Agro Perspectiva

Russia's grain ban showcases Egypt's love of bread

19.08.2010 10:59 "Agro Perspectiva" (Kyiv) — Russia’s temporary ban on grain exports is stirring both political and economic anxiety in Egypt, the world’s largest wheat importer where half of the 80 million residents rely on subsidized bread to survive. Russia, which supplies more than 50 percent of Egypt’s wheat imports, had announced a temporary ban on grain exports earlier this month because of a drought. In addition, Ukraine on Tuesday said it plans to halve grain exports for the rest of the year. The Russian move predictably sent global grain prices higher. But for Egypt, it carried serious political and economic implications, and came at a delicate time for a government already accused of corruption and ignoring the needs of the poor. Protests over rising food prices have been rife ahead of upcoming parliamentary elections this year and presidential elections next year, giving rise to concerns about who will steer a nation that has known one ruler for almost 30 years. On Monday, a 24-year-old man known to suffer a heart condition died while waiting in a chaotic bread line outside a bakery in southern Egypt. Authorities said he died after a two-hour wait in the line on a particularly hot day. The media called him «the first victim» of bread lines in the holy month of Ramadan, when consumption of bread and baked sweets are at an all time high. «Subsidized bread is the most important thing the government gives to the people,» said Egyptian economist Mohammed Abu Pasha of investment house EFG-Hermes. «It is a very basic and sensitive issue and the government had to act quickly to reassure people. It is not about elections, it’s about possible social unrest.» Even the language here conveys how essential bread is. Egyptians alone in the Arab world call it «aish,» Arabic for «life.» It’s one of the few affordable staples in the country — costing the equivalent of $0.01 per round loaf. Its subsidization, for decades, was one of the many unwritten «understandings» between the government and the country’s poor majority, even though food subsidies cost the country $3 billion per year — or roughly 65 percent of what it made in fiscal 2009 from the Suez Canal, one of its key foreign currency revenue sources. Along with education and health care, the government’s tacit pledge to help shoulder the costs of key goods was integral to its ability to appease a nation where officials are widely seen as corrupt, favoring wealthy business interests at the expense of the nearly 50 percent of Egyptians who live on less than $2 per day.