Food crisis and consumer subsidies
p. 104-105
Texte intégral
| 1945 | 31% | 13,000,000 | 5 piastres* |
| System of food subsidies decreed | Percentage of adults qualified as obese in 2015-2017 | Number of people in 2018 without a bread ration card despite being entitled to one | Price per loaf of baladi flat bread since 1989 |
| Source: FAO, 2015-2017 | |||
1While Egypt may be the “gift of the Nile”, it has paradoxically become an agricultural country faced with a chronic problem of food dependency. In 2016 scarcely 48% of the country’s wheat needs were covered by local production. As the world’s biggest importer of wheat, Egypt is very vulnerable to fluctuations in global market prices. The commodity subsidies system (CSS) has historically protected the population from such fluctuations by maintaining low prices for basic foodstuffs (bread, rice, sugar and cooking oil), which are distributed by a wide network of subsidised bakeries and grocery stores.
Challenging subsidies
2The cost of the FSS exploded during the great world food crises of 1974 and 2008, during which the price of grain rocketed. Attempts to tinker with bread subsidies in 1977 provoked massive riots which led President Sadat to back down and dissuaded his successor, Mubarak, from ever engaging in any similar initiative: reforms have been slight and discreet.
3The food crisis of 2008 gave rise to serious shortages that were worsened by products being siphoned off into the black market, leading to jostling crowds outside bakeries, group protests, and the occasional suicide. While the government responded by increasing the number of people eligible for subsidies from 38.3 to 57.7 million, international organisations (IMF, World Bank, IFPRI) have stressed the shortcomings of the FSS.
4The FSS has had a negative impact on the diet of Egyptian households by encouraging the consumption of foodstuffs that are high in calories but low in nutrition. It has exacerbated the twin phenomenon of simultaneous undernourishment and overnutrition that affects Egyptians. Moreover, the massive subsidies on fuel, gas and electricity have meant that the whole system has not been particularly redistributive and has mostly benefited the wealthiest households consuming the most energy. Consequently, the subsidies system has been inefficient in combating poverty and should be replaced by other safety nets. A third distortion appears in that the FSS endows the Ministry of Supply and Internal Trade (MOSIT) with an influential role in the food production process: for example, it buys wheat at a high price and distributes flour at a low price. According to the IMF and the World Bank, this is a major cause of the mediocre quality of products and impedes the liberalisation that is sought by the agri-food sector.
2014, remaking the system
5While the uprising of 2011 was an incentive for experts and decision-makers to take stock of the poverty and socio-economic inequalities in the country, it did not change the approach to foodstuffs. The shortages of oil, sugar and rice that marked the year 2016-2017 were related to the depletion of foreign currency reserves which meant that insufficient quantities could be imported. This was used in November 2016 to justify the devaluation of the Egyptian pound by 48% and its flotation on the open market, as demanded by the IMF. Thus, the cost of imported food and the daily price of basic staples increased, including subsidised items, with the exception of baladi (local) bread, a rock-bottom untouchable, whose price has remained constant.
6.6 Prices of subsidised products in Egypt (2011-2018)

6The overall commodity subsidies system was modified in July 2014. At the insistence of the IMF, subsidies on fuel and electricity were drastically reduced. The resultant hike in energy prices had an affect on peasant farmers who were additionally impacted in March 2017 by the indexing of local wheat prices to world prices, meaning $31.5 for 150 kg as opposed to more than $46 in 2016. Thereafter, the price of wheat and flour no longer benefited from upstream subsidies by MOSIT: subsidies consist in reimbursing bakeries the difference between the price of subsidised bread and the cost of production, multiplied by the number of loaves sold. The tally has been made possible by the introduction of smart cards. This system is designed to fix a quota of bread per person and eliminate queues and shortages. As regards other products, the smart card has shifted the commodity subsidies system towards a monetary credit system that consumers can theoretically use to purchase a greater variety of foodstuffs (cheese, pasta, tomato purée etc.).
7In the meantime, not all of those who have a right to a smart card have received one, and they are consequently deprived of access to subsidised bread and other groceries. Moreover, the products available in these stores vary according to month and location: supply is neither standard nor regular. In fact, the subsidised basket of goods has not really diversified and so raises the same questions regarding nutrition. In addition, inflation has eroded the purchasing power of the credit stored on the smart card: initially set at LE15 per person per month, this was raised to LE50 in July 2017. This rise will not, however, be endlessly repeated and the trend seems to be towards limiting the number of those who have the right to subsidised goods: the definition of who will be excluded is a delicate issue. Three million beneficiaries have already been deregistered between January and March 2019.
6.7 Schematic representation of the 2014 food subsidies system reform

Auteur
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Marie Vannetzel
Marie Vannetzel, CNRS researcher, Centre universitaire de recherches sur l’action publique et le politique (CURAPP-ESS, Amiens), associate researcher at the CEDEJ
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