EIU Brief, 25 Mar 08: Egypt the pressure cooker: Soaring food prices lead to widespread protests
.....The government has sought to address the discontent in several ways. It is especially attempting to improve subsidy provision, separating the production and sale of subsidised bread—the main element in the Egyptian diet—in order to reduce corruption. Families were allowed to add children to their ration cards in February for the first time since 1988 (increasing the total number of beneficiaries from 40m to an estimated 55m). Nevertheless, as rising wheat prices force more and more people to rely on subsidised bread, the queues are lengthening and supplies are coming under strain. Similar problems have also arisen regarding diesel fuel, which is used to power machinery and farm equipment. Shortages have led to outbreaks of fights at petrol stations, and accusations that the government is deliberately keeping stocks hidden to boost prices.....

.....international commodity prices, especially for wheat and food oils, have increased strongly, by nearly 70% during 2007. This has forced the government to increase domestic wheat prices, from EŁ220 ($439)per bushel to EŁ320 ($639)per bushel—the price paid by the government to farmers for the 2008 crop, in the hope that more wheat will be made available for the domestic market. Egypt is the world's largest wheat importer, importing around 6m tonnes/year, about half the country's needs. Rising food prices led the government to increase subsidies by EŁ4.7bn ($9.4 bn)in the fourth quarter of 2007, taking total subsidies for fiscal 2007/08 to EŁ14.4bn ($28.75 bn).....