POVERTY: EGYPT: Fuel shortage threatens bread supplies

CAIRO, 2 April 2012 (IRIN)

 Photo: Amr Emam/IRIN
Customers buy subsidized bread at a Cairo bakery

It has been three months since a fuel shortage hit Egypt, and people’s patience is wearing thin amid fears the crisis could disrupt the production of subsidized bread.
“I move from one petrol station to another every day to find the fuel necessary for the work of the bakery,” Omar Muselhi, a bakery owner from Giza, told IRIN. “I cannot do this for long. If things get worse, I will close down.”
Most of Egypt’s subsidized bakeries need diesel to operate, and some have had to close, for example in the Nile Delta governorate of Monofiya (Arabic).
Outside Muselhi’s bakery, men, women and children form two long lines, and wait their turn.
“I buy 20 loaves of this bread for one pound, whereas the same number sells for four pounds at unsubsidized bakeries,” said Ayman Farahat, standing in line outside the bakery. “This shows how important these bakeries are for people like me.”
Observers say there is a 35 percent shortfall in fuel supplies. The government blames hoarding for the crisis. Thousands of cars queue outside petrol stations from early morning, while long queues form outside gas cylinder centres.
“We are doing our best to solve the problem, but what is happening is abnormal,” Petroleum Minister Abdallah Ghorab said on 24 March. “Some people take the subsidized fuel and sell it on the black market.”
The Petroleum Ministry has increased daily diesel supplies from 36,000 tons to 38,000 tons; petrol supplies from 16,000 to 18,000 tons; and gas cylinders from one million to 1.3 million.
But despite the move, there are numerous reports (Arabic) of fighting over fuel, reflecting citizens’ exasperation, and the need for further government intervention

Ambulance services are also at risk.
“The drivers go to petrol stations from early morning,” Naeem Rizk, the operations manager at Cairo’s main ambulance point, told IRIN. “Sometimes they spend the whole day waiting, but when their turn comes, they are told the fuel is over.”
When a policeman recently called Rizk to ask for help after he was wounded in a fight against armed men on the outskirts of Cairo, Rizk could not find an ambulance with enough fuel to take the policeman to hospital. The policeman’s colleagues had to call the Interior Ministry to borrow some.
Mohamed Abdullah, a 30-year-old ambulance driver, says his job has become even more stressful. “There are always long queues at petrol stations…This prevents me from reaching patients in time. The patients’ relatives always yell at me.”

Rethinking subsidies
Some economists believe the current crisis may force the government to rethink its fuel subsidies’ policy. Egypt spent the equivalent of US$83.3 billion subsidizing fuel over the past five years, according to the Petroleum Ministry.
“Around 60 percent of these subsidies go to people who do not deserve them,” said Rashad Abdo, a leading economist from Cairo University. “This makes it necessary for the government to rethink these subsidies.”
The government is currently reconsidering its support to major industrial institutions, which account for almost 70 percent of fuel subventions.
“If we can reduce petroleum subsidies by 10 percent, we can channel this money for the building of houses, hospitals, or schools,” said Petroleum Minister Ghorab. “We need to deliver subsidies to those who deserve them,” he was quoted as saying by al Masry Al Youm newspaper (Arabic) on 11 March.
Another government plan envisages the issuing of vouchers to poorer citizens to enable them to buy cooking gas for the equivalent of 83 US cents instead of US$5 for everyone else.
http://www.irinnews.org/Report/95222/EGYPT-Fuel-shortage-threatens-bread-supplies

MALNUTRITION: Cost of eating spikes for the Arab world

May 20 2011 : Olivia Ward
Let them eat bread. That refrain, from the authoritarian regime of President Hosni Mubarak, kept impoverished Egyptians from violent rebellion for decades. When food riots broke out in 2008, he contained them by promising to keep up the subsidies that were the barrier between malnutrition and starvation for one-third of the country’s 80 million people. The protests that brought down his regime were driven by hunger for democracy rather than bread. But as Egypt and other Arab countries remain volatile, there are fears that spiking grain prices could propel new discontent.
In the past week, wheat prices soared by 17 per cent, a worrying sign for those countries where it is a staple of the diet.
The Arab world buys about one-third of all the world’s traded wheat, says the World Bank, and that’s due to rise by 40 per cent over the next decade.

