The price of cooking oil surged overnight in the Egyptian market recently, with people waking up on 2 February to an entirely different list of prices.
The price of a 700 ml bottle of mixed cooking oil soared from LE50 to LE75, marking a 50 per cent increase. The price of an 800 ml bottle of sunflower oil increased from LE70 to LE110, a rise of 57 per cent.
The price of an 800 ml bottle of corn oil soared from LE80 to LE120, surging by 50 per cent. The prices of different types of cooking oil had already increased by 10 to 15 per cent last month.
Ayman Qoura, a member of the Food Industries Chamber of the Federation of Egyptian Industries and the head of an oil and soap manufacturing company, told Al-Ahram Weekly that the unprecedented surge in cooking oil prices was driven by three main factors: the changing price of oil on the local commodities exchange due to increased demand and the hike in international prices; fluctuations in the dollar exchange rate; and import challenges.
He explained that the crisis in the Al-Mandab Strait had led to increased shipping costs and a rise in cargo insurance.
If these factors diminish, prices will decrease, he pointed out.
Qoura said that the situation should not be deemed a crisis, particularly since the government already provides 70 million bottles of oil at the reduced price of LE30 for ration-card holders, making it readily available.
“Millions of Egyptians have access to subsidised oil, and only a relatively small percentage of people will need to obtain oil at the higher market price,” he said.
Amoura, a household worker in Heliopolis, told the Weekly that the one bottle of subsidised oil available to her at the price of LE30 was consumed in only two or three days, however.
“Poorer people cannot afford to eat meat or chicken more than once a week or every 10 days. So, we eat aubergines, potatoes, and falafel instead, all of which are fried in oil,” she said.
During a tour of Cairo stores, the Weekly noted that subsidised oil was being sold at ration-card outlets, while the shelves of these outlets were empty of oil being sold at the market price.
In a visit to various food stores and supermarkets, it was observed that oil was available but at elevated prices. The owner of one food store told the Weekly that he had no control over prices.
The companies had sent new price lists twice in less than a month, he said, compelling him to adjust his prices to maintain a profit margin and acquire new goods following the price hikes.
An anonymous source said that the state was contemplating a prompt solution to the problem by importing unrefined food oil and distributing it among factories to process it. In this case, the factories would be instructed to reduce their profit margins.
Egypt imports over 90 per cent of its annual cooking oil needs, according to official data.
It imports 2.5 million tons of cooking oil annually, said President Abdel-Fattah Al-Sisi on 9 February during the opening of the Silo Foodstuffs factories. He added that the state plans to boost oilseed cultivation, with soybeans being a prominent focus.
The prime minister had earlier convened the ministers of supply, agriculture, and land reclamation to explore the expansion of food oil production. The state aims to achieve this by promoting the cultivation of oil crops through the provision of seeds and adopting a contract-farming system to localise the industry.
Contract farming involves the Ministry of Agriculture supervising contracts between farmers, manufacturers, exporters, and marketers to ensure the fair pricing of agricultural products and allow farmers to achieve reasonable profit margins while meeting the quantity and quality requirements of factories and exporters.
Ashraf Kamal, a professor of agricultural economics, lauded the state’s efforts to increase local oil production. However, he noted that the expansion in oil-crop cultivation last year related to crops harvested in the summer and refined afterwards.
He told the Weekly that the state had undertaken this initiative to expand the cultivation of key oil crops, including maize, sunflowers, and soybeans. The government has announced attractive procurement prices from farmers, considering fluctuating global prices, he said.
This meant that if international prices for these crops rises, the guaranteed prices would also be adjusted accordingly.
Kamal anticipated that the expansion in oil-crop cultivation would raise Egypt’s self-sufficiency to 30 per cent by next year.
His 2012 research paper “Agricultural Development in Egypt: Lessons from History and Future Prospects” underscores the importance of augmenting the production of oilseed crops in Egypt, particularly after prices surged during the global food crisis in 2008 with similar increases possible in the future.
Boosting local production could save the state considerable foreign-exchange expenditure, the paper stressed.
Since the 2008 crisis, food oil prices have drastically increased, Kamal said, adding that the increases were more pronounced in 2022 and 2023 and were influenced by the contributions of Russia and Ukraine to oilseed production, particularly of sunflower oil.
* A version of this article appears in print in the 8 February, 2024 edition of Al-Ahram Weekly