The search for sugar

Sarah Elhosary , Tuesday 5 Mar 2024

Further efforts are being made to confront the challenges of rising sugar prices and local hoarding, reports Sarah Elhosary

The search for sugar
The search for sugar

 

Manoeuvring through the bustling streets of Cairo, Mohamed Reda, a taxi-driver, could not help but notice the queues of people patiently lining up to secure discounted sugar from consumer outlets.

Reflecting on the situation, he said that “I obtain subsidised sugar on my ration card and receive an extra kg for LE27. However, individuals without ration cards and small-scale businesses face challenges in obtaining sugar. When they find it, the cost can be more than LE50 a bag.”

“People can only purchase a bag or two of sugar at a time through outlets and consumer complexes. Consequently, café owners and coffee cart proprietors find themselves on a daily quest to obtain sugar, seemingly for personal use, but often integrating it into their businesses as well. Some even buy and sell sugar, capitalising on the price difference between subsidised sugar in government outlets and other private sellers.”

Also searching for sugar, a Cairo housewife said that “I don’t have a ration card, and I haven’t found sugar in any of the supermarkets. When I called the supermarket where I usually shop, they told me they would get it from an external source since it was not available. Subsequently, they sent me a receipt with a price of LE60 per kg unlike the regular price of LE27. The document only said ‘goods’ without specifying ‘sugar’, making it seem like I’m buying something illegal.”

Purchasing sugar at the same price but in a larger quantity for preparing sweets and pastries at his shop, Mohamed Ali, the owner of a bakery in Dar Al-Salam, said that “three months have passed, and I’ve consistently faced the challenge of buying sugar. The wholesale merchants who supply my bakery are currently out of stock. I spend my time visiting different areas in the search for sugar, and every time I locate it, the price has gone up.”

“Previously, I could get it for LE20 or slightly more. I now pay LE55, and today’s purchase cost me LE60. It is getting harder and harder to obtain sugar as numerous traders discreetly sell it with the utmost secrecy and within stringent limits and refuse to transport it from one area to another.”

Ali has resorted to temporary alternatives to add a sweet flavour to his pastries instead of sugar, such as honey and jam. However, he does not think he can continue in this manner.

 

“My brother closed his shop a few days ago as he could not find sugar at a reasonable price. My business is now under threat after I have worked for 35 years in pastries with my father. The increase in prices and the scarcity of materials have become unbearable. At the same time, I cannot raise the price of pastries for my customers, as they are already tired of the rising prices, and they will not buy.

“Besides sugar prices, flour prices have also increased by LE10,000 per ton in just two months. I now buy flour on credit to save money. So far, I have been buying sugar reluctantly despite the severe price difference that cuts into my profits in order to sustain the business. I have around 20 workers, and they all have families to support,” Ali added.

Tarek Mahrous, a wholesale trader in Old Cairo, stopped selling sugar entirely after its price reached LE60 a kg. “Six months ago, I stopped buying and selling sugar. I used to purchase five to 10 tons a week, depending on demand. I am not the only one who has stopped; numerous factories have also ceased producing sugar, while others sell it at a higher price.

“Half an hour ago, I was offered sugar at LE58 a kg, but I declined as customers would not accept such prices. Moreover, if the Ration Investigation Office finds sugar priced higher than LE27, the merchandise gets confiscated, and I will face legal consequences.”

Sugar Crisis

The sugar crisis has been having far-reaching consequences in recent months, coming to a head during a parliamentary session on 16 January.

Minister of Supply and Internal Trade Ali Moselhi appeared before the House of Representatives to respond to inquiries regarding the ministry’s apparent inability to tackle the sugar shortage and lack of stringent measures against traders hoarding goods to inflate prices.

MP Maha Abdel-Nasser told Al-Ahram Weekly that “I submitted two requests for a briefing addressed to the prime minister, the minister of agriculture and land reclamation, and the minister of supply and internal trade. One of the requests concerns expanding the cultivation of sugar cane in the light of the severe crisis that has hit the sugar market. Prices have skyrocketed, sometimes surpassing LE50 per kg.”

“The other request pertains to market oversight and clarification on sugar production, particularly regarding one of the largest sugar beet factories recently announced by the state.

“Despite the gap between local production and sugar consumption, I attribute much of the escalating crisis to some traders and distributors hoarding substantial amounts of sugar to inflate prices. The absence of sugar on the markets on such a scale reflects a lack of control, especially with the Administrative Control Authority recently arresting several officials of the Ministry of Supply and Internal Trade, affiliated government companies, and private-sector companies on charges of withholding subsidised items and manipulating prices.

“The Constitutional and Legislative Affairs Committee in parliament approved the amendment of Article 71 of the Consumer Protection Law recently, increasing the penalties for monopolising strategic commodities in local markets. The penalty now ranges from a minimum of one year’s imprisonment to a fine of no less than LE150,000 and not exceeding LE3 million or the equivalent value of the goods involved,” Abdel-Nasser said.

“In the case of repeated offences, the penalty includes imprisonment for no less than two years and not exceeding five years, with the fine doubled to its maximum. In all cases, the goods related to the crime are confiscated, the establishment may be closed for a period not exceeding six months, and the revocation of its license is also permissible. We hope this amendment will contribute to curbing monopolistic practices.”

