Egyptian government mulls fixing prices of fruit and veg

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Egyptian government mulls fixing prices of fruit and veg

Post by DJKeefy » Tue Sep 24, 2013 1:30 pm

Rising prices of fruit and vegetables - which are not subsidised by the government like other staples - are causing hardship.

The Egyptian government may set official prices for fruit and vegetables because of the number of complaints the state’s ministry of supply has been receiving about price hikes.

According to state daily Al-Ahram on Monday, Minister of Supply Mohamed Abu-Shadi has given grocers nationwide a time-limit of a week to reduce prices, or he will set prices and allot them a profit margin of 25 percent.

Abu-Shadi was formerly a senior interior ministry official, responsible for investigating supply crimes.

"The profit margins of the fruits and vegetable retailers currently exceed 250 percent, which isn't fair and doesn't work even for mid-income Egyptians," Mahmoud Diab, the ministry spokesman told Ahram Online.

Grocers are not complying with the market's disciplinary rules, Diab said.

"For example, if you are dressed in a formal suit, you will get a kilogram (kg) of tomatoes for LE5, but if you send your doorman in his robe to buy some, he will get it for LE3.5 or LE3," Diab added.


Food prices soar

Food and beverage prices contribute the largest amount to Egypt's consumer price index (CPI), which recorded an average of 9.4 percent over the last ten years, a sign of continuous price rises.

Fruit and vegetables are not included among the subsidised foods that the government supplies to Egyptians through a ration card system.

Rationed food reaches around 69 million people out of a population of 90 million.

"The only way for the governmental authorities to stop traders’ manipulation is to revive mandatory pricing," Diab said.

Egypt saw government-imposed prices under the rule of the nationalist president Gamal Abdel-Nasser in the 1950s and 1960s. The system lasted until the early 1990s.

In 1977, president Anwar Sadat tried to lift governmental subsidies on food, causing price hikes. The resulting riots forced him to reverse the decision.


Gap in prices between wholesalers and retailers

Egypt’s retailers nationwide sell fruit and vegetables at average prices 300 times higher than the price at the two major wholesale markets located in Cairo and Giza.

Also, retailers’ prices differ from street vendors to groceries and from one district to another.

Green beans have been a cause for concern as retailers have tripled the price of a kilogram to LE12.

Tomatoes are sold at an average of LE3.5 per kilogram at retailers, while the same amount costs LE0.5 at the wholesale market.

Cucumbers and onions are sold at an average of LE4.5 per kilogram at retailers, while the prices ranges from LE1 to LE2.5 at the wholesalers.

Fruit-lovers are not safe from the trend of high prices. Apples and bananas are sold at an average price of LE12 per kilogram, while guavas and figs are sold at values of LE5 and LE6 a kilogram.

"These differences from street vendors to shops will make the implementing of the new system hard," Ibrahim El-Arabi, the head of Cairo Chamber of Commerce, told Ahram Online.

El-Arabi also pointed out that the government has yet to make clear whether imported fruits and vegetables would be subjected to governmental prices.


Inflation

"If the government was able to manage prices and supply at the same time, we won't see a harmful impact on inflation," said economist at Cairo-based investment bank EFG-Hermes Mohamed Abu Basha.

Abu Basha told Ahram Online that if the supply of fruit and vegetables does not meet popular demand, a black market will emerge.

"Investors might be anxious and will think before pumping their money into our local market when they see governmental interference by setting prices of goods," Abu Basha said.

Egypt’s annual urban headline inflation fell to 9.7 percent in the twelve months to August 2013, down from 10.3 percent, figures from the Central Agency for Statistics and Mobilisation (CAPMAS) showed earlier this month.

The overall inflation rate registered 10.9 percent in August.

Source: http://english.ahram.org.eg/News/82348.aspx


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Re: Egyptian government mulls fixing prices of fruit and veg

Post by DJKeefy » Tue Sep 24, 2013 1:40 pm

Not sure about the rest of Egypt, but I can see grocers in Luxor just ignoring what the Goverment says, it's like they have there own law which they make up to suit themselves.

Cigarettes are supposed to be price set by the goverment, yet most shops in Luxor charge a different proce (which is higher than the set price).

The only way to implement Goverment set prices is for them to form a new work force that goes around checking shops to make sure they have the correct prices in place, if not they get fined or closed for example.
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Re: Egyptian government mulls fixing prices of fruit and veg

Post by LovelyLadyLux » Tue Sep 24, 2013 4:35 pm

Wonder if they'll also fix the prices on fertilizer and farm labour and on and on?

Not justifying artificially high prices on fruit and vegetables but sometimes farmers only have a very short time frame to make their profit for an entire year. If they can't do this because of prices being fixed it could mean a much smaller crop the next year.

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Re: Egyptian government mulls fixing prices of fruit and veg

Post by Dusak » Wed Sep 25, 2013 9:19 am

On the few times that I have ventured into the fruit and vedg market next to the main bus terminal its always depressing to watch the old ladies haggle over the few day old spoiled produce that sells for .5/1Le a kilo. I really think that they would find better in the local skips. A terrible way to live. You pay what you're prepared to pay for here with these commodities, as in all things in life, no matter where. The difference between fair quality and mediocre is quite a big gap with little difference in price. I stopped using what used to be a good shop in Karnak as the quality plunged but not the price. My friend gets mine now to save me the bother, but even she comments how rapidly the price goes up and down from day to day but the quality remains the same. Still, on the whole still cheaper than European prices. When I do buy fruit its from KZ, always top imported quality, always top price but worth it to me.
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Re: Egyptian government mulls fixing prices of fruit and veg

Post by Hafiz » Tue Oct 01, 2013 8:13 am

If you want crime then government setting prices is positively certain to produce it. For example, you set a price. Its for an average banana. A well off person wants a high quality banana and is prepared to pay twice the government rate for it. Presto a crime with 2 criminals and possibly more when you include payments to police and prosecutors to make the offence go away.

Any student of command economies, and of the Wilson government in the UK, will tell you that setting prices not only promotes a black market it also reduces the profits to domestic suppliers. In the normal (non-socialist Egyptian) case the reduced profits reduced supply whilst it is higher profits lwhich ead to higher production and then, at a later stage, to lower prices. Setting prices in this way reduces any incentive to farmers to expand production.

When this happens witless governments are forced to take a new and expensive step by buying at the real and inflated price and then selling at a loss to consumers both rich and poor. One of the hundreds of problems with this expensive move is that it provides no incentive to consumers to moderate their consumption which in turn guarantees that the subsidy program will balloon.

Socialism continues to have an unhealthy hold on government thinking. Nassr was an unreconstructed socialist and Wafd and other parties continue to hang onto this raddled old hag of an economic theory. Egypt needs to decide whether it is going to join the capitalist/market world or continue with the level of state intervention it now has. One thing is certain the growth, and jobs, in Egypt will continue to be less than it could be as long as it sticks with the corrupt/crony capitalism which allocates resources to fix political problems or to enrich friends.

Its a moot point, but the brotherhood, in their Renaissance program, were red hot on markets and getting the government out of everyone's way. They were also for the retention of subsidies but only on a much narrower, and fairer, basis. Billions are lost each year by subsidies to those not in need, of the dead and billions more will be lost as the current government tries to buy votes for cheap vegetables.

Before anyone jumps: I'm not advocating Thatcherism and Chinese communist capitalism is a one off and never replicated in the evil empire or its satellites.

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Re: Egyptian government mulls fixing prices of fruit and veg

Post by Brian Yare » Tue Oct 01, 2013 10:51 pm

While the authorities are mulling, maybe they could fix a price on mulled wine?

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