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Abu Dhabi, UAEMonday 24 September 2018

Bittersweet: Egypt's complicated relation with sugar

Insatiable appetite for sweetener takes its toll on health, economy and water supplies

A bakery worker in Cairo dusts Kahk, a traditional sweet, with sugar. Reuters
A bakery worker in Cairo dusts Kahk, a traditional sweet, with sugar. Reuters

Egypt is facing a bitter battle over sugar. Egyptians consume large amounts of it, to the extent that almost one in 10 suffers from diabetes, yet growing it locally is a drain on scarce water resources and imports to meet a shortfall in supply are a strain on the country's precious foreign reserves.

The population of roughly 90 million goes through 3.4 million tonnes of sugar each year, according to industry experts. That works out to more than 35 kilos of sugar for every man, woman and child

“I put two-three small spoons in my tea. And I have four to five cups a day,” says Mohamed Abbas, 47, a schoolteacher in a Cairo preparatory school, adding that he buys two to three kilos of sugar in a week.

Egypt's sweet tooth means there is a great sensitivity to any adverse change in the supply or affordability of sugar.

In January 1977, a decision by Anwar Sadat's government to lift subsidies on sugar and other basic commodities sparked two days of rioting in which dozens were killed before the army was called out to quell dissent. The subsidies were restored the following day.

In September 2016, the price of sugar almost tripled, from 6 Egyptian pounds (Dh1.25) a kilo to 17. The government blamed the price rise on a shortage created by private companies exporting 250,000 tonnes of the country’s total sugar stock of 750,000 tonnes. However, the government's inability to import supplies because of a shortage of foreign currency in the lead-up to a major IMF bailout was also a factor.

An official from the military's National Service Projects Organisation (NSPO), which comprises companies operating in a wide range of sectors ranging from cement to chemicals and agriculture, told The National that “if the armed forces are aware of any future shortages or crises, it will react accordingly. This happened with the sugar crisis in 2016, and the baby formula shortage in 2015.”

But it has become increasingly difficult for Egypt to satisfy its sweet tooth as a result of rapid growth in the population, which was 30 million in the early 1970s. Local production, which outstripped demand by almost 20 per cent at that time, fell short by 30 per cent in 2016. The gap continues to grow. Last year the country produced 2.4 million tonnes of sugar, but consumption reached 3.4 million tonnes.

This shortfall has created a dilemma for policymakers and for players in the sugar industry.

The government actively controls the domestic sugar market through stockpiles and tariffs, such as an export duty of 3,000 pounds per tonnes imposed in April last year, to ensure supply and keep prices down.

The tariff was lifted this month because, according to a source in the ministry of trade, there was stability in the amount of sugar available to the local market. “The companies have a surplus. There is no use in storing tonnes of sugar,” the source said.

However, Mohamed Fawzy, chairman of the Federation of Egyptian Industries, said cancellation of the tariff would encourage exports. “The companies will prefer quick profit and begin to export reserves, which will eventually affect the local market."

He said the current surplus of 800,000 tonnes could be completely depleted through two or three months of exports, leading to a new crisis.

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President Abdel Fattah El Sisi has imposed new taxes and tried to move Egypt towards a free-market economy since taking charge of the country in 2013, including by reducing state subsidies. The amount allotted for subsidies in the 2018-19 budget is 89.08bn pounds, down from 120.93bn in the previous year. Fuel subsidies have been cut four times since 2014.

Nevertheless, the government is caught between offering welfare to impoverished citizens and implementing economic reforms under a programme supported by the International Monetary Fund.

With unemployment high and the economy still to recover from years of turmoil following the overthrow of Hosni Mubarak in 2011, keeping essential goods affordable is crucial to prevent social unrest. A testament to this is the crowds outside state outlets that sell subsidised goods.

One such crowd is clustered around two shops, one run by the military and other by the interior ministry, in Cairo’s Ramses Square.

“The people are facing several price hikes, we are there to reduce their suffering and to make sure no one trade with their misery to ignite dissent,” said a retired police major at the ministry shop who asked to be identified only as Osama.

A kilo of sugar at such shops, which are run by a variety of state arms, can be had for 8.5 pounds currently. That is one pound less than the original cost, according to the Holding Company for Food Industries affiliated with the ministry of supply, and 2 to 4 pounds cheaper than in normal stores.

The state faces another balancing act in impoverished Upper Egypt, the source of all domestic sugar production where 325,000 feddans (136,500 hectares) are given over to growing sugar cane and sugar beet.

In a country with scarce water resources, one million of the 2.4 million tonnes produced each year is from sugar cane, a water-intensive crop.

Saed Al Mohsen, a farmer in Qena, said 60 per cent of Upper Egypt’s population was dependent on sugar production. "It is not only about growing the plant, but also involves industries like the production of methanol, rock candy, molasses, as well as white vinegar and others,” he said.

With the Grand Ethiopian Renaissance Dam being built on the Blue Nile threatening to reduce Egypt’s water supply, the government is seeking alternative sources as well as limiting farming of water-intensive crops.

This would be a blow for people like Mr Al Mohsen, whose family farms five feddans inherited from his father and grandfather. “If they suddenly decide to reduce the agriculture, the country will lose more than 140 years' worth of experience in the sugar cane industry.”

A railway car is loaded with sugar cane in Abu Al Nasr, about 770 kilometres south of Cairo. AP Photo
A railway car is loaded with sugar cane in Abu Al Nasr, about 770 kilometres south of Cairo. AP Photo

Egypt's appetite for sugar is extracting another cost as well — on public health.

According to the World Health Organisation’s World Health Observatory report for 2016, Egypt had an obesity rate of 32 per cent among people above 18, placing it fourth among all countries and not far behind Kuwait, which topped the list with a 37.9 per cent obesity rate.

And nearly one in 10 Egyptians — 8,222,600 — are diabetic, according to 2017 figures from the International Diabetes Federation.

Mohamed Emara, a cardiologist at the 6 October hospital in Cairo, blames a diet high sugar and fats, from Egyptian fino bread to cakes, fast food, pastries, ice creams and snacks. “The availability of such products and how the media and restaurants promote them makes people crave them, though healthy and delicious alternatives exist with healthy fats.”

The diet described by Mr Abbas, the schoolteacher, would be typical. In addition to his tea habit, he said he eats snacks and pastries, fast food on the street and sweets offered to him at the homes of students he tutors privately.

In the 1950s most cases of diabetes in Egypt were hereditary, Dr Emara said. "Now, you can see young women and men in their 20s with no family record of the illness suffering from the disease.”

Besides the cost of treating the disease with daily pills or insulin injections, diabetes can also lead to complications such as heart attacks, strokes and kidney failure, the doctor said.

Yet despite the toll on the health of citizens and the economy, the risk of social unrest and environmental catastrophe, there are no signs that Egypt will be weaned off its sugar addiction any time soon.

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