Nazif promises government will not interfere in product pricing
CAIRO: Despite the protests of local producers, Tuesday, Prime Minister Ahmed Nazif approved proposals of the Ministries of Agriculture (MOA) and Foreign Trade and Industry (MFTI) to allow duty-free imports of beef, fish and poultry until at least March 2007 to help curb market inflation.
Nazif called the meeting of seven ministers, including ministers of interior, finance (MOF), investment, social solidarity and economic development to discuss ways to control inflation in all food products. The government s Central Agency for Public Mobilization and Statistics reported earlier this month the annual inflation rate had reached 11.8 percent in October up from 9.6 percent in September, fuelled mainly by price increases in energy and food supplies.
No meeting results beyond the approval of duty-free meat imports were immediately available. Prime Minister Office Spokesman Magdi Rady declined to comment beyond what was included in the official statement regarding the meeting.
In the statement, Nazif urged the promotion of new mechanisms to combat inflation without direct government interference in local markets in order to continue the government s free-market reform program. Such mechanisms include strengthening the role of the new Competition (anti-monopoly) Authority and implementation of the recently ratified Consumer Protection Law.
Government officials have remained optimistic for the most part due to recent price drops in poultry and the unlikelihood of further electricity and energy hikes in the near future.
These are one-time factors, which means we will see the [inflation rate] coming down very quickly in the next few months, MFTI head Rachid Mohamed Rachid told The Daily Star Egypt last week.
Almost nine months after poultry and egg prices skyrocketed in the wake of low local supplies due to the country s first outbreak of avian flu, chicken prices have dropped below the LE 9 per kg mark, down from a LE 13 per kg high in May, and eggs below the LE 0.40 per egg mark from a LE 0.65 high in June.
MFTI extended the cut-off date for duty-free poultry imports from December to March despite reports of local production reaching 1.7 million chickens per day, near its pre-avian flu level of 2 million.
MFTI s decision comes in light of this month s MOF announcement that legislation is now being drafted to eliminate the sale of live chickens by 2010, beginning with the Greater Cairo and Alexandria governorates by the end of 2007. Under the proposed legislation, MOF would enter into partnerships with private sector companies to fund the construction of automated and semi-automated abattoirs to be monitored by MOA. The government argues the strategy will help it control possible future outbreaks of the avian flu and reduce prices for the public.
Mohamed A. El-Shafei, vice chairman of the Egyptian Poultry Producers Association (EPPA) and managing director of Misr Arab Poultry Companies, says Egyptians, who generally continue to prefer locally grown chicken, have not been properly introduced to alternative frozen chicken mainly because of the limited quantities ordered and the high prices at which they are offered. Just 50,000 tons of frozen chicken have been imported, mainly from Brazil, since September, which sector analysts say was far short of the 150,000 ton demand.
But some argue government efforts designed to combat inflation might backfire by raising unemployment. Talib Ali, regional animal health and production officer for the UN-affiliate Food and Agriculture Organization, says the poultry industry relies on the services of 70,000 poulterers. Of 1.7 million chickens produced daily, about one-third come from backyard farms. A successful government strategy, says Talib, must focus on proper compensation of backyard farmers.
On the other hand, the price of onions and tomatoes continued to record all time highs, hitting LE 4.50 and LE 4 per kg, respectively. MOA has attributed rising prices to a reduction in cultivated land for each crop. Local cultivation of onions, for example, has dropped this year from 100,000 feddans to just 58,000, reports MOA. The ministry cited the abnormally low prices at which last year s harvest were sold, in some cases as low as LE 0.50 per kg, as discouraging farmers from replanting the vegetable.
