WATANI International 29 August 2010
It is Ramadan which, despite being officially the Muslim holy month of fasting, is notorious for spiralling food prices owing to abnormally high consumption levels. And this year is no exception. But Egyptians are not at all optimistic that prices could go ‘back to normal’ once Ramadan is over. “What goes up never comes down again,” is the popular belief where prices are concerned. Especially hurting is the price of meat which has spiralled beyond control, making the commodity prohibitively expensive for most families. What goes up Many experts believe the problem has its roots in the fact that demand has outweighed supply, or owes to the skyrocketing prices of fodder. But some believe the reason for the late escalation of the price of meat is the retraction of pork meat from the markets. After the spread of the H1N1 virus—commonly known as swine flu—last year, authorities in Egypt surprised the world by culling all its pigs, even though the World Health Organisation had informed the Egyptian Health Ministry that the decision to cull pigs was unnecessary and wasteful. At the time, the head of the pig breeder union in Egypt, Israel Ayad, predicted the price of meat would reach EGP100 a kilogramme, then considered a wild exaggeration. But Ayad insisted it was simple Math: he knew how many tons of pork went into the Egyptian market; their loss would lead to a predictable rise in price. In spite of the widely-varying opinions regarding the reasons for the jump in prices, one fact remains: prices in general, and of meat in particular, are increasing by the day. Unaffordable In the heavily populated Giza district of Imbaba, buyers crowd the fish sellers. One woman told me: “The price of a kilogramme of fish ranges between seven and eleven Egyptian Pounds (EGP), while that of 1kg of meat has risen to EGP50 and going up, and that of chicken to EGP25 and also rising. I came to buy fish because it is affordable.” Another woman, Umm Mahmoud, said sadly that in order to be able to afford meat she would have to buy low-priced cuts such as the head or the intestines, but she added that her children would not allow her to do this so she resorted to buying frozen meat. She explained that in the past she used to pity those who could only afford to buy such cuts. “Now, we are some of them”, she concluded. Hamdi Abdel-Hafiz, a middle-management employee, thinks the State should intervene and control the price rise, whether through importing more goods or through selling subsidised goods via State-owned outlets. He remarked that the unprecedented leap in the food prices, especially meat, required official action, otherwise the situation would metamorphose into a real crisis, especially given that the meagre wages of average employees cannot match the escalating prices. Mr Abdel-Hafiz believes that the meat crisis is the outcome of wrong policies, with the great increase in population countered by the failure of agricultural policies. No subsidies “Even though Egypt is an agricultural country, the State offers no subsidies or support to Egyptian farmers nor to agricultural or livestock growers,” says Mohamed Wahba, head of the butchers’ sector in the Union of the Chambers of Commerce. He explains that there is no real investment in the livestock sector and that the State always resorts to imports in order to fill in the gap between demand and supply. “This has resulted in the current meat crisis, which affects both the client and the supplier whose sales, compared with last year, have decreased by 50 per cent,” he says. With the increase in population, the demand on red meat increases. In addition, lifestyles have changed and social standards improved, thus demand has exceeded supply and prices have increased. There is also no room for horizontal expansion of agricultural land, so the State should encourage vertical expansion through maximising the productivity of livestock. This could be made through encouraging livestock breeders and offering them loans and subsidies, Mr Wahba says. Repercussions of the pig cull Major pig breeder Gamil Israel believes that the meat crisis will climax over the next few months. He says that hundreds of tons of pork meat, which ranged in price between EGP10 and EGP26 per kilo, would normally have served a large sector of the market. But with the disappearance of pork all the demand has been directed to other Egyptian livestock. Mr Israel remarks that even if we started breeding pigs today, it would have no effect on the market before at least a year. “We are unable to reach a solution for the crisis with the authorities. It was proved time and again that the pigs were innocent of the spread of the virus, but the State authorities stuck to their decision to cull all pigs on the pretext that the pig is an ‘unclean’ creature in Islam, and that it was being raised in non-hygienic conditions. The cull wiped out this 50-year old industry and shattered the livelihood of entire families who used to work in the field,” according to Mr Israel. He says that when the State finally allowed the import of pork from Brazil, its exorbitant price—EGP50 per kilo—made it difficult to sell to consumers. In addition, he explains, impediments in import procedures have made investors incur millions of pounds’ worth of losses. Mukhtar Abul-Fotouh, a member of the Giza local council, points out that Egypt is now a pork importer whereas it used to export quality pork. The high cost of importing and processing, Mr Abul-Fotouh says, stresses the need to go back to pig breeding. Fodder shortage General Mohamed Abu-Shadi, head of the internal commerce department of the Ministry of Commerce and Industry (MCI) told Watani that among the reasons for the meat crisis was fodder shortage, slaughtering young calves, and chronic animal diseases such as foot-and-mouth. Other factors such as the spread of the H5N1 virus—commonly known as bird flu—had affected the poultry industry and made consumers resort to meat, which complicates matters further. Mr Abu-Shadi says the MCI employs a strategy to balance between market supply and demand. The ministry, he says, encourages meat importers and is trying to open up new channels with some African countries in addition to existing ones with Brazil, India and Argentina. Taxes on imported meat are currently being reviewed by the ministry and may even be cancelled. Mr Abu-Shadi says imported meat is being sold to the consumer through some 3,600 State-owned outlets which do not seek profit. There is an air channel which brings in produce of Ethiopian meat as well as livestock to be slaughtered in Egypt which is then sold in the State-owned outlets for between EGP20 and EGP30 a kilogramme. Fluctuating prices Watani sounded the opinion of fodder importers who were partially accused for the price increase. “We import fodder components and process them locally. But the prices of these components, such as corn and soya, fluctuate with the fluctuation of the stock market. And this universally affects fodder prices,” said Mahmoud Abdel-Gelil, a fodder importer. “We primarily depend on United States for the corn and soya, and the rest we import from Argentina, Romania, Russia and Ukraine. There is an optimum weight upon which to sell the cattle, the longer they are kept alive the higher their feeding cost and thus the lower the breeder’s and trader’s profits. Genetic imprint Kamil Mittias, head of the Genetic Research Institute (GRI) told Watani that when the decision to cull pigs was taken the GRI suggested keeping specimens of the genetic imprint of the pigs, especially since that particular breed was an indigenous Egyptian one, and could produce between 10 and 12 piglets at a time. Dr Mittias believes that the culling of the pigs lies behind the current increase in meat prices, but only up to a certain extent. There are other factors responsible for the crisis, Dr Mettias says. We should not forget, he says, that during the bird flu crisis no amount of awareness campaigns succeeded in convincing Egyptians to give up their poultry. While the decision to cull the pigs was a political decision, it might lead to rebuilding the pig polutaion in more suitable safer conditions. According to Dr Mettias, the Ministry of Agriculture has assigned, in compensation for pig breeders, areas for pig breeding outside the residential neighbourhoods. On the economic level, Dr Mettias explained, Egypt only had 250,000 pigs versus some 13 million heads of cattle.