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Al-Ahram Weekly On-line 9 -15 November 2000 Issue No.507 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 9 -15 November 2000 Issue No.507
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Books Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Sweet relief
By Mona El Fiqi
Long line-ups outside consumer cooperatives have appeared during the last few weeks due to a sugar shortage and its trading on the black market. A gap between local production and consumption had, until recently, been filled by the import of this commodity. With an annual production of 1.3 million tons and consumption of 1.9 million tons, slightly less than a third of Egypt's demand for sugar was met by imports. However, with the imposition of high tariffs on the sweetener last year, some importers began to reduce their dealings in the commodity.
Not an easy, but sweet when it comes 
photo: Kamal El-Garnussi
In response, a presidential decree was issued last week to cut customs duties from 26 per cent to 10 percent on refined sugar and from 24 to 5 per cent on (raw) brown sugar.
The decree also abolished the practice of calculating tariffs on the commodity on the basis of a fixed price for imported sugar which was set by the Customs Administration. Given that the fixed price was higher than the international price, this practice raised the ire of importers. Tariffs had been calculated according to a price of $750 per ton of sugar, while international prices have recently ranged between $220 and US$270 per ton.
Under the new decree, duties will be levied according to international sugar prices. Under the conditions of its membership in the World Trade Organisation (WTO), Egypt was scheduled to abolish calculation of these duties on the basis of a fixed price in July 2000. The government, however, had obtained permission to delay application of GATT rules for evaluating tariffs.
Khaled Hamza, chairman of the imports and customs committee at the Egyptian Businessmen's Association (EBA), said that in 1999, when the government raised duties by calculating them on the basis of a fixed price on imported sugar, the EBA presented a memo to the minister of finance warning that this would lead to a crisis. The memo, said Hamza, predicted that "Imposing these customs would make imported sugar very expensive -- even compared with international prices." The EBA's efforts were, however, in vain.
Hamza suggested establishing a quota for sugar imports so that they do not exceed the gap between local production and consumption. In this way, import policy will help to protect local industry, while at the same time ensure that consumer demand is met.
In recent weeks consumers, manufacturers and coffee shop owners discovered that there was no sugar available in the market. When it did become available, its price rose from LE1.3 to LE3 per kilogramme.
Representatives of the Federation of Egyptian Chambers of Commerce (FECC) met with government officials and asked that tariffs imposed on imported sugar be decreased.
In response, Prime Minister Atef Ebeid announced in a press conference that 62,000 tons of sugar per month will be made available on the local market. This amount is about quadruple the current 15,000 tons per month. Ebeid added that Egypt's strategic inventory of sugar is estimated at 650,000 tons and that the Ministry of Supply and Internal Trade will provide sugar for consumers through the cooperatives at LE1.3 per kilogramme. Businesses that consume sugar -- coffee shops, sweet factories and foodstuff factories -- may purchase the commodity from the Egyptian Sugar Company at a price of LE1.5 per kilogramme, said Mukhtar Khatab Minister of Public Enterprise.
But not everyone is convinced that the problem has been solved. Why, consumers are asking, if the state possessed sufficient supplies of sugar to meet consumer demand did it fail to release a portion of these into the market before the shortage occurred? And despite official announcements that the problem has been solved, little sugar is available on the market relative to demand. Supermarkets are limiting purchases to one kilogramme per person at a price of LE2.5. Cooperatives, too, are restricting the sale of the commodity. Nonetheless, the commodity is still available on the black market.
Hamza said that the government took measures too late because it takes time for imported sugar to reach consumers. Added to this, demand is increasing as consumers prepare for Ramadan, during which more sugar is consumed than at any time of the year.
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