No food crisis

Thursday 10 Nov 2022

Minister of Supply and Internal Trade Ali Moselhi dismissed rumours that Egypt is in the grip of a major sugar and rice shortage.

Rice

 

“Egypt will not face any crises in sugar or rice shortages in the near future,” said Minister of Supply and Internal Trade Ali Moselhi in a TV interview on Sunday, indicating that local production covered 90 per cent of the country’s needs of sugar in 2022 and that this would increase to 100 per cent in 2023."

“The fact that Egypt will be able to cover 100 per cent of its local sugar consumption in 2023 should be good news to citizens as they will not feel the pinch of international sugar prices which have been on the rise since the eruption of the Russia-Ukraine war,” Moselhi said.

He lamented that there had been much speculation on the rice market since 2022, leading to a hike in retail prices. “Many traders have been greatly involved in stockpiling rice to sell later at higher prices and gain illegal profits,” Moselhi said, revealing that some traders profiteered more than LE7,000 per ton because of such speculation and monopolistic practices.

Moselhi also insisted that like sugar, Egypt’s production of rice is enough to cover 100 per cent of its consumption. “While Egypt is producing 3.5 million tons of rice, it is consuming 3.2 million tons, and so we are able to meet our local consumption needs 100 per cent and even have a surplus of 300,000 tons to export. This is why I say there is an artificial crisis about rice supplies on the local market,” Moselhi said.

He attributed the dramatic rise in rice prices on the local market to the war in Ukraine. “The spike in rice prices on world markets due to this war led traders to stockpile huge quantities rather than sell them to the Ministry of Supply,” Moselhi said, indicating that “the price per ton increased from LE3,200 at the beginning of the season to LE10,000 right now.”

The fact that stockpiling rice is an easy process for anyone as rice can stay in storehouses for a long time without losing its quality due to weather or pests has exacerbated the problem, according to the minister. “This makes it attractive for many people to buy a lot of tons of rice from farmers, stockpile them, and then sell later at higher prices,” Moselhi said, adding that many school teachers, doctors, and lawyers are involved in this stockpiling process for a profitable and fast-returning investment.

Traders and speculators tried to sell rice to the Supply Ministry at LE10,000 per ton, betting that the war in Ukraine would make it much more difficult and expensive for the government to import from abroad. However, “we already imported 55,000 tons of rice from India last year, but it is quite expensive to buy after the war in Ukraine,” Moselhi said.

Last year’s rice crisis will not be repeated, vowed Moselhi who explained that he sat down with owners of the country’s major private rice mills — including Al-Doha, Al-Saa, Rihana, and Zomoroda — on Thursday and agreed that the price of packaged white rice would not exceed LE16.5 per kg. Accordingly, he expects that the current shortage of rice on the market will be solved within days.

While he assured that the Ministry of Supply in collaboration with the Interior Ministry will do their best to tighten control on the local rice market to stand up to speculative and monopolistic practices, he urged citizens to report any supermarket selling rice at prices higher than LE16.5.

Many MPs, however, blame the Supply Ministry for the rice shortage on the local market. Mohamed Zeineddin, deputy chairman of the majority party of Mostaqbal Watan in Beheira governorate, told Al-Ahram Weekly that “the Supply Ministry’s decision at the beginning of the harvest season in September to buy rice from farmers at low prices (LE3,200 per ton) led most of the rice growers to stockpile 60 per cent of the harvest (3.5-4 million tons).

“Even worse was the Supply Ministry’s intervention to force retailers to sell a kg for LE15 in violation of the free market policies,” Zeineddin said, adding that the government also tried to force private rice mills to sell at prices with low profit margin. “The only solution to the rice crisis is for the Supply Ministry not to intervene and let market forces determine the price,” Zeineddin added.  

Moselhi admitted that the price of food oils has notably increased on the local market. “We have a national 5.3-month stock of cooking oils and this made its cost on the retail market not rise very high,” said Moselhi, pointing also to the fact that the government “is committed to selling food oils at subsidised prices to ration card holders to make the market stable and immune to speculative practices. We sell an 800 gram bottle of food oil at LE25 to ration card holders, compared to LE35-40 on the free market,” said Moselhi, indicating that “this subsidised price cost the state a total of LE4.5 billion a year.”

Regarding wheat, Moselhi stressed that despite the fact that Ukraine and Russia are the largest suppliers of Egypt’s wheat imports, “we have a stable bread market despite this war because we have moved very early to contain the consequences,” Moselhi said, indicating that “Egypt has a five-month stock of wheat right now and this means we will stay without facing any crisis in this commodity until next April, and starting next month we will be announcing a new bid to buy 1.5 million tons to bolster our reserves for the next year.”

Moselhi said the cost of bread subsidies had reached up to LE51 billion so far and that it could go up to LE73 billion by the end of the current FY 2022-23 budget. “It was originally planned to allocate LE30 billion only to bread subsidies in FY 2022-23, but the war in Ukraine which led to a hike in international wheat prices plus the government’s new policy of raising the crop delivery price to wheat farmers have cost us an additional LE22 billion,” Moselhi said.

He had urged MPs in October to help the government rationalise bread subsidies to cut wheat imports and reduce pressure on the state budget and foreign exchange reserves. “I have just urged MPs to look into reaching a reformed and more efficient mechanism that can rationalise bread subsidies and make sure they go to citizens who really need them, but I did not say at all that we are going to phase out any part of bread subsidies,” Moselhi said.

He said the hike in prices of some basic food commodities like rice and sugar is 80 per cent due to internal problems and 20 per cent to external problems. “The reason for this is that internal supply chains face disruptions from time to time, not to mention the proliferation of speculative and monopolistic practices,” Moselhi said, adding that “in spite of all of these problems, the government does not have any plans to raise prices of any basic commodities.”

“The government has a duty to safeguard poor, limited-income, and average-income classes against high inflation rates and disruption in supply chains and our role as the Ministry of Supply and Internal Trade is to make sure that all commodities and goods are available on the market at affordable prices as much as possible,” he said.

*A version of this article appears in print in the 10 November, 2022 edition of Al-Ahram Weekly.

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