International sugar prices have cast a shadow on the local market, reports Mona El-Fiqi During the last two weeks sugar prices have increased by 40 per cent, with a kilo retailing for an average of LE3.25, a pound more than at the beginning of the month. The price hike has hit those on low incomes particularly hard. "I cannot afford to pay LE3 or more for a kilo of sugar," said government employee Wagdi Shaaban, who added that some traders have started selling smaller sized packages to disguise the higher price. The increases -- some sugar is now selling at up to LE4, though price does depend on quality -- will have a spin-off effect on a great many small business. Hani Boushra, the manager of a pastry shop, complains that profit margins are shrinking as shops are unwilling to pass on their higher costs to consumers. "We cannot raise our prices," he says, "because our customers cannot afford to pay more." In the absence of any clear explanation for the price hikes rumours began to circulate: sugar stocks are low, said many, while others believed supplies were being reduced in preparation for Moulid Al-Nabi, Prophet Mohamed's birthday, which falls in April and is celebrated with large quantities of sweet confectionery. But according to Minister of Foreign Trade and Industry Rachid Mohamed Rachid, increased sugar prices reflect fluctuations in the international market. Prices, he explained, have been steadily increasing following the EU's recent decision to cancel subsidies provided to sugar cane farmers. And compounding the situation Brazil, the world's leading sugar producer, has started to use sugar to produce energy in the wake of the increased cost of oil. On the international market a tonne of sugar, which in November cost $270, now sells for $437. Egyptian importers stopped buying, believing that the local market could not absorb the higher prices and that imported sugar would be unable to compete with locally produced sugar. The halt in imports has resulted in a shortage of sugar in the market. According to the Ministry of Foreign Trade and Industry Egypt's annual production of sugar is 1.2 million tonnes, and a further one million tones are imported to meet demand. Rachid has announced that Egypt has stockpiles of sugar sufficient for the next nine months. In the meantime, a raft of measures are being introduced in an attempt to control prices and, according to Rachid, the government is examining the possibility of increasing the sugar quota provided to citizens with ration cards. Some 450,000 tonnes of sugar is distributed to 40 million people through such cards. "The government is keenly watching the situation to ensure that traders do not seek to benefit from it," said Rachid, who promised that the government and local sugar producing companies were committed to ensuring that sugar sells at around LE3 per kilo. The Ministry of Trade and Industry is also strengthening controls at Egypt's custom outlets to ensure that sugar is not smuggling to African countries where it can be sold at international rates. In an attempt to relieve consumer panic Ali Moselhi, the minister of social solidarity, issued a statement confirming the government's commitment to supporting those on low incomes. Egypt, he said, is expected to achieve self sufficiency in sugar by 2007-2008. Moselhi also revealed that the ministry has formed a committee to ensure that prices do not exceed the LE3 per kilo ceiling, and that the government has earmarked a share of privatisation receipts to support the local sugar industry. In a recent session at the People's Assembly the agricultural and industrial committees submitted a report criticising the privatisation of sugar producing companies and arguing for a two-tier price system, one for domestic consumption and the other for commercial use of sugar. The report also recommended a support package for sugar cane farmers. Meanwhile, Minister of Investment Mahmoud Mohieddin announced that the government has decided to keep its controlling stake in all joint venture sugar companies. Abdel-Rehim El-Ghoul, chairman of the agricultural committee at the People's Assembly, praised the government's move to raise the delivery price of sugar from LE130 to LE160 per tonne. This move, it is hoped, will encourage more farmers to grow sugar cane. Should sugar cane farmers continue to be supported, said El-Ghoul, then Egypt will quickly become self-sufficient and save the vast sums of hard currency currently spent on importing sugar.
