April 6, 2008 / 7:15 AM / in 10 years

In Egypt, long queues for bread that's almost free

CAIRO (Reuters) - Abdel Nabi Salim’s main job in life is queuing for bread.

<p>A worker places bread inside a furnace in a bakery in Cairo February 6, 2008. Egyptians have been suffering from a bread crisis as queues to buy subsidised bread have lengthened in recent months. President Hosni Mubarak has vowed to end the phenomenon of bread lines. Picture taken February 6, 2008. REUTERS/Nasser Nuri</p>

The graying 65-year-old retired administrator stands under Egypt’s glaring noon sun, waiting in a queue that snakes out to the street to buy 20 loaves of steaming subsidized pocket bread from a barred window for 1 Egyptian pound ($0.18).

Egypt has for decades provided cheap bread for the poor as an expensive but essential component of its economic policy because it enables millions to survive on low salaries and wards off political discontent.

But bread lines have lengthened in recent months as costs of other non-subsidized Egyptian staples soared, forcing more reliance on a subsidy regime that depends heavily on costly imported wheat and is also strained by a thriving black market.

The current crunch means that once Salim buys his first batch of bread, he will return to the back of the line to wait, again, for the additional 10 loaves he needs to keep his extended family from going hungry.

“This is a rotten system,” he said, a half hour into a daily wait for bread that can last several hours. “I come here every day. I have no work, so this is my job. Waiting for bread.”

What is happening in Egypt illustrates some of the risks and trade-offs of subsidies, just as more countries worldwide are looking at such measures to try to ease the burden of spiraling global food prices on the poor.

Excruciating lines have prompted media headlines of a bread “crisis” in the most populous Arab country, where cuts in bread subsidies led to riots in 1977 that killed scores and forced the government to back down.

Egypt has allocated over $2.5 billion for bread subsidies for this fiscal year, but said that may rise due to soaring wheat costs. Yet the pressure over bread remains.

Observers say sustained problems in the subsidy system could lead to a repeat of the 1977 crisis, if not quickly contained.

“It may be something far more reaching and much more violent, I‘m afraid, because people are increasingly feeling that their faces are to the wall,” said Gouda Abdel Khalek, a Cairo University economist.

DEATH IN THE LINES

Already, at least 11 people have died in bread lines since early February, including a heart attack victim and a woman hit by a car while standing in a queue that stretched into the street, security sources said.

One person was shot dead and three wounded after a fight broke out in a queue in one Cairo suburb. Elsewhere, an argument between two boys over their place in line escalated to a brawl in which four people were hurt.

Top Egyptian officials have vowed speedy intervention to restore easy access to subsidized bread, which provides daily nutrition to 50 million Egyptians -- or over two-thirds of the population, according to U.N. statistics.

“Egyptians must be given loaves of bread and the phenomenon of bread lines must disappear,” Egyptian presidential spokesman Suleiman Awad told journalists in March.

President Hosni Mubarak has called on the military to help provide bread to the masses. One minister said security forces would provide an additional 2 million loaves daily and Egypt would raise the share of flour sent to bakers, state media said.

Cairo baker Magdy Labib would welcome that. Speaking as workers shoveled dough into a large oven while crowds clamored outside for bread, he complained that rises in the prices of oil, pasta, rice and sugar had put pressure on his bakery.

“The flour is not enough for these crowds outside,” he said.

Egypt’s bread lines are largely fuelled by urban inflation, which hit 12.1 percent in the 12 months to February. Prices for dairy goods are up 20 percent, vegetables 15 percent and cooking oils 40 percent, Egypt’s statistics agency said.

To help cope, Egypt last week waived import duties on rice, dairy products, edible oils and types of cement and steel. Trade Minister Rachid Mohamed Rachid told a London newspaper Egypt had to act against inflation because of the danger it posed to its liberalization program.

“People are coming and saying we don’t have enough food to eat ... and that will hijack the whole reform program of Egypt. We cannot afford that,” Rachid told the Financial Times.

BLACK MARKET DEALS

Egypt’s liberalization program, which has included cuts in customs duties and the sale of state companies, has made Egypt an investors’ darling, boosting economic growth to 7.1 percent last year. But most Egyptians still live in poverty.

Egypt, meanwhile, has kept the price of subsidized bread stable at less than one U.S. cent per loaf, even as the cost of free-market bread and grain has surged 26.5 percent.

The resulting queues have forced bakers to limit what a person can buy at one time to as few as 20 of the small, bubbly brown loaves -- not a lot for those buying for often large extended families. An average person consumes 3.2 loaves a day.

Some, however, have also sensed opportunity in the current bread crunch: some bakers sell subsidized flour on the black market for a profit, a practice to which government inspectors had often turned a blind eye.

Egypt indicted hundreds of bakers in March over black market deals in subsidized flour and seized 700 tonnes of flour, security sources said. Egypt also found thousands of violations, from overcharging for bread to producing substandard loaves.

Aiming to cut corruption, Egypt has begun taking the task of selling subsidized bread away from the bakeries that produce it to prevent the flow of subsidized flour to the black market and to ensure bakers turn all their flour into bread.

In parts of Cairo, white kiosks not attached to bakeries have sprung up selling subsidized bread. But lines remain in many places.

“The government is trying to direct the subsidy to the right people, to the most poor. And of course to avoid any leakage through the bakeries, which was really a key problem,” World Food Programme deputy country director Ayoub al-Jawaldeh said.

Mohamed Ahmed, who runs a bakery in Cairo’s poor Sayyida neighborhood and who has hired extra staff to cope with demand, agrees corruption should be stamped out.

“Some of the bakery owners have no conscience ... They sell just a little bread, and the rest (of the flour) goes to the black market,” he said. “If everyone worked right, there wouldn’t be these crowds.”

(For previous stories, graphics, pix and video, click on:

here)

(For a video report on Egypt’s bread lines, click on:

here)

Writing by Cynthia Johnston; Editing by Clar Ni Chonghaile

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