In January 1977, the late President Anwar Sadat decided to increase the prices of some goods and foodstuffs, including subsidized bread. These decisions caused widespread anger in the Egyptian street, leading to what was known as the “Bread Uprising,” which forced the authorities to reverse these decisions.
The Bread Uprising took place on January 18 and 19, 1977, following the announcement by Deputy Prime Minister for Financial and Economic Affairs, Abdel Moneim Al-Qaysuni, of a set of economic decisions, including the removal of subsidies on essential goods, thereby raising the prices of bread, sugar, tea, rice, oil, gasoline, and 25 other important items in citizens’ lives. This price adjustment, known as “price movement,” led to nationwide anger, forcing Sadat’s government to abandon its economic decisions.
Forty-seven years after that day when Sadat’s government retracted the bread price hike, Egyptian Prime Minister Mostafa Madbouly announced in a press conference in the New Administrative Capital that the price of subsidized bread would increase from five piasters to 20 piasters, starting today (June 1), marking a 300% increase. He noted that the annual subsidy for bread in Egypt amounts to 120 billion EGP, with daily production reaching 100 billion loaves. The Minister of Supply, Ali Moselhi, added in the same conference that the new price represents 16% of the cost of a loaf, which increased to 125 piasters from 115 piasters last year. He explained that Egypt consumes 8.5 million tons of wheat annually to produce subsidized bread. The general budget for the fiscal year 2024/2025 indicates that the total bill for subsidizing foodstuffs is about 134.150 million EGP, compared to about 127.700 million EGP in the budget for the fiscal year 2023-2024. The Ministry of Finance announced the allocation of 125 billion EGP for bread subsidies in the 2024-2025 budget.
According to the Agricultural Economics Research Institute of the Agricultural Research Center, the area planted with wheat decreased from about 3.4 million feddans in 2021/2022 to about 3.2 million feddans in 2022/2023, while the productivity per feddan of wheat increased from about 2.8 tons in 2021/2022 to about 2.9 tons in 2022/2023. The total wheat production increased from about 9.6 million tons in 2021/2022 to about 10 million tons in 2022/2023. It is expected that the wheat area will be about 3.5 million feddans in 2023/2024, while the cost of producing a 100-gram loaf of tourist bread is about 1.055 EGP, sold for 1.25 EGP. The cost of producing a subsidized loaf is about 83.7 piasters, sold for five piasters, with the state bearing about 78.7 piasters in subsidies per produced loaf, according to data from the institute at the end of last year.
Surprise Decision to Raise Bread Prices
Mona Adel, a resident of the Haram district in Giza Governorate, a widow supporting three children, told Zawia3: “I don’t pay much attention to political events and decisions, but I am now forced to follow government decisions related to price increases daily. I am a mother responsible for three children, and the continuous rise in prices is troubling us all. I can no longer provide the basic commodities for our daily life.” Adel asserts that the decision to raise the price of bread will significantly increase the financial burdens she bears monthly, especially since her ration card only includes one of her children, reducing the share of subsidized bread she receives. She explains that bread is a crucial part of the meals they consume throughout the day. After the new decisions are implemented, the share of subsidized bread for each individual on the ration card will be five loaves per person per day for one EGP instead of 25 piasters, totaling 150 loaves per month.
Commenting on this, Khaled Fikry, the Secretary-General of the Bakery Division at the Federation of Egyptian Chambers of Commerce, said they were surprised by the Prime Minister’s decision to raise the price of subsidized bread to 20 piasters, requiring new working mechanisms between the government and the bakeries receiving subsidized flour, which had not been agreed upon before issuing this decision. Fikry criticized the speed of implementing such a decision that requires much study, indicating the need for the government to prepare first by taking the necessary measures to implement such strategic decisions. He said: “The bread price has remained unchanged since 1988, so why not postpone the decision for a short period to enable all parties involved in providing subsidized bread to prepare for implementing this decision?” Regarding the weight of the bread, the Secretary-General of the Bakery Division clarified that the current weight of the loaf is 90 grams, confirming that the government’s decision did not address the weight of the loaf after the price increase was applied.
In 2014, the government reduced the weight of the loaf from 130 grams to 120 grams, then reduced it again in 2016 to 110 grams, with the latest attempt in 2020 reducing it to the current 90 grams.
