The cabinet decided to terminate its decision to put a cap on rice prices on 15 February, a month ahead of a deadline it had earlier announced. The decision, Number 94/2023, followed a reported lack of the food staple in the market.
In September 2022, the cabinet issued a three-month fixed-price scheme for rice, in which the price of premium kinds was set at LE18 per kg, a packaged kg was set at LE15, and unpackaged rice was set at LE12 per kg. In mid-December, it extended the compulsory pricing mechanism for three more months.
The decision did not satisfy retailers, farmers, and factory owners, who said the prices did not reflect their costs or offer them fair profit margins. Many of them stopped supplying the market with rice, preferring to store it instead.
Before the cabinet decided to reverse its decision, Egyptian rice was available on a limited scale at the prices specified by the government. It was available at higher prices in some herbal stores and small grocery shops.
Hussein Abu Saddam, head of the Farmers Syndicate, lauded the decision to terminate the earlier decision, which came at a time when people are stocking up on their food needs for Ramadan, which begins on 23 March.
“It was necessary for the decision to be reversed so that sellers and farmers would release the rice they had been keeping in storage,” Abu Saddam said.
Galal Omran, head of the Food Supplies Division at the Chambers of Commerce, concurred, saying that the new decision would allow ample time for rice to re-enter the market ahead of Ramadan and stabilise prices.
The earlier decision to fix the price of rice had been the reason it had not been widely available on the market, he said.
Allowing the price of rice to find its own level would make the staple food abundantly available again, he said, particularly because Egypt produces ample supplies of rice, Omran told Al-Ahram Weekly.
Had the cabinet decision not been reversed, there would not have been “a grain of rice in the market come Ramadan,” he added.
Abu Saddam told the Weekly that rice prices will likely rise before they stabilise by Ramadan due to the competition between different brands. “The price it will stabilise at will be a fair price, factoring in the cost of production and the appreciation of the dollar against the Egyptian pound,” he said.
He expects rice prices to stabilise at between LE20 and LE25 per kg, whereas Omran believes a fair price will range from LE16 to LE22, depending on quality.
“Egypt imports wheat, from which alternatives to rice like pasta are produced. The appreciation of the dollar against the pound has raised the price of pasta, along with cooking oil and other foodstuffs, creating more demand for rice, which is cheaper,” Abu Saddam said.
Egypt is normally self-sufficient in rice, but for the “aforementioned reasons and because farmers only planted rice on the land the government allowed them to,” there had been excess demand, he added.
“In previous years, 3.2 million tons of rice covered the nation’s needs. At present, demand has risen to 3.5 million tons,” Abu Saddam said.
This year, 1.1 million feddans of land in Egypt were planted with rice. These produced 4.5 million tons of rice barley, which produced 3.2 million tons of white rice.
Abu Saddam suggested that larger areas of land should be allocated to rice cultivation, especially in Fayoum and the New Valley, to cover the needs of the increasing population.
He added that the government had decreased the amount of land planted with rice because the crop consumes large amounts of water. He proposed planting dry rice instead, as this needs moderate quantities of water in similar amounts to wheat and barley.
Some 200,000 feddans of land were planted with dry rice this year owing to a shortage of appropriate seeds. However, next year there should be more seeds available, leading to increased production, Abu Saddam concluded.
* A version of this article appears in print in the 23 February, 2023 edition of Al-Ahram Weekly
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