Egypt’s bid to reduce wheat imports hampered by bread obsession

Sunday 06/08/2017
Essential commodity. People buy bread at a bakery in Cairo. (Reuters)

Cairo- Egypt is trying to save hundreds of millions of dollars a year on wheat imports by encouraging citizens to reduce con­sumption of bread.
Egypt’s Ministry of Supply and Internal Trade is offering the 81 million Egyptians registered with the national food rationing system incentives to eat less bread. The popular government subsidised flatbread is a mainstay of the Egyp­tian diet, eaten with practically every meal.
“If everyone within the system reduces bread consumption by one loaf every day, we will end up sav­ing 81 million loaves per day and 2.4 billion loaves per month,” Sup­ply Ministry spokesman Mohamed Suwaid said. “This will translate into hundreds of millions of dollars in saved expenditure every year.”
Egypt is the world’s largest wheat importer due to the dependence on bread. It has imported 12 million tonnes of wheat this year, the UN Food and Agriculture Organisation (FAO) said. Wheat imports for 2016- 17 are more than 1.3 million tonnes higher than the previous five years’ annual average, the FAO said. Egypt consumes 20 million tonnes of wheat every year, with that figure expected to increase.
The Egyptian government speci­fied $2.7 billion for wheat imports in the 2016-17 budget in addition to $2.5 billion to provide subsidised bread for Egyptians registered as part of the food ration programme. Each participant in the plan has the right to five loaves of bread every day, with ration card holders paying 10% of the full-price and the gov­ernment subsidising the remaining 90%.
This bread subsidy policy has been in place for decades but is proving devastating to the national budget, the government said. Bread subsidies represent more than 60% of all food subsidies.
Attempts to change the system have been met with massive re­sistance. The 1977 “bread riots” in Egypt, which forced former Presi­dent Anwar Sadat to reinstitute subsidies after nationwide protests, represent a defining point in Egyp­tian history and cemented the idea of subsidised bread as an inalien­able right.
Egypt’s Supply Ministry an­nounced it was implementing a new system to subsidise bread by the loaf, rather than flour and flour mills. However, the policy would not change the price of bread at 5 piastres (about 1.5 US cents) at public bakeries or alter how much subsidised bread those with ration cards could purchase.
The government has sought to cut back on bread subsidies by of­fering citizens free groceries. The policy, Suweid said, would signifi­cantly help Egypt reduce wheat im­ports, saving hundreds of millions of dollars every year, and stimulat­ing the local economy given that most fruit and vegetables are pro­duced locally.
Many Egyptians are suspicious about the move, however.
“This needs a radical change of dietary habits,” said Abdullah Ghorab, head of Egypt’s Bakeries’ Association, which represents more than 25,000 privately run bakeries. “Bread is probably the most indis­pensable item on the table of al­most all Egyptians.”
Protests broke out a few months ago in several provinces when the Supply Ministry was rumoured to be planning a reduction in the number of loaves per day that the rationing system could accommo­date. Most of those making deci­sions in Egypt today were in their 30s or younger when violent riots erupted in 1977 because President Anwar Sadat raised the price of bread 50%.
Addressing the issue of bread subsidies at a briefing on July 29, Supply Minister Ali Moselhi cau­tiously hinted at Cairo’s desire to reduce bread consumption.
Moselhi said that one-third of subscribers in the national food ra­tioning system were under 10 years old and another third of those sub­scribers were over 50. “Each one in these two categories cannot eat five loaves of bread every day,” he said.
Despite the obvious problems in the system, few Egyptians seem inclined to accept change to bread subsidies.
“Some people are so poor that they cannot buy anything other than the bread to eat and these are in the millions,” said Mahmoud el-Askalany, a consumer rights ad­vocate. “A decision to reduce the number of bread loaves for those in the food rationing system is very risky because it will open the door for massive violence.”