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In Egypt, “nothing is affordable anymore”, even bread

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The price of bread has been yo-yoing in recent days in Egypt. Two weeks ago, Rabia, a baker in downtown Cairo, raised the price of his round flatbreads from 50 to 75 Egyptian pound cents. “With this war, it’s not just the price of flour that is soaring, that of gasoline and food too: everything is more expensive”, he justifies, leaning between the oven of his shop and a trolley.

In Egypt, bread is so central to the diet that it is said “aish” (life), in dialect. To counter this sudden increase of 50%, repercussion of the soaring world prices of wheat, the government decided, Sunday, March 20, to regulate its price. In exchange, the supply minister, Ali Al Moselhi, promised deliveries of flour at a reduced price. The Rabia pancakes are down to 50 cents.

Risk of wheat shortage

This measure, intended to ease the burden of the crisis on the Egyptian population, a third of whom live below the poverty line (according to official figures), is however weighing on the country’s wheat stocks. The world’s largest importer of wheat, of which more than 85% comes from Ukraine and Russia (23 and 62% respectively), Egypt has not received a grain since the start of the conflict in Eastern Europe , said the minister.

→ READ. Ukraine: “Each year, 74% of the wheat produced in the country goes abroad”

Faced with the risk of a shortage, and at a time when world prices are reaching peaks, the authorities are turning to the local harvest, scheduled for April. An envelope of 36 billion pounds should make it possible to double orders to reach 6 million tonnes of Egyptian wheat. Farmers will have to provide at least 60% of their crops, or else they are threatened with being deprived of subsidies, fines or even prison.

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These penalties are commensurate with the urgency. Because these stocks are essential to supply the subsidized bread program, sold at a fixed price of 5 cents. No less than 70% of the population benefits from it. Added to strategic stocks, these Egyptian wheat orders will cover the production of subsidized bread until the end of the year,” says Gamal Siam, professor of agricultural economics at Cairo University.

Increase strategic stocks

According to this food security specialist, Egypt, which “imports 60% of its food needs, must increase its strategic stocks. Going from a four-month reserve currently to a year of wheat would avoid the effect of crises such as that of Covid-19 or the Russian-Ukrainian war”, he points out.

→ ANALYSIS. War in Ukraine: the wheat planet in turmoil facing the risk of shortage

But the time is over for such reforms. The Egyptian economy is shaken by the global rise in commodity prices. According to the National Statistics Agency, in February the inflation rate reached 10% year on year, a record since mid-2019. At the head of this soaring price: staple foods, particularly popular as the month of Ramadan approaches on April 2. To curb inflation, the authorities banned, for three months, exports of wheat, beans, lentils, pasta and flour.

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currency devaluation

At the Mounira market, a few blocks from the Rabia bakery, customers are struggling to see the effects of this decision. “Nothing is affordable anymore. I have no choice but to reduce the quantities and I no longer buy meat,” laments Nadia, a 50-year-old mother of four children.

→ REPORT. Tunisia: War in Ukraine worsens wheat shortages

Last blow, last Monday, the central bank devalued the currency in an attempt to stem the flight of foreign capital caused by the war. The pound plunged 14%, signaling a further rise in the cost of living. “A lot of people are at the end of their tether,” deplores a septuagenarian met at the exit of the market.

According to the Minister of Finance, Mohamed Maiet, 7 billion dollars (6.36 billion euros) have been released to mitigate the effects of inflation. This plan notably provides for the addition of 450,000 families to the subsidy system. Egypt, which is starting discussions with the IMF to obtain a new loan, is also finalizing negotiations with India, the world’s second largest producer of wheat, and is leading discussions with the United States, Argentina and France.

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