Sherine Alshawarby at Egypt NPS Seminar

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“Food Prices, Devaluation,
Food Subsidies and their Implications for
Egypt’s Economy and Households”
Food Subsidies and Poverty in Egypt
in the Context of Crises
Sherine Al-Shawarby
Professor of Economics
Cairo University
Food Prices, Poverty
and Household Diets
May 22nd, 2023
INP
Heliopolis, Cairo

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Objective
Encourage the audience to engage in a thoughtful
discussion about policy options aimed at
enhancing the effectiveness of food subsidies
amidst the prevailing challenges of food prices,
devaluation, inflation, and their far-reaching
implications for Egypt's economy and households.

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Outline
1) Facts about the current status
2) What do we know about the role of food subsidies in times of
food crises?
3) What is the role of the Tamween program in the current
Egypt’s context?
4) What is the impact of inflation hikes on HHs welfare?
5) How can we make food subsidies more effective during a food
and inflation crisis?

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1) Facts about the current status

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There are some promising trends, but food
prices remain high
▪Global food prices fell for
the 12 consecutive
months until March 2023,
before experiencing a
modest increase of 0.6
percent from March 2023.
▪ The index is still 19.7
percent (31.2 points) lower
than its value during the
same month in the previous
year.

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Food Price Inflation: Top 10 List

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Food and Beverage price index increased by
61.5% in Februray
62.7% in March, and
53.8% in April

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Egypt is one of the
countries that are
highly exposed to
food security.
It is classified as
(i) suffering from
acute food security
and
(ii) facing a
negative impact on
the current
account of a t least
0.3% of GDP from
international food
and fertilizer prices.

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While international food prices have eased
recently, food insecurity is likely to worsen
1. Undernutrition
Too little food, insufficient variety and too little nutritious food causes hunger. This
can lead to wasting (low weight for height), stunting (low height for age) and
being underweight (low weight for age). It is estimated that 815 million people
worldwide suffer from undernutrition and that 3 million children aged 0-5 years
die every year as a result.
2. Micronutrient deficiencies
A large part of the world's population does have access to food, but this food is
not nutritious as it lacks vitamins and minerals. The biggest problem is the lack of
vitamin A, iron and iodine. About 2 billion people suffer from micronutrient
deficiencies.
3. Excess weight and obesity
A growing proportion of the world's population is overweight or obese due
to a combination of consuming the wrong kind of food containing excessive
calories with too little exercise. Being overweight can lead to higher blood
pressure, heart disease, different types of cancer and type 2 diabetes. Around
1.9 billion adults worldwide are overweight or obese. And 41 million children
under 5 years of age worldwide are also overweight or obese.

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Poverty Rates in Egypt
16.7
19.6
21.6
25.2
26.3
27.8
32.5
29.5
1999/2000 2005/2004 2009/2008 2011/2010 2013/2012 2015 2018/2017 2019/2020
)%(

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2) What do we know about the role of food subsidies in
times of food crises?

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The Role of Food Subsidies in Times of
Food Crises
Food subsidies play a crucial role in mitigating the impact of food
crises by ensuring access to affordable and nutritious food for
vulnerable populations.
Key aspects of the role of food subsidies during food crises include:
•Price Stabilization:
• Subsidies help stabilize prices of essential food items.
• Counteract supply disruptions and market volatility.
• Social Protection:
• Serve as a safety net for vulnerable populations.
• Ensure access to adequate and diverse diets during financial
constraints.

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The Role of Food Subsidies in Times of
Food Crises (cont'd)
•Poverty Reduction:
• Reduce the financial burden on low-income households.
• Contribute to poverty reduction efforts and improve food
security.
• Targeted Interventions:
• Effective subsidies focus on vulnerable groups.
• Improve health outcomes for children, pregnant women, and
the elderly.
Policy Challenges:
• Ensuring subsidies reach intended beneficiaries.
• Preventing market distortions and leakages.
• Managing budgetary constraints.

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2023 Global Food Policy Report: Recommendations for
Food Crisis Response- IFPRI
•Coordinate early warnings & action
•Support business environments for agrifood chains
•Integrate gender & climate in social protection
•Repurpose agricultural support funds
•Leverage private sector for resilience
•Prioritize pre-crisis frameworks & vulnerability analysis
•Improve targeting & inclusivity in interventions

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The IMF recommends strong and timely action across
four policy areas to mitigate the global food crisis
(i) adequately and rapidly support households vulnerable to food
insecurity through international humanitarian assistance, and effective
fiscal policy measures at the domestic level.
Near-term social assistance should focus on providing emergency food
relief or cash transfers to the poor. Where this is not possible, second-
best subsidies and tax measures can provide temporary relief.
(i) maintain open trade,
(ii)increase food production and improve distribution
(iii) invest in climate-resilient agriculture for longer-run sustainability.

