Tackling Egypt’s Rising Food Insecurity in Times of Transition

1. Tackling Egypt’s rising food insecurity in
times of transition
Presenter:
Perrihan Al-Riffai
Contributors:
IFPRI: Clemens Breisinger, Perrihan Al-Riffai, Olivier Ecker; WFP
Egypt Country Office: Riham Abuismail, Jane Waite, Noura
Abdelwahab, Alaa Zohery; Cairo University: Heba El-Laithy, Dina
Armanious
With support from: CGIAR’s Policies, Institutions, and Markets
Program (PIM), the International Fund for Agricultural
Development (IFAD), the World Food Programme (WFP), and the
Embassy of the Kingdom of the Netherlands in Egypt

2. Owing to a succession of crises and shocks, food
security started to deteriorate from 2005 on

3. Food subsidies have played an important role in
protecting the poor from recent crises
• Without food subsidies,
national poverty may have
increased from 25% to
about 34 percent
Because:
• Subsidized food accounts
for nearly 20% of poor
households’ food
expenditure
• Subsidized baladi bread
accounts for 71% of bread
consumed by poor
households.

4. However, maintaining subsidies becomes more
difficult in times of rising budget deficits
Source: Authors’ calculation based on Ministry of Finance

5. Good news is that there is large scope for improving
the subsidy system, especially food subsidies
• Losses and leakages across the baladi bread supply
chain are estimated at 30 percent
• There is large scope for improving the targeting:
• The ration card system covers 73 percent of
nonpoor households
• But it excludes 19 percent of the most vulnerable
households!
• Increased poverty has resulted in an overreliance on
cheap and calorie-dense foods, including subsidized
commodities.

6. Following business as usual is not an option, but
improved targeting and complementary programs
could save costs and improve food security

7. Option 2:
Improve supply chain efficiency will yield
sizeable cost savings
• Short-term:
– Liberalization of wheat prices should continue in line with pilots
– Covering wheat stored in open bunkers (shonas) to reduce losses
– Management of the strategic inventory of wheat could be shifted
to the General Authority for Supply Commodities, and additional
silos could be built in key locations—potentially by the private
sector—to facilitate this
• Medium-term
– Replace ration cards with smart national ID cards, including those
for bread, that would improve monitoring and reduce ghost users
– Program of fortifying subsidized wheat flour with iron and folic acid
and subsidized cooking oil with vitamins A and D, roll out
fortification to the commercial sector, and revise and enforce food-
quality standards, particularly for wheat flour and baladi bread

8. Option 3:
Improve targeting will yield sizeable cost
savings and improve food security
• Short-term:
– Self-targeting through mandatory registration could discourage
better-off households from using the food subsidy system
– Targeting could also be improved by clarifying targeting criteria,
regularly updating the data to include newborns and exclude those
who have died
– Geographic targeting for Upper Egypt and proxy means testing for
urban areas and Lower Egypt.
• Medium-term
– The least vulnerable could be moved to partial rations for baladi
bread
– For those that are not needy, and ration cards that are gradually
phased out

9. Option 4:
Complement and substitute subsidies
– Targeted nutrition interventions focusing particularly on
maternal and child nutrition could be introduced
– Vouchers could be used for specific commodities and target
groups, such as pregnant and lactating women, to aid access to
wider dietary diversity.
– In-kind transfers are preferred by the most vulnerable,
particularly in circumstances of high inflation and low market
access, whereas cash transfers could be used for the relatively
better-off and in areas with good market access.
– Finally, conditional cash transfers, vouchers, or both for
education or health services could be used to top up in kind
assistance to the most vulnerable.

10. Key messages
• Food subsidies have played an important role
in protecting the poor from recent crises
• Food subsidies are not designed to resolve all
poverty and nutrition-related challenges.
• Increasing efficiencies in the subsidy system
can facilitate investment in job creation and
targeted food security and nutrition
interventions

11. Recommendations going forward
Lessons from other countries’ experiences and Egypt’s previous
subsidy reform attempts stress the importance of:
• Creating an understanding (why should the rich get
subsidies?)
• Managing expectations (what are people getting in return?)
• A monitoring and evaluation system for decisionmaking, from
which policymakers must learn and adjust accordingly during
the reform process.
• Subsidy reform is likely to be most successful if it is integrated
into a broader national strategy of development and food
security.

12. Thank you for your attention