Libyan food group warns against rushed subsidy reform

By Gus Trompiz GENEVA (Reuters) - Libya should not rush a shake-up of food subsidies, aimed at curbing costs and corruption, as this could undermine private companies already hurt by delays in getting paid by the authorities, the head of grain group Al Sahl said on Wednesday. Libya is still grappling with unrest two years after the uprising overthrew long-time dictator Muammar Gaddafi, with militias disrupting the oil exports on which the country depends to fund large food imports and subsidies. Al Sahl, one of Libya's largest grain processors, was not experiencing problems but some smaller operators were struggling after waiting up to five months for payment, Abdul-Magid Gadad, chairman of Al Sahl Holding Group said. The government should tread carefully with plans to move from a system of subsidising companies to provide cheap products to one in which it gives an allowance to households, he said. "This requires a lot of study and can't be done overnight," Gadad told Reuters following a presentation at the Global Grain conference in Geneva. "The government is in a mess and because of that mess they can't plan properly." One of the reasons for the planned reform is the smuggling of subsidised food out of Libya to other African countries further south, he said, adding that these flows could represent up to 20 percent of Libyan food production. Al Sahl is a major producer of animal feed and also has flour mills and food manufacturing plants. It handles about 870,000 tonnes of Libya's total grain consumption of 3.7 million tonnes, almost all of which is imported, Gadad said. It aims to raise the volume of grain processed to 1 million tonnes in 2015 with a series of new plants, he added. Another headache for private companies has been delays in unloading grain at ports, Gadad said in his presentation, blaming unqualified personnel, public-sector control of port operations and poor infrastructure. Grain traders have said instability in Libya has made it hard for major buyers to hold import tenders, but a buying agency in Tripoli this week launched a tender.