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Egypt's Port Said to set wheat prices at global levels

Port Said will open a pilot study where local wheat will be sold at international prices in order to encourage cultivation

Ahram Online, Wednesday 31 Oct 2012
Egyptians buy bread from a bakery in Cairo (Photo; Reuters)

Egypt’s coastal governorate Port Said will be a pilot case for separating wheat production and distribution, whereby the price of wheat will be determined according to international prices, to be revised every three months, the state-run daily newspaper Al-Ahram reported Wednesday.

Ahmed Eissa, a member of the Freedom and Justice Party’s economic committee, stated that the new system will save about LE8 billion and provide 50,000 new job opportunities. He added that four other governorates will follow suit, should the pilot programme in Port Said prove successful.

The current subsidy for bread stands at around LE16.2 billion, in addition to LE5.5 billion for buying wheat.

According to Eissa, all loaves of bread will sell for the unified price of eight piastres.

Subsidised bread will be delivered to bakeries and co-ops to distribute at the these prices. Bakery owners will then hand over coupons to the Ministry of Supply to show the amounts sold, proving they have used their quotas of flour.

A 100 kilogramme sack of flour will be enough to produce around 1100 loaves, according to the report.

Eissa mentioned that the true cost of producing a loaf is 30 piastres, leaving the state to incur the difference between the cost price and selling price.

Minister of Finance Momtaz El-Said stated that the state budget would allocate higher subsidies for bread and wheat in FY2013/14, Al-Ahram reported Tuesday.

The government will buy wheat from farmers at international prices as an incentive to cultivate wheat. Meanwhile, the government is considering plans for the bread subsidy to be made available through the retail outlets of the Ministry of Supply, in order to eliminate black markets.

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