“In the U.S., people eat a lot of bread,” says Rami Zurayk of American University of Beirut, an expert in land and water resources. “But imagine a country where they eat about three times that much."
That would be Tunisia, where the Food and Agriculture Organization reports a total of 216 kilograms of wheat a year consumed by every person.
It is the world’s highest level of wheat consumption, and it far outstrips the U.S. and Canadian total of around 80 kilos a year.
But it isn’t unique in the Arab countries, where poverty is persistent, and bread and wheat products the cheapest way of filling a family’s stomachs.
Algeria’s per capita consumption is 210 kilos per year, and Egypt’s 185.
But Egypt is also the world’s leading importer of wheat, and the new transitional government must cope with escalating prices, along with pressure to continue the subsidies that Mubarak began. It’s a practice that other Arab leaders adopted in the hope of keeping their countries tranquil.
“In Egypt the poor aren’t starving, but they live on bread and tea for breakfast, lunch and dinner,” says Bessma Momani, a senior fellow of the Centre for International Governance Innovation. “If you take that away, you will have mass starvation.”
A large number of Egyptians, and other Arab citizens, spend most of their income to feed their families, and those at the bottom of the economic food chain feel the pain the most.
The spiking wheat prices should be good news for producers like Canada — which supplies only a fraction of Egypt’s needs, but sends more than 2 million tonnes of wheat to the Arab region, with Iraq Canada’s biggest client.
The prices are a boon to “farmers with grain in their bins,” says the Canadian Wheat Board.
But it cautions, this year “extremely wet growing and harvest seasons across most of the Prairies resulted in below-average production and quality for wheat, durum and barley,” while production of six major grains dropped 20 per cent, with spring wheat grades the lowest since 2004.
For Arab countries that supply wheat to their people at subsidized prices, the picture is worse.
“The politics taking place today makes it hard for them to cut back or re-target their food subsidies,” says Julian Lampietti of World Bank, who led a 2009 study of Arab food security.
But he adds, although the impact on government budgets is significant in some countries, “it’s probably not unmanageable. The combination of high oil and food prices shows a different effect too.”
While oil-importing countries suffer most, producers may balance the books by taking in bigger oil profits. And, Lampietti says, “there is a lot that can be done to cut down the cost of food,” through better management, including a change in the way grain is procured, unloaded and distributed.
But he warns, “I think we are looking at a new normal in prices. They are more volatile and leveling off at higher levels than in the 1990s.”
“Food prices in the past haven’t gone up the way they have in the last two years,” says Evan Fraser of University of Guelph, author of Empires of Food. “We are experiencing an extraordinary series of shocks to the food system.”
Grain reserves were once believed to be the answer, but the expense of stockpiling, and the opposition of the International Monetary Fund — which pushed indebted countries to reduce reserves for “market efficiency” and import grain when needed — has frayed that safety net. So has real estate speculation that gobbled arable land for development.
http://www.thestar.com/news/canada/article/994961--cost-of-eating-spikes-for-the-arab-world

POVERTY: EGYPT: Harder times as food, gas prices spiral

CAIRO, 11 May 2011 (IRIN)

 Photo: Amr Emam/IRIN
Egypt pays about US$1 billion a year to subsidize bread to feed its poorest people (file photo)

Abdel Moneim Ahmed was finally able to buy 10 loaves of subsidized bread after queuing for one-and-a-half hours with 30 people outside a bakery in the Egyptian capital, Cairo. Another woman, known only as Zeinab, said she had waited two hours. "You can see the problem for yourself,” she told IRIN.
The scene playing out in this El Sayeda Zeinab neighbourhood symbolizes a much wider problem. For the past few weeks, Egypt, which imports half its food and subsidizes bread prices, has experienced severe shortages of this key staple.
Egyptians call it "aish", literally meaning life. The price is fixed at five piasters (less than one US cent per loaf), against 50 piasters per unsubsidized loaf. Economists say Egyptian families spend about 40 percent of their monthly income on food.
"The real reason for the current inflation is that governments, even the existing one, do not protect consumers from merchants’ abuse,” said Ahmed El-Naggar, head economist at Ahram Center for Political and Strategic Studies, and editor in chief of its annual publication, Strategic Economic Directions.
The Egyptian economy took a bashing from protests that swept across the country earlier this year, hurting tourism revenues and affecting trade. "This led to a six percent decrease in exports in January and February," said El-Naggar.
According to the Finance Ministry, urban consumer inflation rose to 11.5 percent in the 12 months to March, its highest level since April 2010, from 10.7 percent in February.
"We no longer buy beef and chicken," Samira Abuzaid, a 45-year-old housewife, said. "I tell my children that we need to adapt to a diet without these two items."

Gas scarce
Another vital commodity that has become scarce and more expensive is cooking gas.
"Gas cylinders have suddenly disappeared," Emad Abul A'as said as he waited to buy a cylinder in the southern industrial city of Helwan. "If I do not get the cylinder from this centre, I will have to pay a lot for a cylinder outside."
Abul A'as, a 37-year-old cement factory worker and father of two, would have to pay six times the price of a subsidized gas cylinder elsewhere.
The government blames the situation in Libya and Gaza. Recently, Social Solidarity Minister Gouda Abdel Khaliq cited smuggling to Libya and Gaza as a reason for cylinder scarcity in Egypt, which imports 60 percent of its solid gas from Saudi Arabia and Algeria.
"Smugglers benefit from the difference in the price of the cylinders in Egypt," said Hossam Arafat, chairman of the petroleum section at the Federation of Commerce Chambers. "What makes this possible is that the government subsidizes the cylinders to the tune of 90 percent here."
Prices of other commodities have also risen dramatically in recent weeks. The prices of tomatoes, onions, green peppers, lemons, eggplants, potatoes, zucchini and beans have trebled, while items such as lentils are out of the reach of many.
"The future might be worse," said Rashad Abdou, an economics professor from Cairo University. "The prices might increase even more."

Consumer protection?
On 14 April, the World Bank said global food prices were 36 percent above their levels a year ago and remained volatile, driven in part by higher fuel costs connected to events in the Middle East and North Africa.
Another 10 percent increase in global prices could drive an additional 10 million people below the $1.25 poverty line, it added.
“More poor people are suffering and more people could become poor because of high and volatile food prices,” said World Bank President Robert Zoellick. “We have to put food first and protect the poor and vulnerable who spend most of their money on food.”
The government says it will try to bring down prices, according to Prime Minister Essam Sharaf in an address last week.
The deputy director at the at Ahram Center for Political and Strategic Studies, Abdel Fatah Al-Gibali, called for consumer protection, saying the supply of certain commodities had been monopolized by a small number of merchants, which affected the dynamics of the market.
“During the last period, or specifically since the start of the [protests] that toppled Mubarak, the society was not producing at all and the supply was less than the demand, [hence] an increase in prices,” he added.

http://www.irinnews.org/report.aspx?reportID=92682