Egypt to modify food subsidy system within three months

[DJKeefy]

The Egyptian government will implement a new food subsidy system within three months starting with a pilot project that will be implemented in Port Said next month. Supply minister, Khaled Hanafi announced that he is going to modify the food subsidy system in order to widen the range of goods offered to consumers.

The new system will also fix a limit for bread use per person that will be controlled through smart cards.

The new system resembles a cash transfer system as each smart subsidy card will include a certain number of points related to the number of family members and each commodity will be worth a certain number of points.

Currently, holders of subsidy cards have the right to a monthly amount of cooking oil, sugar and rice while there is no restriction on the amount of subsidised bread.

“People will be allowed to choose from a larger range of products like milk, fruits and vegetables according to each family's needs," said ministry spokesperson Mahmoud Diab.

“If a family's needs for bread for example are below the fixed amount, it can use the difference of points to meet other needs for free,” he added.

To implement the new system, the government has to finalize the introduction of smart cards; a program launched under Mubarak in order to liberalise flour prices.

According to Diab, only 500,000 familes out of 18.2 million holding subsidy cards still use the old paper card. The liberalisation of flour prices used for subsidised bread will take less than three months.

The government is adopting a previous plan announced in March 2013, under ousted President Mohamed Morsi, according to which it will continue to subsidise bread loaves, but not flour – which would henceforth be sold to bakeries at market prices. The move means that prices paid by bakeries for a 100-kilogram bag of flour would rise from LE16 to LE286.

The government will then purchase loaves of bread from bakeries for 34 piastres each before selling them to consumers at 5 piastres each.

“The new system will reduce fraud and thus bread subsidies," adds Diab.

The government has often accused bakeries of selling subsidised flour on the black market rather than using it to produce bread.

Local bread prices have remained unchanged since the 1980s due to a policy of frequent government intervention to stabilise subsidised bread prices. Until now, the local price for a loaf of bread remains about 5 piastres.

Food subsidies are expected to cost LE32 billion ($4.5 billion) in 2013/14 with more than two thirds of the amount going to bread subsidies.

In recent years, several government's plans to modify food and fuel subsidy systems were reportedly postponed.

Source: http://english.ahram.org.eg/News/96997.aspx

[Hafiz]

Egypt's biggest single budget problem is going to be solved within 3 months. Good luck. There have been 2 previous mass protests following government mismanagement of flour and food issues so they had better be careful this time. Sisi will want this underway so that he can blame others for the inevitable pain. The overall purpose is to reduce government outlay and remove corruption and there will be lots of complaints that Sisi will not want to field.

They say that 18.2 million households are on subsidies which at 6 persons per household must be just about everyone plus a few million hungry phantoms looking for seconds.

They have started the project with some sneaky PR claiming the purpose is to widen the range of goods available. Really. Looks like they are trying to wean Egyptians of their mono-maniacal addiction to bread. Now that's game and destined to fail.

They then say that there will, for the first time, be a monthly ceiling on subsidized bread. That is new. Previously they subsidized flour for bakeries and the home bakers of the poorer rural areas including Upper Egypt. Funding flour made bakers richer than they had a honest right to be. Setting a monthly ceiling which does not result in food riots will require some real skill leading to screwing it down at a later date. Poorer and rural areas of Luxor are probably home bakers and won't much like this new system which is more expensive to them than the old.

Milk, fruit and vegetables will be added to the subsidy list but within some (unstated) overall cap.

A lot is made of the proposed smart card system. Most say that the smart card system is as rorted as the paper system was with hundreds of thousands dead still entitled.

The changes seem less that first appear with millions of well off subsidized by the taxes from the poor to eat cheap bread. The same old problem with the subsidy system which reaches an apogee with multinationals given subsidized gas and oil to run their factories and prices so cheap for fuels that there is no incentive to save energy leading to more energy use. The real changes on eligibility which will free government resources for education, health and infrastructure will have to wait for another day whilst there tinkerings are just moving the deck chairs on the Titanic.

[A-Four]

As usual here, Hafiz says it all.

The only comment that I can add here, is that towards the end of the Mubarak period a policy was to be put in place, that the bakeries and the retail element to the public were to be separated, this would stop all corruption.

[Bearded Brian]

Just waiting for someone to say 'Let them eat cake'.

[Dusak]

One of the most talked about subjects between my friend and I are these subsidized food stuffs. The rice they receive is contaminated with all sorts of debris, mainly grit but they have found dead insects within the mix. The flour is again substandard, an odd grey colour and containing things that should not be in flour. The oil, the villagers state, looks like it has been recycled, a smoky consistency with a funny taste at times when used for cooking. Its all well and good giving cheap or free food stuffs out, but at least have the common decency to provide edible goods. This has been a complain for a few years, well before the revolution. But I suppose they think a starving man will eat his fill no matter what the taste.

[Hafiz]

A-Four the proposed Mubarak change is interesting maybe he will soon have a chance of implementing it when he is called back to government.

Dusak - the complaints you mention could also be true about other socialized areas of the economy or, indeed, of any socialized economy in the past 90 years. Poor workmanship, lack of imagination, waste, corruption and indifference or worse for the customer are par for the course.

A point obscured in my 1st post was that this proposed new scheme will, for the first time, put a ceiling on bread entitlements. I think that this will have an effect on public opinion

[Chocolate Eclair]

Dough!!!!!

[Glyphdoctor]

A-Four the proposed Mubarak change is interesting maybe he will soon have a chance of implementing it when he is called back to government.

Are you delusional? "when he is called back to government"?

[A-Four]

A-Four the proposed Mubarak change is interesting maybe he will soon have a chance of implementing it when he is called back to government.

Are you delusional? "when he is called back to government"?

I will not go fully along with Hafiz's off the cuff remark, but let me perhaps remind you Glyph,............old soldiers never die.