1) The document analyzes the nutritional challenges facing Egypt, including the double burden of malnutrition where undernutrition and overnutrition exist simultaneously. 2) It finds that Egypt's previous food subsidy system, which subsidized foods like oil, sugar, and rice, likely exacerbated issues of overnutrition and did not help reduce undernutrition. 3) The probability of overnutrition in both children and mothers increased with higher subsidy amounts from the ration card program, especially in urban areas, indicating the subsidies incentivized consumption of calories but not nutrients.

1. Key Findings and
Policy Implications
Olivier Ecker
Conrad Hotel, Cairo
February 28, 2017
Book Launch

2.  Malnutrition lowers children’s educational achievements,
reduces adults’ income opportunities, deepens poverty, and
slows economic growth.
 While undernutrition is still the main nutritional problem in the
developing world, overnutrition is rising rapidly—especially in
middle-income countries.
 Along with North America, MENA and LAC have the highest
obesity rates, with more than 30% among women.
 Rising rates of overweight/obesity go along with a growing
prevalence of non-communicable diseases (incl. type 2
diabetes, coronary heart disease, stroke, hypertension),
increasing private and public health care costs.
Background & Motivation

3. Two major nutritional challenges:
1. Double burden of malnutrition (DBM): Simultaneous presence
of chronic undernutrition and overnutrition
2. Growth-nutrition disconnect (GND): High economic growth was
not accompanied by declining prevalence of chronic
undernutrition.
 Both nutritional challenges are exceptionally pronounced in
Egypt compared to other countries.
 Growing evidence suggests that economic and social policies
and programs may contribute to the rapid rise of overnutrition
and the DBM in developing countries.
Egypt: Nutritional Challenges

4. DBM: Country Comparison
Relationship between the prevalence of female overweight and child stunting
Arab world
Africa south of the
Sahara
Latin America and
Caribbean
East Asia and Pacific
West, Central, and
South Asia and
Eastern Europe
North American and
Western European
high-income
countries
Source: Own representation based WDI data (World Bank 2014).

5. DBM in Egypt
DBM at
population level
DBM at
family level
DBM at
individual level
Child
stunting
Child
overweight
Female
overweight
Female
obesity
Stunted child
with overweight
mother
Stunting and
overweight in
children
Total 31 29 73 34 22 14
Urban 32 29 74 34 25 15
Poorest Q5 33 26 73 31 22 13
Richest Q5 29 30 72 31 23 15
Rural 31 29 71 34 21 13
Poorest Q5 32 27 62 25 18 14
Richest Q5 30 34 79 42 22 15
Prevalence of malnutrition (%) in 2011
Source: Own calculation based on 2011 HIECS data (CAPMAS & WFP 2011).

6. 1. The nutrition transition: Shifts in dietary patterns and physical activity
levels, associated with economic development and urbanization
2. Economic crises and rising poverty
3. Insufficient nutrition-sensitive investment, esp. water and sanitation
infrastructure and primary healthcare (incl. maternal and child health and
nutrition programs)
4. The food subsidy system
 The first three drivers alone cannot explain Egypt’s global
exceptionalism and the observed patterns of malnutrition
among the Egyptian population.
Four Key Drivers

7. The food subsidy system—as in place until May 2014—was
ineffective in reducing chronic undernutrition and may have
contributed to sustaining and even aggravating the DBM (and the
GND) in Egypt, through two effects:
1. Direct effect: Creating incentives for overconsumption of
calorie-rich foods and unbalanced diets
2. Indirect effect: Making public funds allocated to food subsidies
unavailable for potentially more nutrition-beneficial spending
 Empirical analysis: Statistical evidence for the existence of
causal relationships between received food subsidies and the
nutritional status of young children and their mothers
Hypothesis & Research Objective

8. Two separate food subsidy programs:
1. Baladi bread & flour program: General subsidy; EGP 0.05
(<1 US cent) per bread loaf, fixed since 1989
2. Ration card program: Restricted to cardholders; monthly
quotas of cooking oil, sugar, rice (and black tea) at fixed prices
Monthly quotas per household and prices under the ration card program in 2011
Egypt’s Food Subsidy System until May 2014
Oil Sugar Rice
Quota per registered person (kg) 0.5 1 n.a.
Additional quota per registered person (kg),
with maximum allowance of 4 persons 1 1 2
Subsidy price (EGP/kg) 3 1.25 1.5
Average market price (EGP/kg) 8 5.5 3.5
Average subsidy rate (%) 63 77 57
Source: Own calculation based data from MOSS (2012) and 2011 HIECS data (CAPMAS & WFP 2011).

