The government's decision to produce a more expensive version of the common subsidised bread may be a step towards reforming the whole system, reports Mona El-Fiqi Subsidised bread is an essential commodity for the majoryty of Egyptians, especially the 40 per cent of the population below the poverty line. Yet it has always been a source of complaints: subsidised bread is low in quality and people have to queue for hours to buy it. But problems are not due to a lack of resources. Already the government is spending around LE20 billion to subsidise bread, yet problems persist. It has been a sensitive issue for successive governments. And Hisham Qandil's government is no exception. Bread is among the five top priority issues President Mohamed Mursi said he would tackle in his first 100 days in office. The other issues are traffic, security, garbage and fuel shortages. Halfway through the 100 days period, however, people do not feel any change in the way they obtain bread or any improvement in its quality. "It is unfair to stand in a long queue for more than half an hour to buy five pieces of bread every morning," said Ahmed Mahmoud, 37. The problem does not end when a person gets his or her bread allowance. Nagat Ali, 62, housewife complained, "I bought 10 bread pieces but they were inedible, so I gave them to the porter of my building to feed his poultry." In an attempt to solve the everlasting bread problem, last week the government announced that it would produce a new kind of baladi (common) subsidised bread to be sold at LE0.1 a loaf. Abu Zeid Mohamed Abu Zeid, minister of supply and internal trade, said that his ministry is currently preparing a study on the cost of the new bread, which is expected to be around LE0.3. The new line of bread will be produced through six production lines at Talebya's bakery complex affiliated to the Holding Company for Food Industries in cooperation with the Ministry of Investment. According to Abu Zeid, the new bread will not be an alternative to the 250 million pieces of subsidised baladi bread currently produced daily and sold at LE0.05 each. Some experts have praised the move to produce the new bread saying it will help reduce demand and queues for LE0.05 bread. "The government is making available a range of prices so that each individual can buy according to their purchasing power," said Hamdi Abdel-Azim, former president of Al-Sadat Academy for Administrative Sciences. But to succeed, he added, it must provide an extra amount of flour for the production of this new kind of bread. Omneya Helmi, professor of economics at Cairo University, also said it is a step in the right direction since it will mean less subsidy going to each bread. "It also helps in providing a variety of bread quality and prices in the market." She added that it could be a gradual move towards raising the price of the cheaper bread. To put an end to the bread problem, experts have suggested some measures the government could apply in the coming period. It all starts with the cultivation of wheat. Helmi said that scientific research should be used to help in increasing the productivity of wheat cultivation per feddan or acre. Meanwhile, wheat must be purchased at high price from farmers, according to Abdel-Azim. "The government should announce high delivery wheat prices as early as possible, before cultivation, to encourage farmers to produce wheat." Increasing the amount of flour directed to produce subsidised baladi bread, as well as tightening control over these amounts to ensure that they are used in producing bread and not being smuggled in the black market, are also important, according to Abdel-Azim. He added: "The government should raise the salaries of inspectors of the Ministry of Supply to discourage them from being bribed by bakery owners to ignore smuggling." Helmi agrees with Abdel-Azim that the difference in price between the subsidised flour and the market price is big, and that this encourages inspectors or bakery owners and workers to sell wheat in the black market. "This difference sometimes reaches 1,500 per cent." To control smuggling, Helmi suggested that the bread production process should be completed at the market price, and at that time if the government needs to subsidise consumers it can do it during the distribution process. "The government should do more to reduce waste, since we lose 30 per cent of the wheat while in storage and 10 per cent during the bread production process, which is too much." Helmi added. A further suggestion to help reduce smuggling in flour, says Abdel-Azim, is that the government establish a new distribution system by which families in outlying governorates are provided with amounts of flour appropriate to their needs that they can use to bake their own bread. "A large number of families in the countryside are willing to bake for themselves," Abdel-Azim said. For the time being, Abdel-Azim explained that distribution should be completely separated from production. Two years ago the government succeeded in applying a system in some governorates by which citizens received their daily quotas of subsidised bread by cards or coupons. According to Abdel-Azim, this system could be expanded to apply in all governorates. Bakeries must also not be ignored. Bakery owners often complain, according to Farag Wahba, chairman of the Bakeries Owners Division at the Cairo Chamber of Commerce. "All problems related to subsidised bread can be solved easily in three days not 100 days as the president promised," Wahba said. He called for the cost price of subsidised bread to be re-evaluated, which currently stands at LE65 per 100kg bag of flour. Wahba added: "The cost price has not changed since 2006 although our agreement as the Bakeries Owners Division with the Minister of Supply at that time was to re-evaluate the cost price annually. Nothing was done." The current cost price, according to Wahba, does not cover the cost of the actual production process, and this might be the reason that pushed some bakery owners to sell subsidised flour in the black market. Wahba estimated that the cost price should be LE90 per 100kg bag of flour. A second problem facing bakery owners is the high fines imposed on bakeries in cases of regulation violations. "If a bakery owner violates the rules, he should be punished, but punishment should be appropriate to the act, without exaggeration," said Wahba, explaining that because inspectors receive a bonus of 25 per cent of the value of each fine they impose, they are keen to impose high fines on bakeries.