In this context, Mohamed El-Gezawy, a worker at a subsidized baladi bread bakery in the 6th of October area in Giza Governorate, confirms that their bakery serves between 500 to 700 citizens daily and adheres to the state’s determination of the loaf’s weight, recently stabilized at 90 grams. He predicts that the decision to raise the loaf price might cause dissatisfaction among the beneficiaries of this system, especially since many of them rely on its provision to convert it into food commodities. He said in our interview that he has been working in this profession for over 40 years, pointing out that the bread loaf is a red line that citizens rely on for their daily sustenance, so any decisions to raise the price of subsidized bread are always postponed. Mona adds, explaining: “I don’t buy subsidized bread daily. I try to save most of it on the ration card to convert it into points I can use to increase other monthly commodities, whether sugar or oil. Since these goods have become priced freely on the card, their quantities have significantly decreased.” The number of beneficiaries of subsidized food commodities reached 63.6 million individuals (50 EGP monthly for four individuals registered on the card, and for those exceeding that number, 25 EGP per person monthly), according to data from the Central Agency for Public Mobilization and Statistics. With the repercussions of the Russian-Ukrainian crisis, the Council of Ministers decided in March 2022 to increase by (100 EGP) for the ration card registered with one family, an increase of about (200 EGP) for the card that includes two or three families, and the cards that include more than three families will be added (300 EGP), with a cost estimated at about 833 million EGP monthly.
Mixing Corn with Wheat: A New Attempt to Reduce Bread Subsidies
During the inauguration of development projects in the New Valley last week, President Abdel Fattah El-Sisi said that the cost of a subsidized loaf of bread to the state had reached 1.25 EGP, indicating that the loaf costs the state about 130 billion EGP in subsidies. He proposed introducing corn at 20% instead of wheat in producing the loaf, which, according to him, would save the state the import of two million tons of wheat at a cost of 600 million dollars. He pointed out that mixing corn with wheat is the only solution considering the agricultural production not growing equally with the population growth, reminding that Egyptians have increased by 25 million people since 2011. Mohamed Mashal, a professor of economics at the Faculty of Agriculture at Cairo University and a board member of the General Authority for Agricultural Reform at the Ministry of Agriculture, explains that the decision to raise the loaf price is a deferred decision for more than 30 years, pointing out that current circumstances forced the state to make the price adjustment decision in light of the high rate of Egypt’s wheat import, which reached 45%, making it one of the largest wheat-importing countries in the world. In the same context, a report by the US Department of Agriculture indicated that Egypt’s wheat imports in the 2023/2024 season amounted to about 11.9 million tons, an increase of 2.9%, compared to the 2023 season ending this June. During the current season, the report expects Egypt’s wheat imports to record 11.6 million tons, the second-lowest amount imported by Egypt in the past ten years, while Egypt’s production amounted to about 9.6 million tons of wheat, in contrast to importing 9.1 million tons annually by the end of last year. It produces eight million tons of corn and imports 8.5 million tons, and the feed industry, along with wasted quantities, consumes about half the quantities produced and imported together, according to data from the Central Agency for Public Mobilization and Statistics. Mashal said in his interview with Zawia3 that President El-Sisi is distinguished by decisions he described as “bold” compared to his predecessors, as his government issues decisions that previous governments sometimes avoided and sometimes circumvented. He explained that the previous decisions to reduce the loaf size aimed to reduce the amount of subsidies the state bears, which seems no longer sufficient amid global economic crises that have directly affected all countries, including Egypt. Regarding the proposal to mix 20% of corn with wheat in
the ingredients of the bread loaf, the member of the Board of the General Authority for Agricultural Reform justifies that this would significantly reduce the percentage borne by the general budget from importing wheat, especially since Egypt is self-sufficient in corn production compared to wheat, which has an import rate exceeding 45%.
Commenting on this, Mohamed, a worker at a Giza bakery, confirms that the proposal to add corn to the loaf ingredients is not new, pointing out that this mechanism was implemented previously by the government but was abandoned because the percentage of corn mixed was more than 20%, affecting the final product of the loaf in terms of shape and taste, making it unpalatable to citizens who objected, leading the authorities to backtrack. He specifies the conditions for the success of this proposal: changing the type of corn and not exceeding the added percentage to wheat beyond 20% to avoid significantly affecting the final shape of the bread.
