Egypt's stocks close in red on Monday as benchmark EGX 30 dips 0.07%    Egypt's stocks start week higher, benchmark EGX 30 gains 0.48%    Fitch affirms Egypt's long-term foreign currency issuer default rating at B+    The unvaccinated prohibited from entry to Egypt state institutions starting December 1    Russia to lift COVID restrictions on flights to Egypt's Red Sea resorts on Nov. 9    Egypt, Greece ink deal for first subsea power link between Europe and Africa    Egypt hosts regional conference of EU refugee agency EASO    SCOHRE sparks discussion on harm reduction, tobacco control    Egypt to receive first of six high-trains from Spain's Talgo in mid-November    Egypt's iron and steel exports jump 197% in 8 months    Ethiopia halts work at its embassy in Egypt for 'economic reasons'    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Russia says it's in sync with US, China, Pakistan on Taliban    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Over 100 officials resign from Tunisia's main Islamist party    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egyptian court bans use of mosques for political purposes    Brazil calls up 8 EPL players for World Cup qualifying    Refugees in fear as sentiment turns against them in Turkey    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Sisi calls on House, Senate to commence second legislative sessions on 3, 5 October    Huawei Technologies has invested $10 mln over 5 years in innovation centres in Egypt    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    Qa'a play showing at Lycee El Horreya Theatre, Alexandria is a must go    Orange Egypt Introduces Amazon Prime Video    Tokyo Olympics: Cautious opening ceremony, shy start for Egyptians in competitions    Mallawi Museum in Upper Egypt holds recycling workshop for children during Eid Al-Adha    Egypt keen on stable tax policies to attract more investors: Finance Minister    Sudan declares state of emergency as water goes beyond Merowe Dam capacity    Niagara Falls illuminated in Egyptian flag to mark 23 July Revolution anniversary    Capital flows into EM keep recovering after March 2020 slump: Central Bank of Egypt    1 child orphaned every 12 seconds due to COVID-19-associated death: World Bank    Egypt, Japanese Olympic Committee discuss boosting sports cooperation    US emphasises AU's role in mediating Ethiopian damdispute    Ethiopia ready to resume dam talks with no legally binding agreements: Ethiopian official    Sunken city of Thônis-Heracleion in Egypt's Abu Qir bay yields new archaeological treasures    New films, concerts, and destinations for Eid Al-Adha holidays    Egypt, Oman discuss enhancing bilateral economic, investment relations    Al Ahly v Kaizer Chiefs: Cairo giants eye 10th CAF Champions League title    Tunisia hopes to have a UN role in resolving Egypt-Ethiopia dam dispute    APO Group enters new exclusive agreement with Getty Images on African press releases and images    On International Museum Day, Egypt opens two new museums at Cairo Airport    Old Cairo's Al-Fustat will be revamped on Egyptian President's directives    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

The staff of life
Published in Ahram Online on 10 - 08 - 2021

In a speech delivered last week during the inauguration of Silo Foods, a new food industrial complex in Menoufiya, President Abdel-Fattah Al-Sisi pointed to the anomaly of "20 loaves of subsidised bread costing the same as one cigarette". He said the price of subsidised bread would increase, and though he did not specify an amount he said the increase would not be large. The actual cost price per loaf, which retails at five piastres, is 60 to 65 piastres, said the president.
Economist Hani Tawfik argues that the decision to raise the price of bread "is long overdue, and had been shirked by previous presidents.
"It is a courageous decision because [Al-Sisi] knows it will lower his popularity," said Tawfik.
Raising the price of bread is a sensitive subject. The decision to reduce the subsidy in 1977 triggered protests nationwide. In August 2017, the government deregulated the price of flour and diesel fuel for bakeries as part of its new subsidy programme. Under the new system, the Ministry of Supply sells wheat to mills for LE 4,000 ($256) a ton and the mills sell the flour they produce to bakeries at LE 4,700 ($300) a ton. The prices are subject to review every three months.
Per capita wheat consumption in Egypt is about 180kg, compared to the international average of 85kg per person, and since the introduction of electronic subsidy cards in April 2014 people entitled to the smart cards have been able to buy bread at five piastres ($0.0032) per loaf.
Former Minister of Supply Gouda Abdel Khalek told Al-Ahram Weekly that the budgetary allocation for bread subsidies, which amounts to EGP 48 billion ($3 billion), is a "drop in the ocean" when it comes to the overall national budget of EGP 1.8 trillion ($115 billion). To eliminate bread subsidies entirely would have a terrible impact on poor families, he said, and even raising the price of subsidised bread is a source of political anxiety.
More than 65 million Egyptians benefit from the government's social protection programmes, one of which allocates five loaves of bread per day to eligible citizens. Subsidy card holders who do not use their daily entitlement of five loaves per person since 2014 receive 10 piastres for every loaf they do not purchase. They can use this amount, called "bread points", to purchase other subsidised goods in excess of the set quotas.
The Ministry of Supply had earlier proposed reducing the daily subsidised bread entitlement to four loaves and increasing bread points to 20 piastres in an attempt to save on the hard currency used for importing wheat.
According to the Ministry of Supply, subsidised bread consumption ranges from 2.5 to 3.8 loaves per person per day. A report released by the ministry proposed directing the additional points to purchases of other food products, such as rice and macaroni, in the hope that promoting alternatives to bread would change consumer patterns and reduce bread consumption.
Currently, more than 120 billion subsidised loaves are distributed annually. According to the Ministry of Finance, 3.7 per cent of the beneficiaries from the subsidy programme use their entitlements, while 26.3 per cent opt to replace bread with other goods they can obtain with their smart cards.
Heba Al-Leithi, a consultant with the Central Agency for Public Mobilisation and Statistics (CAPMAS), told the Weekly that the government should first screen subsidy lists to identify the neediest families. Then, when it raises prices, it should exempt these families. Because bread is so important to the poor, she said, the government should consider subsidy cards exclusively for bread and then introduce a full or partial entitlement system based on the needs of eligible families.
Al-Leithi notes that the bread subsidy level has been reduced in recent years via successive reductions in the weight of a loaf. In August last year the government reduced the weight of an individual loaf from 110 to 90 grams in response to the rising cost of wheat.
"It would have been better," she argues, "to sharpen the focus on the neediest by introducing a system of full or partial support, or by offering them cash subsidies."
The CAPMAS consultant is concerned that a price hike will alter food consumption habits in potentially harmful ways and fears the poor will be forced to reduce consumption of high protein foods, fruits and vegetables.
"The cost of bread should remain stable for the poorest families," she said.
Former supply minister Gouda Abdel-Khalek argues the government should save resources by lifting hidden subsidies for the rich, such as those offered to local automobile manufacturers who are entitled to lower custom duties on imported automobile parts. Given custom duties on fully manufactured imported vehicles can reach 100 per cent, domestic car assemblers are in a position to make huge profits. Abdel-Khalek also points out that even a small levy on capital gains from stock market transactions would cover the cost of subsidising bread many times over.
Tawfik counsels prudence and a clearer focus on the neediest. "This decision should not be implemented until after the completion of the database of the poor who are entitled to subsidies." Once the database is in place, he says, in-kind subsidies can be replaced by cash subsidies. "Around 30 per cent of the population lives below the poverty threshold and exposing them to more pressures is extremely dangerous and holds political risks for the regime."
*A version of this article appears in print in the 12 August, 2021 edition of Al-Ahram Weekly

Clic here to read the story from its source.