9. Food Subsidy Beneficiaries in 2011
Source: Own calculation based on 2011 HIECS data (CAPMAS & WFP 2011).
 Coverage of the food subsidy system was broad:
• 84% of all households consumed Baladi bread, flour, or both.
• 68% of all households had ration cards, and almost all used them.
 Subsidies received from the ration card program were higher
among rich beneficiaries than poor beneficiaries per person.
Distribution of household ration cards and registered persons
Poorest Q5 Second Q5 Third Q5 Fourth Q5 Richest Q5 Total
Households holding ration cards (%)
Total 72 72 68 68 62 68
Urban 62 60 61 62 54 60
Rural 75 77 75 75 76 76
Family members registered on household ration card as proportion of actual household members (%)
Total 90 101 114 127 167 119
Urban 94 112 118 144 182 130
Rural 89 96 107 117 150 112

10.  All subsidized food items were rich in carbohydrates (providing
calories) and poor in micronutrients (vitamins and minerals).
 However, child stunting is often caused by micronutrient
deficiencies and inadequate child feeding practices.
 Two interlinked food consumption effects of the food subsidies:
1. Incentives to (over)consume cheap, calorie-rich foods, lowering the cost
of becoming overweight/obese  income effect of price reduction
2. Incentives to consume cheaper, unbalanced diets, relative to diversified,
micronutrient-rich diets  substitution effect of price reduction
 When household (real) incomes decrease and prices of
nutritious free-market foods rise, such as during economic
crises, the effects become more pronounced.
Nutritional Effects of Food Subsidies

11.  Engel curve estimations suggest that the consumption of
(subsidized) oil, sugar, and rice increases with rising household
income ( normal goods), whereas the consumption of Baladi
bread and flour decreases ( inferior goods).
 The subsidized calorie amount was too high when compared to
common recommendations for healthy diets:
For an average 4-person household (with all members registered):
>90% (>1,700 kcal/d per person) of minimum calorie requirements (for low
PAL)
Nutritional Effects of Food Subsidies

12.  Quasi-experimental impact evaluation methods:
• Propensity Score Matching with binary treatment (PSM)
• Propensity Score Matching with continuous treatment: Dose-Response
Model (DRM)
 Model estimations (42):
• Separate by urban/rural areas and the food subsidy programs: PSM for
effects of ration card program participation, DRM for subsidy level effects
of the ration card program and the Baladi bread & flour program
• Outcome var.: Child HAZ, stunting; child BMIZ, overweight, obesity;
maternal BMI, overweight, obesity; child stunting & overweight; stunted
child with overweight mother; child & maternal overweight; household
dietary diversity, consumption of main food groups
• Indep. var.: household income quintile, characteristics, location
• Treatment var. in DRM: Consumed calories from subsidized foods
Methodology

13.  Household Income, Expenditure, and Consumption Survey
(HIECS), 2010/11
 Special module on household food security and anthropometry
of children and women in 2010/11 HIECS round
• Subsample: 11,802 households (visited in 2011) = 49%
 Unique dataset, because of detailed information on household
food consumption, food subsidies, and nutritional status
Data

14.  There is no evidence that the food
subsidies led to improved nutrition.
 The ration card program had stronger
(adverse) nutritional effects than did
the Baladi bread & flour program.
 The negative nutritional effects were
greater in urban than rural areas.
 Ration-card-program participation
had no clear nutritional effects. It is
the received subsidy amounts that
mattered for nutritional outcomes!
Estimation Results
Dose-response functions (selected):
Ration card program in urban areas
Probability of mothers being overweight
Probability of children being overweight
x = subsidy levels in beneficiary households

15. Among urban beneficiary households of
the ration card program ...
 the probability of maternal
overweight increases
 the probability of child overweight
increases
 children’s HAZ tends to decrease
 the probability of children being
overweight and stunted increases
 the consumption of meat & fish,
milk & dairy products, and legumes
decreases
… with increasing subsidy levels.
Estimation Results
Dose-response functions (selected):
Ration card program in urban areas
Child height-for-age z-score (HAZ)
x = subsidy levels in beneficiary households
Probability of children being stunted
and overweight

16.  Findings provide a strong public health rationale for reforming
the Egyptian food subsidy system.
 Nutritional concerns—especially related to overnutrition—
should be considered in the reform.
 The basket of subsidized foods should be better aligned with
beneficiaries’ nutritional needs.
 Subsidies for calorie-rich, non-staple foods (cooking oil, sugar)
should be phased out.
 Diversified diets and consumption of micronutrient-rich foods
should be promoted.
Policy Implications from the empirical analysis

17.  The fixed-quota scheme of the ration card program should be
abolished to allow beneficiaries more flexibility in choosing
foods according to their individual needs.
 The fixed-price regime of the system should be phased out to
avoid price distortions and related consumption incentives.
 Household eligibility for food subsidies should be reviewed, and
food subsidies (or any alternative assistance) should be better
targeted to the needy population.
 Benefit differentiation corresponding to beneficiaries’
neediness should be (re)introduced.
Policy Implications from the empirical analysis

18.  In June 2014, the Egyptian government began to reform the
food subsidy system.
 Several changes already made are consistent with the reform
recommendations from this study and can be expected to
reduce—but not eliminate or even reverse—the adverse
nutritional effects of the food subsidies.
 For further reforms, there are two long-term options for more
nutrition-sensitive social protection programs:
• Food voucher program with complementary nutrition education
(e.g., Supplemental Nutrition Assistance Program – Education, SNAP-Ed,
of the United States)
• Conditional cash transfer program
(e.g., Progresa-Oportunidades of Mexico)
Current Reform & Reform Options