According to Khaled Haggag, director of the Supply Department in the Rod Al-Farag district of Cairo, “there have been violations by some traders who have stockpiled sugar and sold it at higher prices, but after the efforts of the Supply Directorate’s campaigns, many have ceased engaging in activities that breach legal regulations.

“Our role involves reviewing invoices and matching them with goods in stores. If they do not align, we confiscate the goods,” Haggag said. “Stores must be licensed and have a commercial and tax registration. We ensure fairness by comparing wholesale with retail prices, following the minister of supply and internal trade’s directives. We also look into allegations of hoarding goods and storing them without offering them for sale, intending to sell them at a higher price later on.

“We oversee redistributing and selling the goods we confiscate through the ministry’s outlets at a sugar price of LE27. After seizing seven tons of sugar from non-compliant traders in our district, we supervised their redistribution through the ministry’s designated sales outlets following the public prosecutor’s instructions,” he added.

“Some wholesale traders have caused an artificial crisis in the market by stockpiling sugar. Others have done the same with onions, resulting in improper storage, causing the onions to overgrow, and leading to merchandise loss without benefiting either them or their customers.

“Some other traders have exploited increases in the price of the dollar and the global rise in sugar prices to raise the prices of locally produced sugar from factories in Abu Qurqas, Nag Hammadi, and other places. It is not legal to sell sugar at a higher price citing a rise in the price in the dollar, except for imported sugar from abroad, such as the Brazilian sugar that some companies recently imported, for example.”

In TV interviews at the end of last year, Moselhi said that Egypt produces approximately 2.7 million tons of sugar annually while consuming about 3.2 million tons, with an estimated gap of around 500,000 tons, most of it covered by private-sector imports.

The government supports about 80 per cent of consumption with local production, he said, adding that it had prohibited the export of white sugar to preserve the local crop after the sugar price spiked abroad and several companies tried to profit from the price difference by exporting it.

Moselhi said that many companies had refrained from importing the usual quantities to cover the gap, fearing difficulties in selling imported sugar due to cheaper locally produced sugar.

Ahmed Kamal, the official spokesperson for the Ministry of Supply, told the Weekly that “many private-sector companies have stopped importing sugar due to increasing global prices and their difficulties in securing dollars. The Ministry of Supply has imported approximately 600,000 tons of sugar to bridge the gap between local production and consumption. It aims to cover the needs of the commercial and industrial sectors, sales outlets, and retail chains, in addition to consumer complexes and ration cards.

“In addition to a kg of sugar at the subsidised price of LE12.6 with a ration card, people can also purchase additional sugar for LE27. The ministry provides a ton of sugar for LE30,000 to the industrial sector,” Kamal said.

“Alongside the availability of sugar at grocery stores and consumer complexes, the Ministry of Supply has provided sugar through various other outlets such as Ahlan Ramadan [Welcome Ramadan] and Al-Mowaten Awalan [The Citizen Comes First] at LE27 per kg as part of President Abdel-Fattah Al-Sisi’s initiative to reduce prices,” said Yasser Hanafi, director of commercial control at the Giza Supply Directorate.

“There are also mobile carts affiliated with the Ministry of Supply and the presidential initiative to reduce prices to reach the neediest areas. We supply large quantities of sugar daily to outlets, but the availability depends on people’s eagerness to purchase. Each person is allowed to buy a maximum of two kg of sugar. Many people, especially those who do not receive sugar on the ration cards, rush to buy it, fearing a shortage.”

Challenges Continue

According to Ahmed Hassan, a grocer and the owner of three The Citizen Come First outlets, people receive one kg of sugar per person monthly, with a maximum of six kg for a family of six or more, on the ration card.

People can buy a kg of sugar with a ration card for LE12.6 and any extra kg for LE27 for one to three individuals and two kg for four individuals or more. People with ration cards can obtain sugar at these quantities and prices from grocery stores or consumer complexes. People who do not have ration cards can get sugar from discounted goods outlets for LE27 per kg to a maximum of two kg per person.

“I’ve been selling subsidised goods since 1977, and the Ministry of Supply and Internal Trade has consistently fulfilled its commitments. However, the current challenges are affecting small manufacturers and people without ration cards,” Hassan said.

Many sweets factories and shops that used to rely on imported sugar have now switched to purchasing local sugar. The shift has affected the quantity available for household consumption, resulting in a shortage in the markets and subsequent price increases.

News has circulated about the authorities seizing sugar stockpiles at a well-known sweets factory. The absence of proper supervision has also allowed the sale of sugar allocated to consumers at LE27 to factories at a higher price, and monopolistic practices by some traders have exacerbated the crisis, Hassan said.

“I buy sugar from factories designated by the Ministry of Supply and Trade to sell it on at LE27 as part of the initiative to reduce commodity prices. Recently, the factories have distributed sugar in weekly or daily portions according to capacity. Sugar is sometimes available, and sometimes it is not. Since last Wednesday, it has not been available.

“I make sure to distribute any quantity I receive to the three retail outlets I own in order to ensure the sugar reaches people in different areas instead of being offered at a single selling point,” Hassan concluded.

* A version of this article appears in print in the 7 March, 2024 edition of Al-Ahram Weekly

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