Will Egypt be able to survive world food shortages? Mona El-Fiqi tries to find an answer Due to a notable shortage in food stock on international markets, prices are soaring and expectations are that they will continue to increase in 2008/2009. The problem was reflected on local Egyptian markets in the past few months, with a clear shortage in bread and an unprecedented jump in the cost of all food staples. In response to continued consumer complaints, the government attempted to lighten the impact of such high, but seemingly to no avail. Consumers are sceptical about the effectiveness of the government's plan to overcome the problem, while experts believe that there is much to be done by officials. Alarm bells began to toll when the price of basic staples such as wheat, corn and rice hit record highs by leaping up 70 per cent or more in the last six months. Meanwhile, global food stocks are at historic lows due to a rising demand by major economies like India and China, in addition to climate- and weather-related events such as hurricanes, floods and droughts which have devastated harvests in many parts of the world. High oil prices have also increased the cost of transporting food and purchasing fertiliser. Moreover, the price rise of bio-fuels has reduced the amount of food available for humans. International organisations such as the World Bank, the United Nations and the International Monetary Fund (IMF), warned that the threat of hunger and malnutrition is growing and targeting millions of the world's most vulnerable people. An effective and urgent response is needed by the governments of developing countries, particularly those who depend on importing their food. Since Egypt imports 50 per cent of its food, prices on local markets spiked in the past few months. Fatma Mohamed, a civil servant and mother of two, revealed that she has been compelled to shortlist her grocery list, leaving out items such as fresh juice and rumi cheese used in school sandwiches. "Now, I replace them with white cheese or beans," Mohamed said. Rising food prices have also caused the family to cut their budget for new clothes. Government measures to ease this burden included approving 15 million more citizens to be added in the ration cards system, which provides essential food staples at subsidised prices. The state also started to sell essential foodstuff at cooperatives at reasonable prices, while the Social Fund for Development (SFD) organised a week- long food fair beginning on 20 April to sell food staples at cost price with a small profit margin. Moreover, a ban was imposed on the export of some strategic products, such as rice and cement, to increase supply on the local market. Meanwhile, a presidential decree last week eliminated custom duties on some items such as sugar, cooking oil, cheese and butter. The government also plans to increase the subsidies budget in the coming fiscal year 2008/2009. On another front, the government announced an increase in salaries beginning in July 2008. Gamal Mubarak, head of the ruling National Democratic Party (NDP)'s Polices Committee, announced that the government will not hesitate to interfere and help consumers face rising prices. Mubarak described it as a temporary problem. But consumers are unsatisfied because prices remain high and the expected salary increase of 10 or 20 per cent is not enough. Mustafa Ali, a factory worker and father of three noted: "The government keeps saying prices are going down, but in reality there is no change at all. I do the shopping for the family and have found costs going up every week." Experts describe official procedures to tackle the price issue as insufficient. Mona El-Garf, professor of economics at Cairo University, said that government decisions are too temporary and that they should be complimented with long-term policies. "A comprehensive strategy is needed to increase agricultural production to cover local needs of at least essential food," asserted El-Garf. She suggested that policy should include an expansion of agricultural land, as well as changing the type of crops cultivated to prioritise essential and strategic crops, "not fruit and less important products." El-Garf added that since Egypt is on top of the countries which depend on importing their food, the impact of international high prices will be negative if it does not take action to reduce imports and increase local production of food staples. Moreover, the government should control local markets and follow up on previous decisions in order to guarantee they are applied correctly. "Some decisions are perfect," she argued, "but due to the lack of any kind of follow-up they are unfruitful." As for consumers, El-Garf said that they should change their nutrition habits to avoid buying highly priced products. For example, families can replace rice or pasta with potatoes which are available in Egypt in high quality. She further suggested that consumers should refrain from buying products altogether if their prices rise unjustifiably. Hamdi Abdel-Azim, professor of economics and former president of Al-Sadat Academy for Administrative Sciences, agreed that the only solution is the expansion of agricultural production. This is essentially because demand on food is growing as a result of an annual increase of about 1.3 million citizens in Egypt. According to Abdel-Azim, the government should provide technical assistance to farmers to help them upgrade the productivity of their harvest. Moreover, interest rates on loans provided to farmers should drop from the current 14 per cent, in order to reduce the cost price of their products. He further blamed the government for raising the price of fertilisers provided to farmers at a very critical time. The result is the increase of the cost price and in turn the price of the final product. Altogether, Abdel-Azim believes that it would be better if the government applies a policy which provides all types of assistance to farmers to encourage them to cultivate the most strategic crops, particularly in the coming few years.
