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Lowering prices has become a top priority on the government's agenda, reports Mona El-Fiqi
In early November President Abdel-Fattah Al-Sisi promised that by the end of the month essential food commodities would be available at lower prices. In response, the government formed a working group to take the necessary steps.
Re-addressing the issue, Al-Sisi last week said that the government has intervened and that private manufacturers and traders are also participating in the scheme. Essential food products at reasonable prices should be available in thousands of outlets throughout the country by the end of December.
Distributing a million and a half bags containing basic food commodities free of charge in the governorates over the next two weeks is another part of the plan, to be undertaken by the army.
Moreover, uncooked meals enough for four persons are being offered in government-owned supermarkets at the reduced price of LE20 to LE30. The meals are composed of one kilo of meat or a chicken, vegetable, salad and butter in addition to one kilo of rice or pasta or potatoes.
Minister of Supply and Internal Trade Khaled Hanafi said that the ministry is also providing essential food commodities at lower prices at 4,000 cooperative outlets, some big supermarkets and 27,000 grocery shops, as well as a number of mobile outlets throughout the country.
Since Egypt depends heavily on importing the majority of its food products, the government said it would import a wider array of essential items in an attempt to curb rising prices. The General Authority for Supply Commodities (GASC), the state's grain buyer, would expand its responsibilities to include providing a variety of imports and distributing them to both the local and private sector.
"The more food supplies in the markets, the lower the prices of commodities," Noamani Noamani, former GASC vice chairman, told Al-Ahram Weekly.
Noamani explained that expanding the role of GASC to include providing imported as well as locally produced food products is temporary and aims at increasing supplies in the market.
"GASC has the right according to law to intervene to secure enough stock of all products in case of natural crisis, wars or when there is monopolisation in the market," Noamani said.
It started with GASC signing a contract with an American company to import 2,000 tons of chicken to be sold at LE9 per kilo at cooperative outlets in December. The Poultry Division at the Federation of Egyptian Chambers of Commerce signed a protocol with the Ministry of Supply and Internal Trade to be responsible for delivering imported chicken to state-owned outlets at reasonable prices.
"The government has the right to use its different tools to fight prices, such as opening the door for imports in case of unjustified increases in locally produced goods as is the case with poultry," said Mohamed Abu-Shadi, former minister of supply and internal trade.
Abu-Shadi told the Weekly that the measures taken by the government will balance the markets in the short term. However, there should be permanent solutions for food prices.
"The main reason for such hikes in prices is that local production capacities do not meet the consumption needs since the population of Egypt increases by 2.6 million annually," Abu-Shadi said.
Egypt imports around 60 per cent of total food consumption. It imports 60 per cent of its wheat, 100 per cent of its cooking oils and 80 per cent of its beans, according to Abu-Shadi.
"We should focus on developing the agricultural sector as a national project during the coming years. The government has to change educational programmes to get the most out of the country's agricultural and natural potential in order to increase production," said Abu-Shadi.
The government should give priority to upgrade the methods and tools used in agriculture to reduce production waste, which is between 30 and 80 per cent during the collecting, handling and transporting procedures of vegetables and fruits, according to Abu-Shadi.
Abu-Shadi added that the government is also responsible for providing suitable measures that guarantee an easy flow of commodities from the production zones to the governorates.
To succeed in fighting hikes in prices, a change in legislation regulating internal trade is also needed, according to experts. Abu-Shadi explained that the current anti-monopoly Law No 3 for 2005 should be amended since it does not prohibit all monopoly practices.
For example, in large markets such as Al-Obor, traders from a few families in Al-Saieda Zeinab district are monopolising the sale of certain products and thus controlling their prices.
Laws regulating state-owned holding companies should be amended to give them the right to directly buy food commodities from producers in case of shortages in some products rather than calling for tenders, said Noamani. "If the companies buy agricultural products directly from farmers, prices would certainly go down."
The government should also start to establish logistic zones in the production governorates to facilitate internal trade. These zones include suitable stores and fridges to store produce. Almost 30 to 60 per cent of Egypt's agricultural production is being wasted due to problems in storage and transportation.
As far as agricultural products are concerned, there is an obvious problem in marketing because farmers, after collecting the harvest, have no access to markets, so traders buy the products and control the markets. The reactivation of cooperative unions representing farmers in marketing their products both locally and internationally is a must, according to Noamani.
Setting up a local bourse for agricultural products would be of benefit to give an indicative price for each product. "It does not make any sense to find the price of tomatoes at LE18 in Cairo while it is sold for LE6 in Sharkia governorate," said Noamani. The existence of a bourse will help the government to intervene.
According to Noamani, the government should play a role to strike a balance between producers, traders and consumers in a way that protects all of them. In cases where there is an increase in the supply over the demand of a certain agricultural product, the extra amounts should be used in producing juice, jam and frozen vegetables.
Unifying the authority that tackles trade affairs is important. Both internal and foreign trade should be in the hands of one ministry. "It is unreasonable that the Ministry of Industry and Foreign Trade is supervising the federation of chambers of commerce which handle internal trade," said Noamani.
Aside from official announcements and expert opinions, many consumers still do not feel any change in some districts. Amira Mahmoud, a housewife who lives in Nasr City, said that despite all the announcements, prices remain high and at the same levels.
"I do not know the reason. It may be because these official announcements are not applied in my district and are focussed on the poorer neighbourhoods or shantytowns," she said.
Mahmoud suggested that the consumer protection authority, along with the NGO consumer protection societies should do more to control the market and protect consumers' rights.
Hikes in food prices led to an increase in Egypt's inflation rate on a year by year basis, to 9.7 per cent in October compared to 9.2 the previous month.
© Al Ahram Weekly 2015
