Egypt’s bread distribution system has wasted between 20% and 25% of the state’s bread subsidies budget, which amounts to EGP 21bn, Minister of Supply and Internal Trade Khaled Hanafy said Monday, describing the current distribution system as a “failure”.
“This system allowed bakery owners to smuggle flour and sell it on the black market at higher prices,” Hanafy said during a press conference.
A complete plan to “end the bread crisis” and stop wasting state funds on ineffective subsidies will be announced within 10 days, Hanafy said in a phone interview with MBC Masr Monday.
The plan would not reduce the amount of money allocated for bread subsidies, but it would “restructure bread production,” he said. For example, centres around the country where subsidised bread is sold will be open longer. Bread distribution will also be added to the smartcard programme, which the government adopted to regulate the distribution of diesel and fuel in an effort to address shortages and combat smuggling.
Egypt has imported 4.5m tons of wheat since July, Hanafy said, noting that these quantities will be sufficient to meet the country’s needs until June 2014. “Budget appropriations for importing additional wheat are ready,” he said. The Ministry of Supply announced Sunday that it has purchased 295,000 tons of wheat from Romania and Russia, which is expected to be delivered beginning mid-March.
The Ministry of Supply will be working on lowering the price of importing wheat, reducing the accumulation of wheat stock, and guaranteeing wheat supply in a timely manner, Hanafy said.
Hanafy said the indicative price system set by former prime minister Hazem El-Beblawi’s cabinet will be suspended. “This system helps create a black market by setting two different prices, one official and one unofficial,” he said.
Under the system, the Ministry of Supply publishes indicative prices for commodities, such as fruits and vegetables, for merchants to follow. It was developed after a plan to set compulsory prices, approved in September, was criticised for encouraging the recovery of black and parallel markets.
Consumer complexes that are selling food commodities at subsidised prices should be increased nationwide, said Prime Minister Mehleb in a Monday meeting with Hanafy.
Mehleb pledged to dispatch mobile trucks selling those commodities to areas that don’t include consumer complexes.