As the markets see its annual increase in food price for the holy month of Ramadan, Sarah Eissa looks for the reasons for the price hikes and asks if the government can come up with any solutions
Egyptian housewife Marwa Hussein sums up the food consumption of her family, which includes her husband and three children: “Our average main meal consists of a vegetable, chicken, rice and a green salad. Such a meal costs LE90 and is enough for two days. Because a kilo of chicken costs about LE22, while a kilo of meat can be LE90, we eat a maximum of three small chickens over the week, and we eat meat occasionally.”
Hussein says that whilefood prices are high, they recently decreased in supermarkets run by the Ministry of Supply and Trade. However, she sometimes finds a shortage of certain products, while some traders buy large quantities when they know products are cheap.
“Prices vary from one place to another. This is due to the lack of governmental control,” she says, and she expects prices to increase in Ramadan as they do every year.
However Muhammad Farag, the deputy chairman of the Farmers Union, expects there to be a good harvest in time for this Ramadan. Farmers are now aware of the products needed for the holy month, and accordingly they can better provide for the market.
“Unfortunately, products on the market are sold at double the buying price by farmers, which creates a gap,” Farag told The Middle East Observer. “To bridge this gap, production must be linked to manufacturing and marketing.
“About 95 per cent of farmers cannot control the prices because most of them need to sell their harvested crops just to pay for the rent for their land and to meet their daily expenses,” he says. “But the investors have a different agenda, including exporting and gaining high profits, and they control the prices.”
Fruit and vegetable merchant Muhammad Abdel-Azim, who has a stall at al-Obour wholesale market, says he receives his produce directly from farmers and has enough supply. The only challenge, in his opinion, is the high cost of transporting produce. However he sees the current price of vegetables as adequate. “The price of tomatoes has started to fall, and we are trying to sell them at a reasonable price.
When the quantity in the market is less than the demand, however, this certainly helps raise prices. Prices are also not stabilised according to the law of supply and demand, and Abdel-Azim expects prices to fall during Ramadan.
In his May speech to the nation, President Abdel-Fattah El-Sisi told the public not to worry as the government was working on providing basic food commodities at reasonable prices during the holy month of Ramadan. He also promised to step up efforts to stabilise prices.
Minister of Supply and Internal Trade Khaled Hanafi recently met the Cairo governor, Galal Said, together with wholesalers from al-Obour market, to discuss such procedures.
In a press release published on 18 May, the ministry announced a further 1,000 outlets for food supplies at discounted prices, 750 of which would be allocated to fruit and vegetables.
The government is also going to supply transport vehicles for vegetables and facilitate the mechanism of transferring products from al-Obour market to retailers to reduce transport costs.
According to its press release, the government is preparing two large outlets at al-Obour wholesale market. The outlets are affiliated to the al-Ahram and al-Nile companies allied to the holding company for food industries, which in turn is affiliated to the Ministry of Investment, and will be used to sort produce for sale to consumer complex branches and wholesale companies. These will be added to other outlets affiliated to the holding company for food industries, and will help limit the amount of waste produce and facilitate the marketing process.
The Trade Ministry, Hanafi says, will coordinate with the Central Bank of Egypt (CBE) to facilitate administrative procedures and open financial credits to smooth the process of importing food commodities and help increase food supplies. This in turn will guarantee market stability and maintain mutual trust between Egyptian importers and their foreign suppliers.
“Prices are temporarily stabilised owing to various factors, including a decrease in demand,” Ahmed Yehia, head of the Foodstuffs Division at the Cairo Chamber of Commerce, told the MEO.
“Prices of some products like rice and sugar have already increased by 5 per cent,” Yehia says. “This could be a temporary change because farmers and traders are busy with the wheat harvesting season. Prices usually reach their peak during the two weeks before Ramadan and get back to normal again just after the first week of the Holy Month.”
The Ministry of Supply says it has established more than 20,000 outlets for food commodities, as well as 500 vehicles to serve as sales points. The strategic reserves of wheat currently stand at 450,000 tons, a 210-per cent increase over the same time last year, while sugar reserves are at 1.6m tons.
As for poultry supplies, Abdel-Aziz al-Sayed, head of the poultry division of the Cairo Chamber of Commerce and the Federation of Egyptian Chambers of Commerce, says prices are high and production low.
“The Egyptian citizen depends on poultry because it is the cheaper animal protein,” Sayed told the ME Observer, adding that prices were high when compared with average incomes. He has a reason for the increase. “This winter was a hard season for the poultry industry, and deaths were high. It is the worst year since the 2007 bird ’flu started.” The bird ’flu epidemic resulted in large groups of small breeders leaving the system, which affected production.
The winter caused other problems. Chick prices rose to a high of LE7.50, an indicator that production for Ramadan will remain high.
“The level of demand as Ramadan approaches should be 2.1 million birds,” Sayed says. “So far there are hardly even 1.8 million. I do not like the supply and demand mechanism, but this is what controls us.”
He advises people not to buy more than they need to avoid more shortages and price increases.
Muhammad al-Naggar, professor of economics at Banha University, believes prices are extremely high and says the government is not concerned about the working and middle classes but only with investors. He referred to the government’s decision to halt working tax capital gains in the stock market for two years.
“Prices rise in Ramadan because public demand for food and beverages is exaggerated. When demand increases, so do prices. The responsibility rests on the shoulders of the government. It should place tighter controls on traders, at least prior to Ramadan, so that the people can endure the costs during the month,” “Naggar told the ME Observer.
Prime Minister Ibrahim Mehleb has decided to import fruit and vegetables to confront the price rise. Trader Abdel-Azim, however, disagrees with this move. “We have our farms, which are working effectively,”he says with pride. “If we worked together, our farms would be better than farms in any other country. The best produce come from Egyptian soil.”
The CBE also plans to pump US$500m. into supporting the import of basic commodities before Ramadan. Yehia calls this a positive step to stabilise the availability of products, and accordingly the market.
Naggar, however, disagrees. “It is good to import hard currency for imported products, but only well-off families can use such products,” he says.
Addressing the Egyptian government and officials, housewife Hussein—who represents every middle-class family—hopes prices will decrease. “Have some mercy and reduce the prices so we can all live,” she says.