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Top 5 Food Related Measures Announced –
IMF survey on 174 countries
•Many countries implementing measures
to mitigate social impact
•Clear correlation between cash
transfers and country's level of
development, typically used by more
advanced economies (AEs)
•Low-income developing countries
(LIDCs) rely more on subsidies. Given
that SSNs are often still at an early stage
of development, the use of cash transfers
is relatively rare.

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To prevent a worsening of the food and nutrition
security crisis, the World Bank recommends further
urgent actions are required to
(i) rescue hunger hotspots,
(ii) facilitate trade, improve the functioning of markets, and
enhance the role of the private sector, and
(iii) reform and repurpose harmful subsidies with careful
targeting and efficiency.
(iv) Countries should balance short-term urgent interventions
with longer-term resilience efforts as they respond to the
crisis.

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How do governments respond to food price volatility?-
United Nations University World Institute for
Development Economics Research(UN- WIDER)
Except for a few countries with politically powerful agricultural sectors,
policy responses were directed at two main objectives.
First: moderating food price increases through export restrictions,
reduced import tariffs, removal of value added tax on food, and release of
grain stock.
Second: compensating select groups of consumers for increasing
food prices through targeted transfers, consumer food subsidies, and
increased public sector wages. In general, transfers were targeted at
those groups of urban consumers likely to be most important for
government to maintain its legitimacy. In fact, although improved food
security was the declared goal of many of the countries, maintaining
legitimacy appeared to overshadow all other goals.

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Outline
3) What is the role of the Tamween program in the
current Egypt’s context?

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Source: WFP, https://www.wfp.org/countries/egypt
Egypt has transformed the design, delivery and scope of
its national social protection programs to better support
vulnerable groups.
While maintaining positive economic growth, Egypt
faces a set of long-standing development challenges,
including poverty, food insecurity, malnutrition, spatial
and social disparity, and gender-based inequality, as well
as climate shocks.

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The main pillars of the fiscal budget for
FY 2023/2024
‫المصدر‬
:
‫لعام‬ ‫للدولة‬ ‫العامة‬ ‫الموازنة‬ ‫مشروع‬ ‫عن‬ ‫المالية‬ ‫لوزارة‬ ‫المالي‬ ‫البيان‬
٢٠٢٣
/
٢٠٢٤

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GoE’s response
The Government of Egypt continues to respond to the economic situation to
protect families impacted the most. The Ministry of Finance (MoF) earmarked a
mitigation package worth 130 billion EGP (1.6% of the FY 2022/23 GDP). The latter
includes increases in public wages, pensions, allowances, as well as tax cuts, such as
raising the personal income tax exemption.
▪ Adding one million new families to the Takaful and Karama progra, reaching
over 5 million HHs. Increasing allocations to social assistance to 22 billion EGP
▪ Increasing benefit level of TKP beneficiaries by 25% per month, starting from
April 2023
▪ Raising minimum wage from 2,700 to 3,000 EGP.
▪ Extension of package for food ration cards, with additional funds between 100 to
300 EGP per household at a cost of 8.5 billion and adding new commodities to the
list of subsidized food commodities.
▪ Raising the tax exemption limit from 24,000 to 30,000 EGP annually.

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Increase in the allocations to Subsidies, Grants and Social Benefits (SGSB)
Source: MOF- Monthly Finance and Financial Statement, several years.
127.0
103.0
123.1
150.2
197.1
228.6
198.6 201.0
276.7
329.4
287.5
229.2
263.9
343.4
428.5
529.7
FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24

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but not as much in real terms…..
10.4%
12.2%
8.5%
9.0%
9.5%
10.6% 10.7%
8.1%
7.4% 7.6%
7.1%
5.1%
3.7% 4.0%
4.38% 4.37% 4.48%
31.5%
33.7%
30.3%
29.3% 29.9%
31.6%
32.9%
30.0% 30.2%
28.2%
26.7%
24.5%
23.3% 23.7% 23.3%
22.3%
25.3%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24
SGSB expend

