Containing the sugar crisis

Amira Hisham , Tuesday 28 Nov 2023

While the price of sugar has been rising, government controls are ensuring its availability to consumers, writes Amira Hisham

Sugar

 

Sugar traders and distributors have been given 10 days to rein in runaway sugar prices or face possible price controls, said Ali Moselhi, the minister of supply, on Sunday.

Sugar prices and its growing unavailability at a reasonable cost have been the talk of the town during the past three weeks. Where it can be found, it is selling at almost double its price a month ago, hovering around LE50 per kg.

The minister and market observers cited a number of factors to explain the rise, starting with the increases in international sugar prices, manipulative practices by some traders, and lower sugar imports due to problems acquiring hard currency.

Egypt’s production of sugar covers between 87.5 and 90 per cent of its consumption, and the rest is covered by imports, according to Hussein Al-Fendi, head of the Sugar Division at the Federation of Egyptian Industries.

What has pushed prices up is the fact that private-sector importers have not imported the usual quantities due to hikes in sugar prices in the international markets, Al-Fendi said, adding that international prices have jumped from $625 per ton to $780 per ton.

The present scarcity of hard currency in Egypt has made it harder for local sugar importers to acquire the dollars needed to pay for shipments.

Al-Fendi said the government is trying to halt the jumps in sugar prices as the local harvest season is close. The sugar cane harvest starts in December and the harvesting of beetroot is in March.

Talking on the primetime talk show Kalema Akheera on Sunday night, Moselhi said that Egypt has sugar reserves that cover its needs for 5.7 months, adding that the root of the problem lies in distribution.

Hisham Al-Degwi, head of the Grocery Supply Division at the Federation of Chambers of Commerce, seconded this opinion, saying that some packaging companies buy sugar on the commodities exchange then sell it at a much higher price to the industrial sector rather than supplying it to merchants in order to make gains.

The ministry is now not only responsible for providing sugar for outlets that sell it on ration cards, but also for providing for the needs of the industrial and commercial sectors through the commodity exchange, Moselhi said.

The government is also making withdrawals from its strategic sugar reserves to cover the needs of state-owned outlets that sell subsidised sugar to ration-card holders, wholesale merchants, and food factories.

The overall volume of sugar pumped into the market by the ministry during the last three weeks amounted to 164,000 tons, the minister said.

While sugar is sold to ration-card holders at LE12.6 per kg, the commodity exchange offers it to the commercial and industrial sector at LE24,000 per ton to be sold in outlets at a price of LE27,000 per ton or LE27 per kg, Moselhi explained.

However, some traders sell it in the parallel market at LE40 per kg, he added. The output of private-sector producers is also offered at prices higher than the LE27 threshold.

According to the Ministry of Supply, Egypt’s annual sugar production stands at 2.8 million tons, while consumption is around 3.2 million tons.

The General Authority for Supply Commodities has contracted for 100,000 tons of white sugar that is expected to arrive in the second half of November, Moselhi said. The contracts are in line with directives by President Abdel-Fattah Al-Sisi aiming to bolster the strategic sugar stocks and fulfil people’s needs.

Karim Gomaa, the assistant minister of supply, reaffirmed on television that Egypt’s sugar reserves will last until April and anticipated an increase of 200,000 tons in local sugar production from sugarcane in January 2024.

He added that sugar production from sugar beet is expected at the end of February or the beginning of March 2024 and that this will increase the strategic sugar stock for a long period and contribute to ending the crisis.

Egypt implemented a ban on sugar exports in March for an initial period of three months. The decision was subsequently extended twice, first on 22 June and then on 21 September.

At an earlier press conference, Moselhi said that he had himself assumed office during the 2017 sugar crisis. He attributed the shortages at that time to the export of sugar, adding that exporting materials needed at home is not a wise decision.

Al-Degwi said the sugar crisis would end shortly as substantial quantities of sugar are being directly supplied to shops instead of to distributors who then supply supermarkets.

 


* A version of this article appears in print in the 30 November, 2023 edition of Al-Ahram Weekly

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