Development & Aid, Economy & Trade, Food & Agriculture, Headlines, Middle East & North Africa

EGYPT: The Global Makes the Local Worse

Adam Morrow and Khaled Moussa al-Omrani

CAIRO, Apr 28 2008 (IPS) - The appearance of long breadlines outside state-run distribution centres in recent weeks has raised fears of possible bread shortages. Although the government has taken measures aimed at easing the crisis, experts point to soaring international wheat prices that have made the commodity more costly for households worldwide.

At a bread queue in Cairo. Credit: Khaled Moussa al-Omrani

At a bread queue in Cairo. Credit: Khaled Moussa al-Omrani

"Wheat prices jumped 20 percent on the local market last year," Hamdi Abdel Azim, former professor of economics at Cairo&#39s Sadat Academy told IPS. "But during the same period, global prices rose by a whopping 120 percent."

According to official statements, Egypt&#39s economy is growing at a rate of roughly 7 percent a year, and is set to grow further. But despite this rosy outlook, the vast majority of Egypt&#39s teeming population of 80 million has yet to feel the benefits of stated macro-economic growth.

In fact, most Egyptians complain that times have never been harder. With inflation soaring across the board, local prices of basic foodstuffs – including such staples as bread, rice and pasta – have tripled in recent months.

Per capita income, meanwhile, has failed to keep pace with rising prices. The past year has seen an unprecedented number of labour strikes and demonstrations, with workers angrily insisting on higher wages to meet soaring costs of living.

Even discounting inflation, Egypt&#39s situation is precarious: according to World Bank estimates, the number of Egyptians living in poverty – on a dollar per day or less – stands at roughly 20 percent of the population. Many independent observers have put the number as high as 50 percent.

Tellingly, recent weeks have seen the appearance of long queues outside of bakeries mandated with distributing state-subsidised bread, which sells for one fifth of the normal retail price. According to local reports, these breadlines have become the scene of occasional violence between frustrated – and hungry – patrons.

In an effort to ensure the availability of low-priced bread to low-income segments of the population, the government announced in March that the armed forces and police would help produce and distribute bread in and around the capital. Shortly afterwards, Prime Minister Ahmed Nazif announced a 15 percent salary raise for state employees.

Given soaring global wheat prices, however, some local commentators see these measures as little more than stop-gap in nature.

"These steps solved about 40 percent of the problem," Mohammed Sami, assistant professor of agro-economy at the agriculture ministry&#39s Centre for Desert Research told IPS. "The crisis has eased in the cities – due largely to the media attention it received – but breadlines are still a common feature in the countryside."

Despite once having been the "bread basket" of the Mediterranean, Egypt currently imports between seven and eight million tonnes of wheat every year to satisfy local demand. This represents roughly 55 percent of the country&#39s total domestic wheat consumption, estimated at some 14 million tonnes annually.

Informed observers note that as long as Egypt is a net importer of wheat, it will remain at the mercy of international price fluctuations.

Although global wheat prices have since fallen slightly, they hit a record high – 13.50 dollars per bushel – in February. In a recent policy statement, Nazif cited rising global prices, particularly for oil and wheat, as the chief cause of soaring domestic food prices.

According to media reports, international wheat reserves are at their lowest levels in decades. Within the last three years, serious drought in major growing areas, including the U.S. and Australia, has led to severe shortfalls in cereal stocks around the world.

Some experts have expressed concern that global wheat supplies could suffer further depletion by the spread of the Ug99 strain of wheat fungus.

Devastating to wheat yields and resistant to most fungicides, Ug99 was first reported in Uganda in 1999. Since then, the blight, also known as stem rust, has reportedly infected crops in north and east Africa, as well as Yemen and Iran.

In early March, the UN Food and Agriculture Organisation warned that, should the fungus spread further, wheat harvests in the Mediterranean region were also potentially at risk.

According to a report released this month by the UN-funded International Assessment of Agricultural Science and Technology for Development (IAASTD), current global food insecurity "threatens millions."

The IAASTD attributed soaring global prices partly to the reckless production of bio-fuels – driven by high world energy prices – which has risen at the expense of traditional food crops such as maize and wheat.

"Although the government has put an end to the practice, multinational companies were initially offering local farmers five times the usual price for their wheat harvests for use in bio-fuel production," said Sami.

The IAASTD report also blamed rising global prices on climate changes that have led to decreased harvests, higher energy costs and speculation on the cereal futures market. The report concluded by calling for a major reassessment of agricultural practices worldwide in order to allay the potentially adverse social effects of soaring food prices.

Local commentators say the answer lies in Egypt&#39s ability to achieve a degree of agricultural self-sufficiency.

"The crisis can&#39t be solved without increasing local wheat production," said Abdel Azim. "This can be done if the government reverses its policy of buying from international markets, and persuades local farmers to grow wheat instead of more lucrative crops."

According to Sami, however, Egypt&#39s prospects for self-sufficiency remain hindered by the government&#39s commitment to big business.

"Egypt has the ability to supply itself with wheat," said Sami. "But there are businessmen close to the government making a killing on imports – and they are keen to maintain the state&#39s longstanding policy of buying wheat abroad."

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