Tackling Egypt’s rising food insecurity in times of transition

Tackling Egypt’s rising food insecurity in times of transition

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 Research Program on Policies, Institutions and Markets (PIM), the International Fund for Agricultural Development (IFAD), the World Food Programme (WFP), and the Embassy of the Kingdom of the Netherlands in Egypt

Presenter: Perrihan Al-Riffai

Owing to a succession of crises and shocks, food security started to deteriorate from 2005 onwards

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%

Because: Subsidized food accounts for

nearly 20% of poor households’ food expenditure

Subsidized baladi bread accounts for 71% of bread consumed by poor households.

However, maintaining subsidies becomes more difficult in times of rising budget deficits

Source: Ministry of Finance, Financial Monthly Bulletin, various issues.

There is significant potential for improving the current food subsidy system

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 over reliance on cheap and calorie-dense foods, including subsidized commodities.

Following business as usual is not an option: Improved targeting and complementary programs

could save costs and improve food security

Option 2: Improving 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 – Additional silos may be built in key locations—potentially by the

private sector Medium-term

– Replacement of ration cards with smart national ID cards, including those for bread, to improve monitoring and reduce ghost users

– Continue the 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

Option 3: Improving targeting will yield sizeable cost savings and improve food security

Short-term: – Encouraging self-targeting through mandatory registration to

discourage better-off households from using the food subsidy system

– Clarifying targeting objectives and criteria and regularly updating the data to include newborns and exclude those who have died

– Relying on geographic targeting for Upper Egypt and proxy means testing for urban areas and Lower Egypt.

Medium-term – The least vulnerable could be transitioned towards partial

rations for baladi bread

– For the non needy, ration cards are gradually phased out

Option 4: Complementing and providing alternatives to subsidies

Targeted nutrition interventions focusing particularly on maternal and child nutrition

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 and/or vouchers for education or health services may be used to top off in kind assistance to the most vulnerable.

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.

Amend the current system to generate and scale up efficiencies to potentially lead up to a triple win; fiscal savings, reduced poverty and improved nutrition outcomes.

Brazil halved child malnutrition within a decade… Key features of Brazil’s approach:

Highest-level commitment: presidential initiative, ‘right-to-food’ stated in the constitution, and, state accountability.

Integrative: National strategy (‘Zero Hunger’) coordinates programs from 11 ministries.

Establishment and close collaboration of two secretariats, food and nutrition and social protection.

Targeted, large-scale poverty alleviation program with conditional cash transfers (children’s school attendance and participation in child and maternal healthcare and nutrition programs - ‘Bolsa Familia’)

Large-scale nutrition interventions

Investments in drinking water and sanitation infrastructure

Regular process of monitoring and evaluation of progress

Source: Ecker & Nene (2012) – Nutrition Policies in Developing Countries (IFPRI PN).

Recommendations going forward Lessons from other countries’ experiences and Egypt’s previous subsidy reform attempts stress the importance of:

Building credibility by promoting transparency of policies and discussions amongst the population

Creating an understanding (why should the rich get subsidies?)

Managing expectations (what are people getting in return/what are the alternatives to the existing subsidy structure?)

Establishing a robust monitoring and evaluation system for decision making, empowering policymakers to learn and become versatile during any reform process.

Restructuring of the subsidy system is likely to be most successful if it is integrated within the broader national strategy of development and food security.

Thank you for your attention