Friday,21 September, 2018
Current issue | Issue 1315, (13 -19 October 2016)
Friday,21 September, 2018
Issue 1315, (13 -19 October 2016)

Ahram Weekly

Scarcity of sugar

Mona El-Fiqi investigates the reasons behind the current sugar shortages

Scarcity of sugar
Scarcity of sugar
Al-Ahram Weekly

Sugar prices have increased over the past few weeks to reach LE7.5 to LE9 per kilogram compared to LE5.5 previously. Even so, Islam Mohamed, a university student, needed two kilos of sugar last week, but did not find any on the market even after visiting four large supermarkets in Nasr City. 

“I knew that something was wrong. I decided to go to small groceries in the district because I needed the sugar urgently. I finally managed to buy two kilos of sugar from a very small grocery at LE8.5 per kilo,” he said.

Mohamed has not been alone in his quest for sugar. The unmet demand has led some large supermarkets to put up signs saying that each customer can buy only two kilos of sugar in order to give consumers the chance to meet their needs.

Prime Minister Sherif Ismail met the Minister of Supply at the weekend to discuss the measures needed to provide sufficient sugar at reasonable prices. He said the government would import some 600,000 tons of sugar to meet market needs.

Ismail also instructed the Holding Company for Food Industries (HCFI) to deliver 100,000 tons of white sugar per month to the country’s food industries as well as packing factories at a price of LE6,000 per ton. 

The HCFI will also be committed to providing for the needs of the big supermarkets at LE4,550 per ton, on the condition that they sell the sugar at LE5 per kilo to consumers.

Ali Abdel-Rahman, a professor of agriculture at Al-Azhar University in Cairo, blamed the sugar shortages on monopolistic practices on the part of some importers and traders, who have been importing cheap raw sugar in large quantities, especially when the international price is low, and then refining it and selling it at higher prices, earning millions in profits.

Yet, there are other reasons for the increasing prices. Global sugar prices have been on the rise for the past year, going up by more than 50 per cent in the past six months alone. 

The prime minister said that the Ministry of Supply would increase its surveillance campaigns to follow up on the implementation of the government’s decisions and guarantee the availability of food commodities at reasonable prices. 

He said the Central Bank of Egypt (CBE) had provided the $1.8 billion needed to finance imports of basic food products and to maintain the country’s safe limit of food reserves for the coming six months. But the higher global sugar prices could pose additional costs for the government’s food subsidies bill.

According to the Ministry of Agriculture figures, local sugar production in 2016 is estimated at 2.2 million tons, while annual consumption reaches 3.1 million. To fill the gap, Egypt needs to import around 900,000 tons of sugar, mainly from Brazil and the European Union. 

Around 90 per cent of local production is from sugarcane grown in Upper Egypt, while the remaining is from beet that is mostly cultivated in the Nile Delta region.

To meet domestic needs for sugar, the government has imposed an export tax of LE900 per ton. On imports, it has had to impose protection fees when the amount of imported sugar exceeds the gap between production and consumption as an anti-dumping measure.

The last time the government increased the tariffs imposed on raw cane and beet sugar was in April 2015, when these went up from two to 20 per cent and from 10 to 20 per cent on refined sugar with a minimum of LE700 per ton. 

The new tariffs were to be implemented for 200 days, but in February 2016 the Ministry of Trade and Industry cancelled the 20 per cent tariffs imposed on sugar imports. 

In order to protect farmers, the government provides a supply purchasing price for sugarcane through the state-run Sugar and Integrated Industries Company, an affiliate of the HCFI and the Ministry of Supply. This aims to support farmers’ incomes, while reducing the price of local sugar in order to increase its competitiveness. 

Sugar is a main staple in the food subsidies system that benefits around 69 million Egyptians, and sugar provided by the system is sold at LE5.5 per kg. 

According to former minister of supply Khaled Hanafi, the government is not using imported sugar in its subsidies programme in order to support the local sugar industry, which has suffered the effects of the global drop in sugar prices as a result of oversupply. 

Abdel-Rahman blamed the subsidies system for augmenting the problem, saying that it permitted a ration-card holder who is supplied with products to the value of LE15 free of charge to take one commodity for the total value. 

“A family of four persons can get sugar to the value of LE60 per month. This leads to high demand for products like sugar and cooking oil,” he explained. He suggested that the Ministry of Supply return to the old system, which permitted each person a fixed quota of each product. 

He added that Egyptians should also reduce their sugar consumption, which is one of the highest in the world. The international average is between 10 to 12 kilos per person a year, but in Egypt the rate is 30 kilos. 

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