Reining in food prices
The government is making an all-out effort to control the prices of food products. Mona El-Fiqi reports
Since the floatation of the Egyptian pound last January and its subsequent depreciation, the prices of food products have been continuously rising. As the problem was exacerbated by markedly higher consumption during the month of Ramadan, the government has been taking a series of new measures to control the prices of basic foodstuffs, many of which are imported.
The first step was taken a few weeks ago, when the government allocated an additional LE1.6 billion in food subsidies.
Moreover, the government decided to exempt all basic food products imported by the Ministry of Supply and Internal Trade from customs duties. To help limited income families, essential foodstuffs such as sugar, rice, oil and beans are sold at reasonable prices through governmental cooperatives.
Last week, the government decided to fix the dollar exchange rate for customs purposes on private sector imports of essential food products for one year. According to the decree, the dollar exchange price is fixed at LE5.35 instead of the official LE6.15.
However, Khaled Hamza, chairman of imports and customs committee at the Egyptian Businessmen Association said that this decision is not sufficient to reduce the prices of essential foodstuffs.
"This new decree will reduce the total price of a product by only five per cent, which will not be positively felt by consumers," Hamza explained.
Expressing the importers' view, Hamza said that it was a big mistake when the government decided last January to change the dollar exchange rate for customs purposes every 15 days. He argues that this policy has led to a continuous increase in the retail prices of food products.
The government also increased its imports of some basic food products last month. Moreover, a high-level government delegation, headed by Minister of Supply and Internal Trade Hassan Khedr, traveled to Syria this week to conclude purchase agreements for some strategic food products, including wheat. Khedr announced that this step aims at promoting trade exchange between Egypt and Syria. The delegation is expected to sign a protocol to regulate the exchange of essential food products such as beans, rice and wheat. According to the protocol, Egypt will import Syrian beans and wheat while Syria will import Egyptian rice.
Following up on efforts to check the prices of essential foods, a ministerial meeting headed by Prime Minister Atef Ebeid was recently held.
During the meeting officials discussed two reports issued by the Ministry of Finance and Ministry of Supply and Internal Trade. The ministries said that food products are available at reasonable prices although consumption has increased during Ramadan. According to reports, the Egyptian strategic inventory of essential foodstuffs is enough to last six months.