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The same pattern applies to public spending on
Social Protection in the functional classification
5.2%
10.2% 10.3%
7.7%
6.9% 7.0% 6.7%
0.0%
3.3% 3.5% 4.0% 3.7% 4.0%
8.5%
9.0%
9.5%
10.6% 10.7%
8.1%
7.4% 7.6%
7.1%
5.1%
3.7% 4.0%
4.4% 4.4% 4.5%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24
Social Protection SGSB

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The decline in SBSG spending is mainly
due to the energy subsidy reforms
Source: MOF- Financial Statement, several years.
6.76%
5.39%
6.73%
6.02%
5.51%
4.94%
6.06%
6.45%
5.92%
3.02%
1.88%
3.15%
2.59%
1.51%
0.30%0.28%
0.76%0.80%
1.01%
FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24

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Food subsidies did not increase in real terms
32.7 30.3 32.6 35.5
39.4 42.7
47.5
80.5
87.0
80.4 83.0
96.8
140.5
127.7
2.39%
1.92%
1.75%
1.67% 1.61% 1.58%
1.30%
1.73%
1.55%
1.31% 1.25% 1.23%
1.43%
1.08%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24
in bn EGP % GDP

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CT did not increase in real terms, as well
0.16%
0.15%
0.11%
0.12% 0.12%
0.15%
0.16%
0.20%
0.24%
0.28%
0.33%
0.36%
0.38%
0.31%
0.30%
0.29%
0.24% 0.25%
0.26%
FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY24
CTs

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Food subsidies:
Facts from the FY24 budget
Increased to EGP 127.7 bn in FY24 budget (planned), compared with EGP 140.5 bn in
FY3 (expected), and EGP 90 bn in planned FY23
Ration Carids (RCs)
36.1 bn (0.31% GDP)
In terms of %GDP, there is a decline from 1.43% to 1.08%
Baladi Bread (BB)
91.6 bn (0.77% of GDP)
Cover 62.2 million
Egyptians
EGP 50/person/month
up to 4 persons and
EGP25/month for the
remaining family
beneficiaries
+EGP100 for targeted
families
EGP 83.6 bn
Covers 67 mil Egyptians
5/loaves/person/day
EGP 5.4 bn
Covers 4.3 mil
Egyptians
10/kg/person/month
EGP 2.5 bn)
BB points (10 pt/ loaf)

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Ration Cards:
the poverty impact in 2019/2020
In 2019/2020, ration cards lifted up 2.95% of the
Egyptian population from poverty.
Without the ration cards, the poverty rate would
have stood at 32.7% instead of 29.7%.

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Ration Cards:
what is the expected poverty impact today?

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Ration Cards: Facts from the market
4 persons
Jan- Nov 2019 May 2023
Before 2015 reforms:
Each beneficiary
2 kgs sugar
2 Kgs cooking oil
2 Kgs Rice
50 gm Tea
And others
0.8 Kg cooking oil. 19.0
1 Kg sugar 8.5
3 Kg Rice 24.0
____
Total 51.5
0.8 Kg cooking oil. 30.0
1 Kg sugar 12.5
0.720 Kg Rice 9.0
___
Total 51.5
EGP 50/person
(EGP net EGP48-
EGP 3 for the
grocery)
EGP 50/person
(EGP net EGP48-
EGP 3 for the
grocery)
+ 100 EGP/family
+ 2 Kg Rice /person

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Ration Cards:
Definitely less than their impact in
2019/2020.
Yet, still has a positive effect on the
beneficiaries’ living standards

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Ration Cards:
Just questions!!!
Are the food commodities supplied in the MOS outlets
subsidized?
Is this amount included in the RC subsidy in the budget?
Are the food commodities in the outlets of the armed
forces, police, tahya Masr, etc.. subsidized?
Are these subsidies shown in the SBSG chapter?
If not, where does the budget unity principle apply?
How can a comprhensive and consitent FS policies be
designed ?

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BB: Facts from the market
In 1984, BB of 82%
extraction was
introduced with a
weight of 160 gm for
2pts.
The price increased
to 5 pt in 1990
weight declined to
130 gm in 1998,
110 gm in 2107,
90 gm in 2020
Constant price + reduced weight
Less benefit
Constant Price + increased cost
Higher benefit

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BB:
what is the poverty impact in 2019/2020?

