Can bread subsidies keep pace with urbanisation in Egypt?

Rising bread prices are said to have been a significant cause of the recent unrest in North Africa.  Egypt in particular has to import about 60% of its wheat needs each year, at a cost of $63 million at today’s price of $340 per tonne, making it the world’s largest wheat importer.  

Since one in five of Egypt’s 80 million people currently have a daily income of less than $1, their government has been forced to bear the additional cost of subsidising bread for 14.2 million poor people each day, in order to stave off widespread hunger and starvation.  This subsidy represents almost a quarter of state spending and reduces the amount available for health and education.

Egyptian farmers currently produce 8.5 million tonnes of wheat each year. However, although self-sufficiency in wheat at national level is said to be the government’s urgent goal, successive UNDP reports have criticised the Mubarak regime for neglecting the rural areas, where poverty remains rampant and migration to the city in search of work becomes the only option.

Urbanisation has been dramatic in Egypt, with the capital city, Cairo, growing from 1.5 to 6 million between 1947 and 1986.  Despite the high birth rate in Cairo’s slums, internal migration still accounts for 50% of the population growth, which has now reached 18 million in the greater Cairo region4. Unfortunately all of this urban growth has spilled into areas that are ideal for wheat production.

The deepest poverty is found in the rural areas of Upper Egypt that have a medium to high potential for wheat production:  According to UNDP Upper Egypt accommodates 36% of the country’s population and two-thirds of these people are unable to meet their basic food and non-food needs.  UNDP’s recommendations to address this problem have included:

·        increasing food productivity of small-holder farmers,

·        getting their farm products to markets,

·        empowering farmers’ associations to negotiate with market intermediaries,

·        enhancing rural credit and saving services,

·        encouraging investments in building storage facilities,

·        supporting networks of  agro-dealers,

·        expanding income-generating opportunities for the rural landless.

They have also stressed the need for increasing access to health care as well as primary and secondary education.

With the world wheat price expected to rise still further, Egypt’s new government would do well to take these recommendations much more seriously than did the previous regime.