1) Food security has deteriorated in Egypt since 2005 due to successive crises and shocks. 2) Food subsidies have played an important role in protecting the poor from these crises by accounting for nearly 20% of poor households' food expenditures and subsidized bread accounting for 71% of bread consumed by poor households. 3) Maintaining subsidies is becoming more difficult with rising budget deficits, so improving targeting efficiency and complementing subsidies with other programs could both save costs and improve food security outcomes.

1. 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

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

3. 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.

4. However, maintaining subsidies becomes more
difficult in times of rising budget deficits
Source: Ministry of Finance, Financial Monthly Bulletin, various issues.

5. 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.

6. Following business as usual is not an option:
Improved targeting and complementary programs
could save costs and improve food security

7. 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

8. 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

9. 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.

10. 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.

11. 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).

12. 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.

13. Thank you for your attention