Friday,24 November, 2017
Current issue | Issue 1167, (3 - 9 October 2013)
Friday,24 November, 2017
Issue 1167, (3 - 9 October 2013)

Ahram Weekly

Reining in prices

How successful are government attempts to control commodity prices, asks Nesma Nowar

Fruits and vegetables
Fruits and vegetables
Al-Ahram Weekly

Within three days of the government’s imposing guide prices on 28 types of fruit and vegetables last week, the prices of some commodities had eased in the county’s wholesale and retail markets. One kilogramme of green beans was selling at LE6 this week, for example, compared to LE12 last week by retailers.
However, the prices of some other vegetables and fruit have not decreased and instead have continued to soar, including courgettes, selling at LE6 per kilo though its proposed price should range from LE3.75 to LE4.5, according to the government.
Mohamed Amin, a grocer, explained the changes in prices as a result of supply and demand rather than because of the government’s guide prices, adding that the decrease in green bean prices was because of abundant supply this week compared to the last one.
Meanwhile, he said other types of vegetables were selling for more than their assigned prices, such as okra, which is sold at LE12 per kilo though its price should range from LE8 to LE9. The high price of okra was due to a lower supply as it is now the end of season.  
“The prices of any kind of vegetable are high during the start or end of the season,” Mahmoud Al-Askalani, head of the Consumers Against Price Hikes Association told Al-Ahram Weekly. “That’s why we didn’t want to set a price for end-of-season vegetables and fruit,” he said.
The Ministry of Supply and Internal Trade held a meeting last Thursday with the country’s chambers of commerce and other concerned parties to address the problem of price hikes.
The meeting ended with all parties agreeing upon setting prices for vegetables and fruit on a weekly basis. The prices are intended to guide the market and are not mandatory. “We have set fair prices that should suit all vendors across the country,” Al-Askalani said.
Vegetables and fruit are not subsidised commodities, which makes any surge in their prices a burden on households.
The guide prices are designed as an attempt by the government to control the market and price hikes, said Ahmed Yehia, head of the food commodities division at the Cairo Chamber of Commerce.
He added that the move should help raise awareness among customers and vendors and curb malpractice by some sellers.
However, Yehia said the move could only solve the problem of price hikes in the short term and that more actions were needed. He explained that the main factor that determined the prices of commodities, especially vegetables and fruit, was supply and demand.
If the supply of any commodity was abundant, its price would decrease. “This is what happened to green beans and tomatoes. When there was a surplus, prices went down,” he said.
A kilo of tomatoes is now selling for LE1.25, though its guide price is LE1.50.
Yehia said that the government should supply the market with enough quantities of different commodities through its outlets at fair prices in such a way as to create competition and eliminate monopolistic practices in the marketplace.
Ahmed Gaber, the owner of a fruit shop in the Dokki neighbourhood of Cairo, said that the government should have increased the supply of food commodities in order to rebalance the market, rather than introducing fixed prices.
Gaber said that the latter approach was unfair to some registered grocers and shop owners who paid taxes, unlike unregistered street vendors who did not have any financial commitments.
Gaber noted that fixed pricing added to the losses which vendors shoulder due to the high temperatures, these ruining their commodities.
There was also another problem the government should address, Yehia said, claiming that the reason for the increased prices of vegetables and fruit was that large quantities of these commodities were damaged as a result of bad packaging.
“The government should work on improving packaging methods that would help reduce such damage.”
Opponents of the fixed pricing scheme argue that it will reduce the quality of commodities and help spawn a black market where better quality fruit and vegetables will be sold at higher prices.
Such fears can also be found in the marketplace, and one vendor asked by the Weekly said that if mandatory prices were imposed he would sell their poorest quality commodities at fixed prices, while raising the prices for the better quality ones.
The guide prices were imposed on Saturday, and the Ministry of Supply has assigned two hotlines for people having complaints about prices.
Mohamed Abu-Shadi, the minister of supply and internal trade, said that the ministry would continue to set prices on a weekly basis until stability returned to the market and that if retailers did not follow these prices, he would impose mandatory ones.
On a tour by the Weekly, it was found that not all grocers and fruit vendors knew about the implementation of the guide prices, saying that they were waiting to be informed.
Yehia said that there were no legal penalties on vendors who did not follow the government guide prices, adding that inspection campaigns by the Ministry of Supply would be “amicable” in nature and would be aimed at raising vendors’ awareness.
However, Yehia called upon consumers to boycott any vendor or grocer who did not abide by the government prices as a means to punish him.
He also praised the way the government had opted to redress the problem of price hikes by opening a dialogue with the concerned parties in a bid to reach fairer decisions that would be satisfactory to all.
“This is the most effective way to solve problems, because all parties will be eager to carry out the decisions that are taken,” he said.
Fixed prices were passed after the recent price hikes of fruit and vegetables such as tomatoes, potatoes, bananas, mango and beans. According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), the prices of vegetables increased in August by 5.2 per cent, compared to July.
CAPMAS attributed the increases to a hike in the prices of tomatoes by 7.7 per cent, cucumbers by 13.7 per cent, green beans by 36 per cent, and potatoes by around 10.7 per cent
Egypt’s annual urban headline inflation fell to 9.7 per cent in the 12 months to August 2013, down from 10.3 per cent a year earlier, figures from CAPMAS showed earlier this month.

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