Egypt struggles to provide subsidised food to poor

Friday 26/02/2016
An employee of a bakery carries a tray of baked bread in a street in Cairo.

Cairo - “Any rice?” asks the woman, leaning into a shop in Cairo and brandishing a green smartcard that car­ries her family’s food credits. The shopkeeper shakes his head: “Only sugar.” Behind him, more than half the shelves are empty. Rice and cooking oil are nowhere to be seen.
Tens of millions of Egyptians rely on state subsidies provided as credits on smartcards they redeem for household staples. In recent weeks imported commodities, such as cooking oil, have been in short supply as a dollar shortage makes it harder for state importers to secure regular supplies.
Shortages persist across Cairo and in cities from Alexandria in the north to Minya in the south.
“When we ask the grocer he says there’s nothing but sugar. Every day he says, tomorrow, tomorrow, but we are halfway through the month now and it’s not resolved,” said Samia Mohamed, a housewife, at a grocery in southern Cairo.
“Prices elsewhere are expensive. We don’t know what to do.”
Affordable food is an explosive issue in Egypt, where millions live a pay cheque from hunger and eco­nomic discontent has helped un­seat two presidents in five years.
The dangers are not lost on Egyp­tian President Abdel Fattah al-Sisi, whose government has sought to protect poor Egyptians from the worst effects of double-digit infla­tion.
The smartcards are accepted at a network of government-run super­markets as well as 26,000 privately owned grocers and grant each fam­ily member 15 pounds ($2) of cred­its a week plus five loaves of bread a day from participating bakeries.
The Supply Ministry also over­sees a network of stores and kiosks offering subsidised food outside the smartcard system.
Goods of all kinds are available at ordinary supermarkets not par­ticipating in the smartcard scheme but poor consumers would have to pay market prices that many can ill-afford.
Even at the discount shops, stocks are low.
At a kiosk, emblazoned with the Egyptian flag and the words Togeth­er against high prices in a historic part of Cairo, a shelf labelled “local rice, 3.25 per kilo” is bare.
“Oil is in short supply. The sup­plies of oil aren’t stable,” said the manager of the kiosk, which opened in December as part of a government effort to ease food in­flation. “Sometimes we are short of rice, sometimes sugar… Sometimes people don’t like the variety. We don’t get enough.”
Supply Minister Khaled Hanafi said stocks at state food companies were being replenished with doz­ens of products that would be avail­able to smartcard-holders in March.
Though essential foods are high on the priority list, a foreign ex­change shortage has made it more difficult for Egypt’s state food im­porters to pay promptly over the past year. Worst affected by the shortages has been cooking oil, with payment problems putting suppliers off bidding in state ten­ders.
Egypt’s state importers have can­celled three cooking oil tenders in the last three months after not re­ceiving enough offers or because prices were too high.
Traders say they now have to factor in the cost of expected de­lays, particularly after the govern­ment brought in measures that mean they are not paid for up to six months.
“You are talking millions of dol­lars here. These delays are costly,” said one trader. “They make you feel like a beggar when you chase your money, not answering calls, not responding.”
Egypt has struggled to revive its economy since the 2011 “Arab spring” uprising drove away tour­ists and foreign investors. Foreign exchange reserves have more than halved since then, leaving Egypt with scarcely enough to cover three-months’ worth of imports.
Pressure mounted on the central bank to devalue the pound but it has resisted a major adjustment for fear of stoking inflation. Instead, it imposed strict limits on dollar deposits and transfers, making it harder to clear shipments.
A lack of clarity on rice policy has caused confusion in the market. Egypt banned rice exports in 2008 but lifted the ban in October after a bumper harvest. It issued a rice im­port tender in January only to can­cel it again and grocers say there is not enough rice in state stores.
Occasional shortages have been the norm for the past year but sup­ply issues were compounded re­cently by a change in the rules sur­rounding unclaimed bread rations.
Participating grocers source most of their goods from the state-run Food Industries Holding Company (FIHC) but until this month would receive cash from the Supply Min­istry equivalent to any unclaimed bread credits. They would then use the cash to buy other goods on the open market to meet the demand.
Since February 1st, they have been refused cash and been offered goods supplied by the FIHC instead.
But grocers say the FIHC is un­able to meet demand.
“The issue is not one of oil and sugar. We used to buy 100 prod­ucts and now we can’t find ten… More than 50% of the supply stores are empty and there are no goods,” said Majed Nadi, spokesman for the General Grocers’ Syndicate. “They expected to be able to meet all the needs but they couldn’t.”
Hanafi said 2,000 tonnes of rice and 2,500 tonnes of oil were being supplied daily to replenish stocks in addition to goods including pasta, tea, and canned tuna, which have not been in short supply. FIHC bought 42,000 tonnes of sunflower and soy oils on February 17th.
Supply Ministry spokesman Mahmoud Diab said the change was intended to reduce prices because FIHC could secure economical bulk deals that individual grocers could not.
“The idea is to bring citizens higher-quality goods at lower pric­es,” he told Reuters. “It is for the good of the people.”