Monday, July 19, 2010

"Free" market, speculations and corrupt governments: the ultimate triad. Now add Ramadan to all that

"During the past two weeks consumers were surprised to see locally produced rice -- an essential staple for the majority of Egyptian families -- increase in cost by almost 50 per cent. Best grade rice increased from LE4 to LE5.5 per one-kilo bag while lesser quality rice increased to LE3 per kilo instead of LE2. The increase of rice prices a few weeks before the holy month of Ramadan, a season of high demand for food products, means a heavier financial burden for Egyptian families. Layla Mohamed, a maid and mother of three children, said "I was shocked to buy the rice at LE3 per kilo, but I have to as my children live on rice with vegetables."
There are different reasons behind the price hikes. The government attributed the rise to supply and demand. The Ministry of Trade and Industry told Al-Ahram Weekly in an e-mailed statement that as is the case every Ramadan, commodity prices increase as it is the time of the highest consumption. Moreover, Ramadan starts before the new rice harvest season begins. This is helping to drive up prices with some consumers wrongly believing there is insufficient rice in the market. "Despite the fact that we are at the end of the previous harvesting season, we still have sufficient amounts to cover the needs of the domestic market fully until the new harvest season," said the statement.
On the other hand, some experts blame the government for its policy of reducing rice production while others accuse traders of storing huge quantities to control prices in local markets. Low-income consumers, who do not care who is responsible for the price rises, are getting squeezed in between. While rice prices usually witness an increase during the last two months of the rice season that starts in October, this year's increase is far above usual." (Thanks Marcy)

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