Thursday,20 September, 2018
Current issue | Issue 1338, (30 March - 5 April 2017)
Thursday,20 September, 2018
Issue 1338, (30 March - 5 April 2017)

Ahram Weekly

Revisiting food subsidies

The Ministry of Supply is readying a new food subsidy system to ensure continuity of supplies

Revisiting food subsidies
Revisiting food subsidies

Starting in April, nearly 70 million Egyptians will be able to buy staple foods such as cooking oil and sugar at reduced prices in a reformed subsidies system, according to a decision by Minister of Supply Ali Moselhi earlier this month.

“The current subsidy system does not obligate the state to provide staple foods through designated grocery shops,” said Maged Nadi, deputy chair of the Grocers Syndicate, and this will change under the new system.

It will bring benefits because it commits the state to providing two or three staple foods by giving each beneficiary LE21 to purchase such commodities. At present, the price of one kg of sugar under the subsidies programme is LE8, and an 800g bottle of cooking oil is LE12.

According to Moselhi, the beneficiaries of the programme will not be obliged to buy specific commodities and efforts will be made to educate them about their rights. One of the problems with the present system is widespread fraud, and it is hoped that this will be remedied by the new system.

There are currently 21 million ration cards serving some 69 million people in the food subsidy programme.

“The state’s commitment to providing basic commodities under the new system aims to drive down demand for these goods on the free market,” explained Al-Arabi Abu Taleb, chairman of the Supplies Inspectors Union. “This will result in greater efficiency savings for all.”

In preparation for the new system, the Holding Company for Food Industries and the General Company for Wholesale Trade at the Ministry of Supply have asked area managers from Cairo to Aswan to place one bottle of cooking oil and one bag of subsidised sugar in bags to be distributed to individuals in April.

In February, the ministry announced it had signed a deal with Integrated Sugar Industries to provide 130,000 tons of sugar each month to the General Authority for Supply Commodities (GASC). It also signed an agreement with sugar beet refineries for 90,000 tons of sugar to sell at market prices, according to Mamdouh Ramadan, a spokesman for the Ministry of Supply.

Moselhi said his ministry would provide bags containing oil and sugar at designated grocery shops. These would be set aside in separate bags so people would understand that the subsidised oil costs LE12 and the sugar LE8 under the subsidies system run by the ministry, cutting down possibilities of fraud. They would also be free to buy these or other commodities at market prices.

There are 130,000 designated grocers and 2,000 co-ops in the network run by the Holding Company for Food Industries.

Over recent months, there have been shortages in subsidised sugar and rice, and ration card beneficiaries have had difficulty finding these commodities at designated grocers. “I often went to the shops and could not find what I was looking for,” said Malaka Mohamed, a pensioner living in Cairo.

“The cooking oil I was given was also of poor quality and dark in colour,” she said.

Mohamed said she did not know the price of sugar would jump to LE10.5 in shops outside the subsidies system. She said the new system would be very good if the products provided by the state were of acceptable quality.

Mohamed Ammar, a man in his 30s, said he thought the old system was better since people could choose which goods they wanted instead of “wasting subsidies on the smart card system”.

He said there were doubts that the state could meet people’s expectations. The smart card system also did not allow card holders to save sugar and oil rations over to the following month, as had been the case in the past using paper cards.

Under the old system, grocers would sometimes write down the owed oil and sugar on the back of ration cards for the next month or for whenever the commodities became available. The current system allows beneficiaries to take other goods worth LE21, but at free market prices.

As well as the contract with Integrated Sugar Industries, the ministry has also signed deals with private sector rice suppliers to provide 200,000 tons of rice each month, according to Ramadan.

Through the GASC, the state subsidises sugar, oil and rice. According to Moselhi, the overall cost of the subsidies in the 2017-2018 budget is LE26.5 billion, though this figure has not been finalised.

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