Tuesday,21 November, 2017
Current issue | Issue 1365, (19 - 25 October 2017)
Tuesday,21 November, 2017
Issue 1365, (19 - 25 October 2017)

Ahram Weekly

Tagging difficulties

A new decree that obliges food manufacturers to print price tags on products has been widely criticised, writes Nesma Nowar

 

Price tags
Price tags

Food manufactures were enraged last week by a new decree issued by the Supply Ministry that orders them to put price tags on their products in “clear and non-erasable Arabic”.

The decree, published in the Official Gazette last week, punishes violators with one to five years in prison and a fine of between LE300 and LE1,000 in accordance with Article 9 of the compulsory pricing and profit-regulation law.

Violations could include manufacturers and importers failing to put prices on their products and retailers changing the prices of already-labelled products. The ministry has given the market a grace period until 31 December to sell all its unlabelled goods.

The decision is meant to put a brake on inflation, which is currently running at over 30 per cent on the back of the floatation of the Egyptian pound and cutting energy and electricity subsidies.

“We don’t want to scare the market. All countries try to regulate their markets to protect their citizens from the greed of some traders. It’s not compulsory pricing,” Supply Ministry Spokesman Mamdouh Ramadan was quoted as saying by Reuters.

Manufacturers are concerned about the difficulties of implementing the decision and the complications it could create, hampering the production process. Former head of the sugar division at the Federation of Egyptian Industries (FEI) Raafat Rozeika said that packaging would be a problem in the light of the new decision.

He said that manufacturers usually had stocks of packages that had prices printed on them. But in the light of fluctuating costs of production, prices could vary and therefore new packages with new prices would be needed, causing confusion and difficulties in the production process.

He added that these difficulties could also cause losses to retailers and exporters. “They might find themselves selling their products at a higher price than on the printed labels,” Rozeika told the Weekly.

The proper implementation of the decision needed discussion between all concerned parties so that the welfare of all sides could be safeguarded, he said. However, the decision had been issued without discussion, and the FEI was communicating with the Supply Ministry to try to find a solution that would not harm any side.

Head of the Food Industries Chamber at the Cairo Chamber of Commerce Ahmed Yehia agreed with Rozeika that the new decision could cause problems for manufactures, also citing the packaging problem.

He said that the problem lay with the implementation, wondering what would be the situation if a product’s price increased or decreased when there was a rigid printed price-tag system.  

Yehia was also sceptical about how effective the decision would be in curbing inflation. “The market is the main driver that controls prices, not decisions,” Yehia told the Weekly. “We should also not forget that the currency’s value has been halved,” he added.

Though Egypt might not be the only country that has made such a move, Rozeika stressed the importance of discussion among all the concerned parties to mull over how other countries had implemented the measure and whether it was applicable in Egypt.

“If it’s really necessary to implement this decision, I suggest that it be applied to strategic goods only,” he said.

Rozeika added that such decisions might harm investment, as investors could be wary of decisions that could cause confusion in the market without proper discussion among the parties concerned.  

Egypt is seeking to attract investment in order to revive its economy after years of political and economic instability. It has embarked on a bold economic reform programme that has included introducing new taxes and slashing energy subsides, which in turn have pushed prices up across the board.

The country’s headline inflation rate eased slightly in September to 31.6 per cent from 31.9 per cent in August, falling for two consecutive months for the first time since early 2016, according to figures from the Central Agency for Public Mobilisation and Statistics (CAPMAS).

In August, inflation slowed to 31.9 per cent from a 30-year high of 33 per cent in July.

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