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News Analysis: Egypt's decision to free flour prices faces obstacles in application

English.news.cn   2013-03-15 06:11:42            

by Marwa Yahia

CAIRO, March 14 (Xinhua) -- Egypt's decision to free the flour prices is a daring step to combat trading in the black market, but the move, re-enacting an old policy, may look better on paper than in application.

Despite a failure in 2006, the Egyptian government is confident that a comeback of the measure will eventually encourage bakeries' to produce more bread, a daily staple food for Egyptians, instead of selling subsidized flour in the black market for profit.

Most notably, Minister of Supply and Domestic Trade, Bassem Ouda, asserted that the new system will bring the government huge revenues, deliver the subsidies to those who deserve them, and prevent squandering of the public fund.

Ahmed Khorshid, a member of Bread Developing Committee, deemed the system as an urgent step aiming at getting rid of the black market and regulating sales, while noting its work will take time like any new system would.

He also pointed out that citizens' awareness is vital to the successful implementation of this measure, particularly the bakery owners' willingness to accept it.

This policy will not affect "honest bakery owners" as it targets those who sell state-subsidized flour in the black market, Khorshid told Xinhua.

According to Attyah Hamad, vice president of the Bakery Branch in the Commerce Chamber, the governmental inspectors had found some bakery owners selling subsidized flour sacks (70 kg) for 14. 81 U.S. dollars while getting it from the government for 2.37 dollars.

However, Abdullah Ghorab, president of the chamber, expressed sympathy with the bakery owners. He said the flour black market is not a phenomenon that only exists in Egypt, and that Egyptian bakery owners are going to have a hard time under the new policy.

The chamber president said the new system will no doubt in the face of opposition of the bakery owners, to whom the government is already in debt.

He explained that according to the contracts, the government should pay diesel subsidies to the bakery owners, which is already seven-month behind. As a result, the government owes 59.43 million dollars to some 25,000 registered bakeries in the country.

Under the new system, the government shall provide the bakeries with sacks of flour in return for loaves of bread for governmental outlets.

"The policy won't affect ordinary citizens as the country will continue to provide them with good bread at subsidized prices," Khorshid added.

Agreeing with Khorshid, Hamad said the government will still subsidize the final products so that the changes in flour prices will not affect the people.

However, the experts' opinion is not echoed by local citizen whose governorates have already adopted the new system. People have staged protests in Kafr el-Sheikh and Qalyubiyah over the declining quality of the subsidized bread.

"The bread isn't good even for animals," said Kamilia Ibrahim, a house wife, adding "The bakeries are punishing the poor people for a governmental decision."

Based on the angry reactions, Ghorab does not think the new policy will succeed, predicting it would "rot at the root."

He added that the government should have had coordinating procedures in place to guarantee a proper application of the measure, including a rise in wheat prices to encourage farmers to produce it more.

In Maadi district, southern Cairo, Abou Karim, a bakery worker, complained that his boss has cut down his wage because the bakery has turned to use 13 sacks of flour a day from 25 due to the waning business.

At another bakery in Haadaiq el-Qubba district of western Cairo, the owner said his sales have been influenced by the price hike of the flour, noting a ton of flour now costs 385 dollars from 300 dollars, adding that he has to raise the prices and loses customers as a result.

Editor: Mu Xuequan
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