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Subsidized BB
lifted up between
3.4% and 4% of
the Egyptian
population from
poverty.,
depending on the
cost of producing a
loaf of BB.
Without the
BBsubsidy, the
poverty rate would
have stood at
between 33.07%
and 33.72%.
3.33%
3.60%
3.98%
33.07%
33.34%
33.72%
50
55
60
SBB cost
Pt/loaf
Poverty
reduction
Poverty Rate

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BB: Facts
The government announced
that the cost of a BB loaf is
currently EGP 0.95 pt.
The benefit for the consumer is
90 pt/loaf in 2023
In 2019/2020, the cost of BB
was in the range of
EGP 0.55- 0.60
The benefit for the consumer is
0.50-0.55 pt/loaf in 2019/2020

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BB:
The production of a loaf costs the budget EGP 0.95
there is a nominal increase in the benefits received by
the beneficiaries of EGP0.35- 045 per loaf
The ongoing poverty impact is at potentially higher
scale compared to that in 2019/2020

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Ration Cards and BB combined:
the poverty impact in 2019/2020
In 2019/2020, food subsidies lifted up at least
6.3% of the Egyptian population from poverty.
Without the ration cards and BB combined, the
poverty rate would have stood at least at
36.37% instead of 29.74%.

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RCs and subsidized
BB together lifted up
between 6.32% and
7.06% of the Egyptian
population from
poverty., depending
on the cost of
producing a loaf of
BB.
Without RCs and BB
subsidy, the poverty
rate would have stood
at between 36.37%
and 37.12%.
6.32%
6.71%
7.06%
36.37%
36.77%
37.12%
50
55
60
SBB cost
Pt/loaf
Poverty
reduction of FS
Poverty Rate

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3) What is the effect of inflation on
poverty and living standards?

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As Food shares is larger for the poorer quintiles,
CPI is higher for the poorest quintile
40.05
36.95
35.12
32.39
23.83
30.71
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
1 2 3 4 5 All Egypt
Food Shares by quintiles
104
106
108
110
112
114
116
118
120
122
CPI by month with respect to corresponding month of previous year, by
quintiles
1 2 3 4 5

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Inflation is the main factor for poverty and food
insecurity
Looking at the triple decomposition, most of
the increase in poverty was due to relative
price shifts (faster change in the cost of
the basket of commodities consumed by
the poorer deciles than that consumed by the
average household).
The increase of about 5.6 percentage points
in poverty can be accounted for by the
inflation factor. Real growth would reduce
poverty by 0.97 percentage points;
distributional change (which is also poverty-
reducing) would increase it by 0.1
percentage points.
Changes All
Egypt
Urban Rural
Actual 4.71 7.88 2.26
due to growth -0.97 1.49 -4.36
due to
inequality
0.07 1.65 0.37
due to
inflation
5.61 4.74 6.26
Triple composition of poverty changes, 2015-2018
(percent)

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Rise in food
prices
Rise in prices of
non-food
Emergency
diseases
Social events
(marriage,
birth,...)
Due payment of
debt or loan
Price of
agricultural
supplies and
animal
husbandry
Urban 77.9% 30.0% 20.9% 4.5% 3.8% .8%
Rural 83.0% 22.9% 26.6% 6.0% 5.3% 5.6%
Total 80.8% 26.0% 24.1% 5.3% 4.7% 3.5%
77.9%
30.0%
20.9%
4.5% 3.8% .8%
83.0%
22.9%
26.6%
6.0% 5.3% 5.6%
80.8%
26.0% 24.1%
5.3% 4.7% 3.5%
Urban Rural Total
Source: Heba El-Laithy, Dina Armanios and Alia Hafez.(2023). Analysis of Impact of Inflation on Food Security,
Nutrition, and Child Poverty in Egypt. UNICEF and WFP.
The most common shocks reported by
households are price inflation of

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Cheaper and less nutritious food are the most used
coping strategies amid deteriorated living
conditions, price increases, and stagnant income
▪ Stress strategies (short-term
strategies), includes borrowing or
purchasing on credit. Reduce
consumption, reduce number of
meals
▪ Crises strategies such as reducing
expenditure on health and education,
sending children to work and sell
income-generating land, have a
serious impact on human capital.
▪ Emergency strategies , receiving
financial support from governmental
or non-governmental agencies
1.8
11.1
20.8
22.1
31.1
33.7
35.9
88.2
89.7
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0
Spend day or more without food
Reduce food consumption of adults
Coping crisis
Reduce number of meals
Coping emergency
Coping Stress
Reduce meal size
Reduce weekly consumption of
meat/poultry
Relay on cheaper food
% of households who experienced insufficient food by coping
strategies, 2019/20

