CAIRO: Every year the Egyptian government spends roughly $5.5 billion dollars on subsidising foodstuffs for three quarters of the country's population. The multi-billion dollar subsidy is a tremendous burden to the economy, especially after the January 25 Revolution, which saw the ousting of former President Hosni Mubarak and the disappearance of almost half of all the projected tourists visiting the country. The problem presented is not only financially. The hefty subsidy on wheat, designed in the 1950's to aid the poor, has changed the face of Egyptian agriculture. Bread has become so cheap that many people, including those who are not poverty stricken, use bread as a cheap alternative to animal feed. The emphasis on importing perishable goods has also led to produce rotting before it even reaches the market. “Currently, post-harvest losses result in the destruction of 30 percent of the produce. In the case of tomatoes, post-harvest losses can reach 60 percent,” said Angie Helmy, vice chairman of Egyptian Agrofoods Co. With adequate packaging and shipping she believes large amounts of produce could be saved. The current interim government has been looking at ways they could reform the subsidization of products such as wheat to reduce the burden, freeing up money which could go in to agricultural reform projects to strengthen that sector. “We need a radical shift in the way we deal with our bread subsidy system,” Social Solidarity Minister Gouda Abdel Khaleq told a seminar this month on food security in Egypt. Any reform carried out to the subsidy must also be discussed with the finance and agriculture ministries. As it stands, more than three quarters of Egypts population has access to bread at five piasters per loaf (less than one cent). This system, Abdel Khaleq argues, is unsustainable. The government has forecast a budget deficit of 8.6 percent of the gross domestic product, a forecast which analysts say may be exceeded. Any change to food subsidies is under threat of change after elections are held and any attempts in the past to alter the subsidies in the past have led to many riots. Nevertheless, there seems to be widespread support for change. “The subsidy system is not a reflection of social justice; around two-thirds of the people benefiting from it are not poor,” Magda Kandil, executive director and director of research at the Egyptian Center for Economic Studies, told the seminar. “The people who don't need the subsidy are taking the bread anyway and feeding it to their animals,” Kandil said. Egypt has one of the highest rates of wheat consumption per capita in the world. “We need to change consumer habits so that we are not consuming so much bread,” said Saad Nassar, adviser to the agriculture minister. Subsidy reform must be carried out along side agricultural reform, a thought echoed by both experts and officials. One alternative would be to expand its farmland beyond the current Nile Valley and Delta. The Toshka project is one such project which began in the 1990's to reclaim tracks of desert fed from the Aswan dam with limited success. BM
