Egypt’s subsidised bread system will soon be expanded to include those who are not currently registered on the country’s ration-card system, allowing them to buy bread at almost cost price.

Last week, President Abdel-Fattah Al-Sisi approved a measure allowing the sale of bread from Ministry of Supply bakeries at the nominal price of LE1 per loaf. Customers will be able to pay using prepaid cards, and there will be no limit to the number of loaves any one individual can buy.

The idea of selling bread to individuals not registered in the ration-card system has been on the table for some time, Ministry of Supply Spokesman Ahmed Kamal told Al-Ahram Weekly.

“The minister of supply, Ali Moselhi, has been studying a proposal presented by Abdallah Ghorab, head of the Bakeries Division at the Federation of Chambers of Commerce, with the aim of easing the economic burdens on non-ration-card holders,” he said.

 Non-subsidised bread, called free bread, is sold in private bakeries for LE2 to LE3 per loaf.  

Currently, the approximately 30,000 government-run bakeries in the country are not permitted to sell non-subsidised bread to those not holding ration cards. If they do, they could be fined for a violation.

The government allocates LE91 billion a year to subsidising bread. It costs about 95 piastres for government-run bakeries to produce a loaf of bread that only ration-card holders are eligible to purchase for five piastres a loaf. An estimated 275 million loaves of this “baladi” bread are produced daily, or over 100 billion loaves annually.

Egypt, one of the world’s biggest wheat importers, is currently struggling with high inflation rates that have recorded new highs as a result of the Russian-Ukrainian conflict. The new programme is aimed at offering consumers a cheaper source of bread as a main staple of every Egyptian’s diet.

In January, Moselhi said that the decline in the value of the currency would result in more than a 76 per cent increase in the state’s bread subsidy bill. Some 72 million people are registered with the subsidised bread system.

“The new system won’t cost us, as bakery operators, anything extra. Once we use up our share of 20 sacks of flour a day to produce subsidised bread and dispose of that, the government will give us another lot of flour to make bread for people who’ll buy it with the prepaid card system,” Ghorab said.

“The aim of the new system is to help people. We’re not getting anything out of it. The customers are dealing with the government directly through the prepaid cards that will benefit nearly 40 million people who don’t have ration cards. As for the private-sector bakeries, their prices are subject to supply and demand, but that’s their business,” he added.

Government-run bakeries have been coming under pressure from non-ration-card holders to sell bread at more than the subsidised rate but for less than the prices on the open market. Whether they do so or not “is up to each bakery and the salespersons inside”, one bakery employee told the Weekly.

The price of non-subsidised bread has been subject to the laws of supply and demand since 1980, and there are no laws regulating its price.

Moselhi said that he had begun to study a proposal for introducing prepaid cards for buying bread in January. The cards will be available at post offices, and they will come in denominations of up to LE100.

Last year, Moselhi said the government was considering turning the bread subsidy system into cash-based system, but he ruled out the idea after the outbreak of the Russian-Ukrainian war due to its effects on inflation.  

President Al-Sisi hinted in late August 2021 that a revamp was needed to the system.

“It is time for the five-piastre loaf to increase in price,” he said at the opening of a food production plant. “It’s incredible to sell 20 loaves for the price of a cigarette,” he added.

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