage and far easier payment terms for imports, official sources said, as the world's largest wheat buyer grapples with a prolonged economic crisis.
France, the European Union's top wheat exporter and one of Egypt's leading suppliers, is studying the request and is open to helping Egypt on a vital food security issue, a French diplomatic source said.
"We need to make an effort and if the French government has to push this forward it will," a diplomatic source told Reuters on Tuesday.
"It's an urgent matter. It won't be settled within hours but we're not talking either about an agreement in six months."
The diplomatic source said Egypt's request included assistance with building grain silos in Egypt; the stocking in France of French wheat bought by Egypt for up to six months free of charge, with shipment as and when needed by Egypt; and an extended payment period for wheat sales of nine to 12 months from shipment.
The extended period compares starkly with the "cash against documents" terms Egypt normally applies, in which grain is paid for on agreement of terms.
A source at the foreign trade ministry said it was too early to say whether France would approve the request.
Two years of political turmoil and economic crisis have eroded Egypt's hard currency reserves, making it difficult for the country to finance essential food and fuel imports.
Egypt's state grain buyer General Authority for Supply Commodities (GASC), which together with private importers normally obtains around 10 million tonnes of wheat per year, has not bought on international markets since February.
While Egyptian authorities have said they expect a bigger local harvest this year to replenish wheat stocks as part of a plan to phase out imports within four years, they are also trying to get assistance from suppliers.
Egyptian President Mohamed Mursi failed in April to secure grain and a loan from Russia to help ease a deepening economic crisis.
The French finance ministry was now studying with French grain exporting firms a possible response to Egypt's request, the source said.
Traders were sceptical over the outcome.
"They (Egypt) have to import and the crux of the matter is money. And France isn't Qatar, Russia or the IMF," a European trader said.
The request was initially sent several weeks ago to the French embassy in Cairo, and was then discussed last week by the Egyptian ambassador in Paris with France's food industry minister, the source added.
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