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Coping strategies reflected in lower real poverty lines
2017/18 EGP451/pers
2019/20 EGP420/pers
2015 EGP470/pers

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3) What is the likely effect of inflation on
Impact of price changes & inflation on
poverty
Inflation scenario 23 %

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At 23% inflation rate: All forms of poverty including
extreme poverty are expected to increase. The near poor
are slightly increased.
The percentage of those non-poor are projected to
decrease to 36 % from 45
4.5
25.2 25
45.2
7.2
31.2
25.1
36.4
Extreme poor Poor Near poor Non-poor
% of individuals in different poverty category
2019/20 23% inflation rate
Source: Heba El-Laithy, Dina Armanios and Alia Hafez.(2023). Analysis of Impact of
Inflation on Food Security, Nutrition, and Child Poverty in Egypt. UNICEF and WFP.

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Stimulus package is efficiently targeting the extreme poor
especially among households with children and among
children
4.50
25.24 25.03
45.23
4.50
25.24 25.03
45.23
7.24
31.18
25.14
36.44
3.20
32.52
27.29
36.99
extrene poor poor near poor non-poor extrene poor poor near poor non-poor
scenarios without stimulus scenarios with stimulus
Poverty incidence without and with mitigation measures
2019/20 23%inflation rate

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4.2 million people are projected to move from
being extremely poor to either poor or
4.6
26.0 25.8
46.5
4.6
26.0 25.8
46.5
7.4
32.1
25.9
37.5
3.3
33.5
28.1
38.1
extrene poor poor near poor non-poor extrene poor poor near poor non-poor
scenarios without stimulus scenarios with stimulus
The number of the poor in million with and without stimulus
package for all population
2019/20 23% inflation rate

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3) What is the likely effect of inflation on
Impact of inflation on food & Nutrition security
A. Dietary Diversity
B. Caloric deficiency and
C. Micronutrient deficiency
D. Child Dietary diversity for children 6-59 months
Inflation scenario 23 %

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Poverty is the main driver of food insecurity
2019/2020
Access to Food
▪ Overall, 31% of HHs exhibited unacceptable DD scores.
▪ 74% of extreme poor & 49% of the poor exhibited unacceptable DD
scores; compared with 17% for the non-poor
▪ Among households with children 0-17 years
▪ Overall, 35% of HHs with children 0-17 years exhibited
unacceptable DD score
▪ 75% of extreme poor, 51% of the poor & 22% of the non-poor
had unacceptable DD score

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Poverty is the main driver of food insecurity in 2019/2020
Access to Food
For Caloric deficiency : 57% of extremely poor and 32% of the poor
living in HHs with children 0-17 years do not meet their minimum
daily caloric needs, compared to 9% among non-poor
The analysis concerned with energy intake regardless the source of
energy
However, it is necessary to also assess the sources of
caloric/energy intake and the implications on the nutritional
status
Overall, Consumption of micronutrients among 47% of the
population was less than the Required Nutrient Intake, 9% of
individuals -of all ages- are consuming less than the Required Nutrient
Intake for iron, 42% for folic acid and 13% for Vitamin A

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Under the 23% inflation scenario;
percentage of HHs with unacceptable DD score would rise from
31% to 38% (about 7 ppts up)
34.9
27.6
73.8
49.2
28.5
17.4
12.1
32.1
40.8
30.7
39.5 36.9
81.9
52.5
30.8
21.9
15.9
36.9
54.6
38.0
Urban Rural Extreme
poor
Poor Near poor Non poor 1-3 4-5 6+
Urb/rur Poverty household size Total
% of individuals with unacceptable dietary diversity by
poverty status and geographic areas
Hiecs 2019/29 23% inflation rate
The % of persons
with Unacceptable
dietary diversity
(DD) would
increase with
higher inflation
rates, especially
among rural areas,
extreme poor &
with larger HH size

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In 2019/2020, the consumption of micronutrients
among 47% of the population was less than the
Required Nutrient Intake
8.7
42.0
12.7
3.9 0.8
46.8
Iron Folic acid Vitamin A Vitamin D Zinc Any micronutrient
Percent of population suffering deficiency, 2019/20
• 8.7% of individuals -of all ages- are consuming less than the Required Nutrient Intake
for iron, 42% for folic acid and 12.7% for Vitamin A
• 47% of individuals consumed less than recommended from at least one of the
micronutrients (Iron, folic acid, Vit A, Vit D, zinc)

