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Getting smart on bread

Fady Labib- Katrine Faragallah -Nariman Yanni

30 May 2014 8:44 pm


I have no idea what anyone in the world would do if he finds a piece of bread lying on the ground but an Egyptian would bend, pick it up, kiss it, say a short prayer and lay it beside the wall lest anyone should step on it. Such is the reverence for bread in the Egyptian culture.

Egyptians see bread as a gift from the Divine, the very substance of life; its name in Egyptian Arabic, eish, is literal for life. Bread is the main component of Egyptian diet; no food is eaten without bread and, while bread can do when no other food is attainable, no other food may do in place of bread. 
At some 180kg per person a year, Egypt’s bread consumption is among the highest in the world. Egyptian bread acts as a good source of protein, vitamins, fibre, and even iron with which it is fortified.
No surprise then that successive Egyptian governments have since as far back as the 1960s decided to subsidise the wheat imports that go into making bread. When Egypt’s population was a mere 25 million in the 1950s, the local wheat produce was sufficient to meet the people’s need for bread. Today that the population has reached a staggering 86 million and is steadily growing, the country purchases some 10 million tonnes a year on world markets, making Egypt the biggest wheat importer in the world. The subsidy for bread in turn reached some EGP22 billion last year. 
Huge waste
The bread subsidy was put into effect through the government distributing to bakeries quotas of flour at very low prices, to be used to bake bread that would in turn be sold to the public at the trifling price of 5 Piastres a loaf, almost 0.15 cents.
The system met with much criticism not least among which was that the bakeries preferred to bake less subsidised bread than their quota of flour allowed, and sell the remaining flour on the black market, making huge profits in the process. This crime, punishable by law, was termed ‘smuggling’ flour. The profit generated on subsidised bread was so meagre that the bakeries more often than not prepared and baked the bread with such negligence and carelessness as to render it next to inedible. The notoriously low price at which the bread was sold led many to purchase it for poultry or household animal feed which were much more costly. To say nothing, of course, of the painful bread shortages that would occur every once in a while when men and women had to queue for long hours to buy bread. The more well-to-do would buy non-subsidised bread on the market at prices that ranged from five to ten times the price of subsidised bread, but for the Egyptian families who could not afford any replacement, subsidised bread remained the staple food. 
The bread subsidy came under heavy fire from economists, officials, and the public for the huge waste of public funds it involved, in short summed up as “the subsidy does not go to those who really need it.” The waste was estimated to cost the government a 20 to 25 per cent loss on the budget for bread subsidy.
Tall order
It was inevitable that a new system should be set up, a system that would put an end to the waste and save funds, consequently leading to lower subsidy.
Yet untenable promises and innumerable plans put forward by officials over time meant that enhancing Egypt’s bread subsidy system and improving bread quality was a tall order. At this point in time, however, with the country in the wake of the Arab Spring revolution that has heavily depleted Egypt’s financial resources and ground the economy to an almost stand-still, it has become increasingly pressing to find a way out of the bread subsidy dilemma.
A recent decision by the Ministry of Supply and Foreign Trade may be the answer to the bread subsidy predicament. The plan is for the government to sell flour to the bakeries at its actual price and subsidise the final product, the loaf of bread which would still sell at 5 Piastres, instead of the original system of subsidising the flour. The system has already been implemented in the Suez Canal towns of Port Said, Suez and Islmailiya, where the public buy the bread from the bakeries using smart ration cards. That way the number of subsidised loaves sold to the public can be easily monitored, and the government pays only for that bread.
It’s all about going smart
So far, the system implemented in the Suez Canal towns has been a success. The plan is to extend it within three months throughout the whole of Egypt.
The public have been issued smart ration cards to buy bread directly from bakeries at the official price of 5 Piastres a loaf. Those not entitled to the ‘normal’ ration cards through which quotas of various basic foods are issued to the holder at subsidised prices, are issued a smart card only for the purchase of subsidised bread. The Ministry of Supply is also issuing special cards for institutions that need large rations of bread such as hospitals and orphanages. 
The Minister of Supply Khaled Hanafi reassured Egyptians at large that each smart card is assigned a more-than-sufficient monthly ration of bread according to the number of family members. “The card holder is allowed to take his monthly ration on a daily basis or take the entire monthly ration in a single day,” the minister said. “The number of loaves will be counted on the card as points. If an individual manages not to use his entire monthly ration of bread, he will save points which can be exchanged for free commodities such as dairy products, sugar, tea or oil from grocery stores. These free commodities gained through the point system would not prevent citizens from obtaining their monthly ration of groceries through the normal smart card.”
