Wheat consumption drops 23% after new bread subsidy system: Minister

Ahram Online , Monday 11 May 2015

Egypt launched a new subsidy system last year to reduce state spending on wheat

wheat field
Sayeda Hassan, 30, carries freshly harvested wheat in a field in Qaha, El-Kalubia governorate, northeast of Cairo, May 5, 2015 (Photo: Reuters)

Egypt's consumption of wheat dropped to 8.3 million tonnes in 2014/2015, decreasing by 23 percent in comparison to 10.2 million tonnes in 2013/2014, Supplies Minister Khaled Hanafi told the press on Monday.

Hanafi attributed the drop to Egypt's new bread subsidy programme, introduced last year to cut down on state spending.

Under the new smart-card system, card owners are entitled to a fixed ration of five loaves of bread per day at the unchanged subsidised price of LE0.05 per loaf. To avoid bakers selling off subsidised flour for profit, bakers buy flour at a market rate, and are reimbursed the subsidy later, based on sales data gathered from the smart cards.

The new system has been implemented in all 27 Egyptian governorates, according to the minister.

Wheat imports also dropped by 40 percent from 2013/2014 to 2014/2015, falling from 6.4 million tonnes to 4.6 million tonnes, he said.

Egypt, the world’s largest wheat importer needs around 9.5 million tonnes of wheat to produce subsidised bread, the main staple food for Egyptians.

For the first time in years, the General Authority for Supply Commodities managed to buy wheat directly without middlemen, thus cutting its costs, he said.

The new bread subsidy system has contributed to a decline in state spending on food subsidies, from LE37.3 billion in the last fiscal year to LE37 billion, said Hanafi.

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