Over ten years, the state’s bread subsidy budget has moved from 19 billion EGP in the 2013/2014 budget to 90.7 billion EGP in the new fiscal year’s budget, according to Ministry of Finance data. Meanwhile, Egypt’s population in 2013 was about 83.7 million people, rising to about 85.8 million in 2014, reaching about 106 million and 389 thousand citizens today within the country.
In 2014, the unused bread point system was introduced, and the food subsidy system was restructured by mechanizing ration cards and providing a greater number of sales outlets to citizens while continuing to provide subsidized baladi bread on ration cards at approximately 250 to 270 million loaves per day. Calculating the budget’s bread subsidy value, based on the dollar exchange rates over the past ten years, shows a reduction in the bread subsidy bill from 2.7 billion dollars in 2023-2024 to 1.8 billion dollars in the next year’s budget, a 33% contraction resulting from successive government policies, such as reducing the loaf’s weight from 130 grams to 90 grams and reducing the number of beneficiaries from 76.8 million to 66.7 million, according to the latest figures of bread beneficiaries in the general budget.
Efforts to Increase Wheat Production
Egypt tops the list of the world’s largest wheat importers, with imports reaching about 10.88 million tons in 2023, an increase of 14.7% from 9.48 million tons in 2022, with most imports coming from Russia, constituting about 69.5% of total wheat imports. Global wheat imports have been affected by several disruptions over the past two years, starting with the Russian-Ukrainian war and its extended impacts, which have troubled Egyptian markets, especially with the increase in wheat consumption rates due to the rising number of population and incoming migrants from neighboring countries. Following the war between Russia and Ukraine, and the increasing geopolitical tensions in the Middle East after the war in Gaza, Cairo included new markets for wheat imports, including India, raising the total number of countries supplying wheat to Egypt to 22, with 11 main suppliers, to bridge the gap of more than 50% between Egypt’s wheat production and consumption. Despite the government’s plan to increase the number of wheat supplying markets, the value of Egyptian wheat imports decreased by 5% during January and February this year, recording 614.96 million dollars, compared to 647.56 million dollars in the same period last year, a decrease of 32.6 million dollars, according to the foreign trade bulletin issued by the Central Agency for Public Mobilization and Statistics. Last year, 2023, saw a decline in Egypt’s wheat imports by 11.7%, recording 3.77 billion dollars compared to 4.27 billion dollars in 2022, a decrease of 497.56 million dollars, according to previous data from the Central Agency for Public Mobilization and Statistics.
Cash Subsidy for Bread
Commenting on the government’s decision to be implemented today, Mahmoud El-Askalany, head of the Citizens Against Price Increases Association, expressed his concern about any decisions related to the bread loaf made by the state. He said that the bread subsidy amount borne by the state reaching 130 billion is alarming, pointing out that the mechanism of distributing the subsidy amount is what allows the theft of the bulk of it by some bakery owners who sell their share of subsidized flour at the free market price. He suggests that if these amounts were distributed to citizens directly through the ration card, it would reduce thefts and ensure the subsidy reaches its rightful recipients and benefits a larger number of current beneficiaries in the subsidy system. He supports the proposal for cash subsidies for bread instead of in-kind subsidies to resolve the budget deficit that the state bears due to wheat imports and provide the necessary support to citizens at the same time. Mohamed Al-Homsany, the official spokesperson for the Council of Ministers, revealed details of the government’s new proposal to convert the in-kind support provided to low and middle-income citizens into cash support. The proposal entails disbursing specific amounts of money to each individual registered on the ration card instead of subsidized goods. The Prime Minister indicated their intention to raise the issue of cash support for citizens as an alternative to ration subsidies during a press conference on Wednesday, announcing that this topic would be discussed during the upcoming national dialogue sessions, with the end of the year set as a deadline for presenting a vision to determine whether cash support is the best model for Egypt. Between implementing the bread price increase, reducing the percentage of wheat in it, and the government’s consideration of replacing ration subsidies with cash, the fears of Mona and millions of other Egyptians remain prevalent, given the daily political and economic decisions that increasingly impact subsidized goods awaited by more than half of the population at the beginning of each month.
