Since the end of September, Egypt has been facing a remarkable shortage in sugar, pushing the commodity’s price upwards, while creating its very own informal market, and consequently, increasing the suffering of Egyptians.
Egypt produced a total of 2.2m tonnes of sugar in 2015 and consumed 3.1m tonnes, creating a shortage of some 900,000 tonnes.
The Ministry of Supply is continuing to pump large amounts of sugar, both subsidised and free, into consumer complexes, commercial chains, and grocery stores in a bid to control market prices.
However, the problem was not alleviated for more than six weeks, and sugar prices are high, surpassing the usual price of EGP 5/kg.
The government is currently trying to deal with other problems, such as floods caused by excessive rainwater in some parts of Egypt and the foreign exchange crisis, making it hard to predict when it will come around to resolve the sugar dilemma.
How could the government fix the problem? Will sugar prices ever decrease from EGP 7-10/kg and reach their normative level of EGP 5/kg?
Sugar crisis: how it started and when it will end
The sugar crisis is almost over due to large amounts of sugar the government has been pumping into Egyptian markets, both subsidised and free, sources at the Ministry of Supply told Daily News Egypt on 28 October.
The sources, which requested to remain anonymous, said the markets have an adequate supply of sugar, but public panic pushes citizens to buy more than their needs, which stresses the market.
Egypt produced a total of 2.2m tonnes of sugar in 2015 and consumed 3.1m tonnes, creating a shortage of some 900,000 tonnes. The production harvest begins in February of each year.
But what happened that resulted in the crisis?
A source in a state-owned sugar company told Daily News Egypt that Egypt has a total sugar stock of 750,000 tonnes, but, unfortunately, some private companies have exported 250,000 tonnes of that amount.
The source, who requested to remain anonymous, emphasised that there was a drop in local production from 2.4m tonnes to 2.2m, which has resulted in a gap between supply and demand that amounts to approximately 450,000 tonnes, which the government is trying to close by increasing imports.
A representative of a private sugar trade company said that the main problem is the poor distribution of sugar in the Egyptian market. The representative, who preferred to remain anonymous, said the government put its hand on the reserves to control the market six weeks ago; however, it does not know the proper mechanisms for distributing sugar.
He said that the government stopped local suppliers from trading and distributing sugar by allowing only member companies from the Chamber of Food Industries to buy their needs directly from sugar companies with permission from the Food Industries Holding Company.
The government does not have enough distribution centres to sell to consumers, which has created an informal market, he noted.
What caused the problem to become worse is that soft drink companies, which used to import sugar to supply their demand, decided to buy sugar from the local market due to the shortage in US dollars, he said.
The company representative said that with increasing demand and the limited local production, which does not exceed 2.4m tonnes of sugar, the government had no choice but to increase its import of sugar to supply the demand, adding that the usual amount of sugar that Egypt imports is almost 600,000 to 700,000 tonnes a year to meet the estimated consumption rate of 3m tonnes.
The problem will be solved soon, he stated, adding that the government did not make a misstep when it decided to control the market, because all it cares about is providing sugar at affordable prices to consumers. However, the Ministry of Supply must increase its distribution centres if it wants to keep the applied system or it should allow local suppliers to work in the market again.
It is worth noting that sugar prices increased during October, the Food and Agriculture Organisation (FAO) announced on 6 October.
FAO said that the sugar price index averaged 304.8 points in September, up 19 points (6.7%) from August, marking an increase for the fifth consecutive month. The latest surge in international sugar prices was largely due to unfavourable weather conditions in the main producing region in Brazil, the world’s largest sugar producer and exporter.
People can hardly find sugar, but who is to blame?
Sugar: the sweetener of a cup of tea that Egyptians love to drink after a long, exhausting day (as well as several during the day). This routine has been disrupted since October by the severe sugar shortage, which is now spiraling into a crisis.
People are struggling to find sugar to buy whether for work, their home, or even factories.
Omar El-Sayed, a teacher who lives on Al-Ahram street, bought 3kg of sugar at EGP 9/kg. He said it was hard to find at any nearby stores so he went to Giza Square to buy from a supermarket a friend of his told him about.
People are suffering more and more on top the price hikes, he said; food, water, electricity, transport, even “the air we breathe” has become more expensive.
Nada Nader who lives in Maadi said: “Last time, I paid EGP 7 for 1kg of sugar.”
Nader believes that Egypt doesn’t have a problem in producing sugar, and it’s “nothing but corruption” that caused the crisis. One of her friends in Dar El-Salam had to ask Nader to buy sugar for her.
Mohamed Taison thinks that this problem is on its way to being solved. He used to buy sugar for his cafe at EGP 7/kg; however, two weeks ago it wasn’t as easy to find it. He had to resort to paying EGP 12/kg because if there’s no sugar, then no customers would come to his cafe.
Ahmed Hamam thinks that traders are the ones to blame for the sugar crisis. The government pushed huge amounts of sugar into the market in recent weeks to solve the problem, yet the traders did not sell it to the people, he said.
There is nothing left in Egypt that didn’t have its price increased, said a bus driver who works in the Public Transportation Authority.
The driver, who preferred to remain anonymous, said that even though he can find sugar, it is at a higher price of EGP 7-8 rather than EGP 5 as it was before the crisis.
Hanafy El-Kholy, 57, who lives in Manial agreed with what the driver said, explaining that his income from his pension barely allows him to buy necessary goods, such as food and clothes.
“If the prices continue to increase day after day, then my pension would not be enough for me to live a fair life”, El-Kholy said.
He believes that what the government is doing a good thing by providing subsidised food at different stores, yet it’s not enough.
Omar El-Shenety, managing director at Multiples Group, believes that, unfortunately, the government doesn’t have a plan, but they’re trying to solve any problems that seem to “come out of the blue”.
The sugar crisis is very dangerous because it tells investors around the world that Egypt cannot guarantee even the simplest raw materials, he said. The government must try to fix any problem before it happens and try to forecast the consequences of not dealing with it in a timely fashion, he added.
Source: Daily News Egypt