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Better for bakers
Members of the Bakeries Branch at the Federation of Chambers of Commerce (FEDCOC) approved the new system at a meeting with the Minister of Supply. Dr Hanafi explained that the new plan would do away with the corruption of the original bread subsidy system and would ensure the availability of bread for the public in large amounts at an improved quality without an increase in price.
At the meeting, the president and representatives of the Chamber of Cereals Industry praised the new plan for achieving social justice and providing bread for the public easily and in a dignified way.
Khaled Maqled, general coordinator of the Bakeries Branch in Qalyubiya governorate, says that liberalising the price of flour would increase competition between bakery owners who would each wish to attract the largest number of buyers. This, he said, means they would produce high-quality bread, thus bringing to an end the current low quality of subsidised bread.
“The new system of subsidising the loaf rather than the flour will also bring to an end the smuggling of subsidised flour,” he says.
However Abdel-Rahman Omar, president of the Bakeries Branch at the Minya Chamber of Commerce and Secretary-General of the General Bakeries Branch, points out that it was important that the Ministry of Supply should pay its dues to the bakeries on time. “Bakery owners face many problems, among them taxation, and the Minister of Supply should intervene to solve them,” he says. 
Subsidy as a concept
Mahmoud al-Umairi, former director of the Field Crops Research Institute at the Agricultural Research Centre, insists that the entire subsidy system needs complete restructuring because of its momentous economic and political implications. “The main problem with subsidies lies in the huge gap between the cost of production of goods and the price at which they are sold to the public,” he explains. “This gap is a huge burden on the State budget. In case of bread, it would be best to gradually increase the price of a loaf of bread to 10 Piastres, which would still be very cheap.”
“The decision must be taken from an economic rather than a political perspective,” Dr Umaiari says. “It would require a bold move to do so, since officials are always afraid that raising prices of basic commodities, the most basic of which is bread, would lead to social unrest. But, in my opinion, phasing out subsidy is the only real solution to the problem.”
On the ground
But how does the system measure on the ground? 
Experience proved that turning vision into reality is definitely not an easy task. Watani surveyed bakeries in Port Said and Ismailiya, interviewing many of those who lined up for their ration of subsidised bread.
Opinions differed substantially from one consumer to another. Some housewives hailed the new system, stressing that in the past they could only get 10 loaves of bread a day, which did not meet their family needs. But now, with the smart card, they get their daily bread quota of 5 loaves per family member quite easily. 
However, others complained that the system does not add children on the family ration card which makes the bread quota of families having a large number of youngsters insufficient. These families often look for other families who have a surplus of bread which they buy at a slightly higher price.
Opinions also diverged with respect to the quality of bread under the new system. Some people saw no difference in the size of bread while others noted a decrease in size, weight and quality of the loaves.
Sayed Megahed, a bread vendor at the Egyptian Company for Bakeries in Ismailiya, pointed out that although the Ministry of Supply had announced that each citizen would have the flexibility to buy his monthly ration of bread on daily, weekly or monthly basis, the actual application of the system doesn’t allow anyone to buy more than a three-day ration of bread a time. 
Savings
In the bakery, piles of plastic bags filled with bread were stocked on the shelves. Megahed explained that currently there was an overproduction of bread because according to the new system, subsidised bread could only be sold to holders of ration or bread cards. Issuing the cards remains a very slow and strenuous task despite all the ministry’s instructions to ease the process. In addition, only six family members may be registered on a ration card regardless of the actual size of the family.
It is interesting to point out that the reporters who accompanied the Minister of Supply during his tour of the bakeries in the city of Suez noticed that some people intentionally appeared in front of TV cameras to give a negative feedback of the new system. Their suspicious attitude implies that they might be paid by those who used to exploit the old system to make profits.
Some may approve, others may disapprove or complain, but it is expected that the new system will eventually win over especially that the government is more determined than ever to close Egypt’s budget deficiency caused by an inefficient and corrupt system of bread subsidy.  
In an interview on State TV, the Minister of Supply hailed the new system and announced that, even though it had only been implemented for a few weeks, the system had already achieved a 30 per cent decrease in wheat consumption. The minister also announced that Cairo would be next to implement the new bread subsidy system. 
Watani International
1 June 2014


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