Thursday,20 September, 2018
Current issue | Issue 1324, (15 - 21 December 2016)
Thursday,20 September, 2018
Issue 1324, (15 - 21 December 2016)

Ahram Weekly

Bittersweet increases

Some consumers are still experiencing difficulties in buying sugar at reasonable prices, reports Safeya Mounir

Al-Ahram Weekly

“Some government decisions have contributed to the sugar crisis,” declared the owner of one private sugar factory talking to Al-Ahram Weekly on condition of anonymity.
 
He said that the tariffs imposed on sugar earlier this year, the recent increase in the value of the dollar against the pound, and the hikes in sugar prices worldwide had forced many importers to stop importing sugar. A decree by former minister of trade and industry Mounir Fakhri Abdel-Nour in April 2015 imposed temporary duties of 20 per cent on imported sugar for a minimum of LE700 for 200 days. President Abdel-Fattah Al-Sisi then issued a decree earlier this year raising tariffs on imported white sugar from two to 20 per cent.

“The rise in the value of the dollar against the pound before the decision to float the pound and the government’s insistence on capping the price of sugar at LE7 per kilogram meant losses for importers,” the factory owner said. “As a result, many importers have refused to import sugar from overseas.”

He said the government should have removed the tariffs on sugar imports and raised the domestic price of sugar earlier in order to encourage importers. Prime Minister Sherif Ismail issued a decree on 17 November eliminating tariffs on imported sugar until May 2017.
 
Egypt produces around one million tons of sugar from sugar cane and another 1.2 million tons from sugar beet each year. The country’s consumption amounts to 3.2 million tons, with imports making up the difference between local supply and demand.

Ashraf Rezeiqa, a member of the Sugar Industry Division at the Federation of Egyptian Industries, said the government wanted to protect the industry at the expense of the consumer by imposing tariffs.
 
When these rose, importers stopped importing sugar since the government still insisted that one kilogram of sugar should sell for LE5 for ration-card holders and LE7 on the open market. This meant losses for importers, he said, since the international prices of sugar had risen, and he described the government’s decision to raise the price of one kilogram of sugar on the open market to LE10 as “very late”.

Sugar-price inflation has escalated in recent weeks, with one kilogram at chain store Seoudi reaching LE12 and consumers not being allowed to buy more than two kilograms. The Lulu chain has been selling sugar for LE7.5 per kg.

Rezeiqa said that about 20,000 tons of white sugar had arrived in Egypt after the decision to remove the tariffs, and the price per kilogram had gone up. He said that other shipments were on their way and the shortages should end shortly after the end of the local production season in January.

Many importers have also faced difficulties in finding the dollars they need to import sugar, and some have resorted to the parallel market in order to buy hard currency to pay for imports or raw materials.
 
According to the November consumer price index issued on 8 December by the Central Agency for Public Mobilisation and Statistics (CAPMAS), the price of food including significant amounts of sugar rose by 47.4 per cent in November, with the price of sugar rising by 68.3 per cent during the same month.

The General Agency for Supply Commodities, which is responsible for providing commodities for ration-card holders, announced earlier this week that it had cancelled a tender to import sugar because there had been insufficient offers.
 
The last tender was in September when it bought 20,000 tons of sugar at $580 per ton, including shipping.


GOVERNMENT SUGAR DECREES:

19 April 2015: Former minister of trade and industry Mounir Fakhri Abdel-Nour issues a decree imposing temporary duties of 20 per cent on imported sugar for a minimum of LE700 for 200 days.

January 2016: A presidential decree raises tariffs on sugar imports from two per cent to 20 per cent.

10 February: The government removes all tariffs on white sugar.

1 November: The Ministry of Supply raises the price of sugar on ration cards from LE5 to LE7 per kilogram.

16 November: The Holding Company for Food Industries raises the price of one ton of sugar for sale to factories from LE7,000 to LE10,000.


The writer is a freelance journalist.

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