Subsidy rumours on rice

Amira Hisham, Thursday 7 Sep 2023

Experts explain the reasons behind rumours that rice has been excluded from Egypt’s subsidy system.

Rice remains part of the subsidy system
Rice remains part of the subsidy system


Many people were baffled last week when Ali Moselhi, the minister of supply and internal trade, said during the opening of an outlet in Luxor for rationed goods that “this month rice is not included in the list of subsidised items, but is available at premium quality for LE22.”

He added that “it is not that rice is not available, but that the LE50 [the value of the monthly ration card issued to over 60 million Egyptians] barely covers the price of cooking oil and sugar.”

This statement was interpreted to mean either that rice was going to see a price rise or that it would be excluded from the ration system altogether. However, Moselhi told Al-Ahram Weekly that the state has no intention of removing rice from the list of subsidised items.

The 31 subsidised items currently available on ration cards include packaged sugar (1 kg for LE12.6), cooking oil (800 ml for LE30), packaged rice (1 kg for LE12.6), pasta (800 g for LE13), pasta (400 g for LE6.5), packaged fava beans (500 g for LE9), and packaged flour (1 kg for LE11).

Soap, coffee, biscuits, and other items are sold at half the price of their equivalents in regular supermarkets.

These subsidised items cost a total of LE325, whereas the monthly ration card gives LE50 in subsidies, which means individauls can receive a maximum of three subsidised goods for free each month.

People often opt to receive subsidised cooking oil as it is sold in the market for LE60, or almost double the subsidised price. Other favourites include sugar and rice.

Chair of the Foodstuffs Division at the Giza governorate Hisham Al-Degwi told the Weekly that subsidised rice selling for LE12.6 per kg has been temporarily unavailable at supply outlets this month, adding that the staple remains part of the subsidy system. 

Another premium variety was introduced at supply outlets for LE22 per kg, he said. 

Another source who preferred to remain anonymous told the Weekly that subsidised rice was not available this month because the government had wanted to reduce the bill it shoulders to subsidise the staple, especially since this month marks the end of the previous growing season. 

The government had to import rice last year to bridge the shortage and provide it as a subsidised item for the 64 million beneficiaries of the ration-card system. 

Al-Degwi said that there was no shortage in terms of rice production, but some intermediaries had exploited the situation last year by purchasing rice from farmers during the harvest season and stockpiling it. This had led to inflated prices and lower availability, prompting the government to import rice from India to address the deficit caused by monopolistic practices and stabilise the market.

Moselhi said that this year’s rice harvest season was balanced in terms of supply and demand. Approximately 1.6 million feddans were cultivated this year, exceeding Egypt’s sufficiency level of 1.2 million feddans, he said. Rice exports will continue to be banned, ensuring its availability in the domestic market.

New-season rice will be available in two weeks, Moselhi noted, pointing out that Egypt is self-sufficient in rice for 3.3 months of consumption.

Ashraf Kamal, a professor of agricultural economics, said Egypt is self-sufficient in rice and also has a surplus. The country produces around four million tons of rice annually, he said, and imports only become necessary when the market experiences scarcity due to the actions of dominant merchants.

Some of these may stockpile rice after purchasing it from farmers, only to sell it at higher price later on and leading to shortages in the market, he said.

The solution lay in the state offering incentives to farmers in terms of prices, Kamal said. While the government buys rice from farmers for LE7,000 per ton, some merchants pay LE11,000 a ton, causing distortions in the market.

* A version of this article appears in print in the 7 September, 2023 edition of Al-Ahram Weekly

Short link: