Supporting food commodities…an alternative policy solutions report that discusses the state’s role in reducing poverty rates

The Egyptian government recently announced the allocation of 596 billion pounds ($12.66 billion) to the support system, as part of the next draft budget (2024/2025), including 134 billion pounds for food supplies.

While the government views support as a burden on the budget, its various provisions have had a clear impact in reducing poverty rates. According to income and expenditure research data (2019/2020), “poverty rates decreased by 10 percentage points from 40.0% to 29.74%, due to… “Government support for food, stoves, and electricity.” However, the government’s direction – was and still is – aims to reduce support. While the government increased its nominal value in the general budget, it declined as a percentage of public spending and gross domestic product.

* Food support…a necessary investment for humans

According to the Alternative Policy Solutions Project, a research project affiliated with the American University in Cairo, in contrast to the government trend in reducing subsidies for food commodities, studies have shown that the rapid rise in food prices causes great harm to poor families, because food represents a large share of their total consumption, and thus It has a direct impact on the health and safety of citizens.

In Egypt, subsidizing food commodities reduced poverty rates by 3 percentage points in 2019/2020. Its greatest impact has been shown in reducing poverty rates in the countryside compared to the cities. Therefore, support directed to rural Upper Egypt in particular, where poverty rates are high, must be increased.

Despite this, the family’s support for food commodities does not exceed 7.4% of its total food consumption. While there are about 23 million ration cards benefiting 64 million citizens, the value of the support on them is still small, not exceeding 50 pounds per month per person. Therefore, it is necessary to increase the amounts allocated for ration cards and continue to provide commodity support because it provides the minimum level of food security in light of the high poverty rates reaching 35.7%, with a total of 37.05 million citizens in 2023, according to the report of the Alternative Policy Solutions Project.

It is noteworthy that the “Alternative Policy Solutions” project is a research project at the American University in Cairo, concerned with presenting public policy proposals to deal with the most important challenges facing Egyptian society, through an in-depth and precise research process and extensive consultations with various sectors concerned.

The project provides innovative solutions with a future vision to support the efforts of decision makers in providing public policies. It aims to achieve equitable development in the areas of economic development, resource management and institutional reform.