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Iron intake decreases by 10 percentage points
with price inflation among children 0-17 years
8.9 9 8.8
32.6
14.0
6.2
3.3 4.8 6.4
12.9 12.9
9.2 7.6
4.4
18.7 19.6 18.2
45.5
27.0
15.6
10.5 11.7
15.2
24.8 23.2
18.8 17.5
13.7
Urban
Rural
Extreme
poor
Poor
Near
Poor
Non-poor
1-3
4-5
6+
Illiterate
Prim_Prep.
Secondary
University
+
Total Residence Poverty Status Household Size Education of mothers
% of children 0-17 years suffering iron deficiency
HIECS 2019/20
23% inflation rate

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Folic Acid intake decreases by 10 percentage points
40.7
29.9
47.6
75.8
56.6
40.1
23.2
52.7
38.7 39.2
24.7
61.0
54.6
65.1
84.6
74.2
63.4
45.2
66.4
57.7
62.3
51.2
Urban Rural Ultra poor Poor Near Poor Non-poor Illiterate Prim_Prep. Secondary University +
Total Residence Poverty Status Education of mothers
% of children 0-17 years suffering folic acid deficiency
HIECS 2019/20
23% inflation rate

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Vitamin A intake decreases by 10 percentage points
12.7
10.2
14.7
44.6
22.9
10.4
5.2 5.4
10.9
20.6
17.6
15.1
19.5
52.1
26.8
11.8
6.9 7.4
15.5
27.8
Total Urban Rural Extreme
poor
Poor Near Poor Non-poor 1-3 4-5 6+
Residence Poverty Household Size
% of individuals suffering Vitamin A deficiency
HIECS 2019/20
23% inflation rate

z
Poor access to food is expected to increase from 8% in
2019/20 to 20% with the increased inflation scenario,
translating to 9.8 million more persons with poor
access to food
8.1
4.2 5
3.4
11.9 10.7
22.2
34.5
19.8
4.1
8.8
3.1
12.9
6
23.7
21.7
Poor Access to
food
Unacceptable DD
& Caloric
deficient &
sufficient
micronutrient
Acceptable DD &
Caloric &
micronutrient
deficient
Acceptable DD &
Caloric deficient
& sufficient
micronutrient
Unacceptable DD
& Sufficient
calories &
micronutrient
deficient
Unacceptable DD
& Sufficient
Calories &
micronutrient
Acceptable DD &
Sufficient
Calories &
micronutrient
deficient
Non-poor Access
to food
Distribution of individuals living in HH with children 0-17 years by overlay
of food security
HIECS 2019/20 23% inflation rate

z
4) How can we make food subsidies more
effective during a food and inflation crisis?

z
Effective early warning system is crucial to ensure targeted
and directed support from various public and private
initiatives and to effectively address the constantly evolving
shocks
Source: Family Early Warning Systems Network (Fews Net)
https://fews.net/about/integrated-phase-classification#:~:text=The%20IPC%20Acute%20Malnutrition%20Scale,3.1%20manual%20for%20more%20information).
IPC is the
Integrated Food
Security Phase
Classification
scale for Acute
Food Insecurity.
It is a landmark in
the fight against
global hunger.

z
Strengthening the policy-relevant evidence base
Policy makers in most of the countries did not have access
to relevant, reliable, and timely information about policy
options and expected impact of each option on the various
stakeholder groups.
An improved database, timely market information, including
reliable forecasts in developing countries, would greatly
facilitate evidence-based policy design and implementation.
Sharing of such information across countries and
international assessments and forecasts are needed.

z
Expedite the Food subsidy targeting and reform
( nutrition sensitive)
While food subsidies have the highest impact on poverty
reduction (as it has the biggest coverage), they also
attract the largest budget; need to enhance targeting to
address leakages and link to nutrition outcomes.
Revive the National Flour fortification program under the
food subsidy system.

z
Reform Policy options
1- exclude the top 20% of the beneficiaries
2- gradual increase in the SBB price.
3- blended flour or other grain flours (???)

z
0.15%
GDP
Exclude the richest
20% of beneficiaries
Policy Option Fiscal Savings

z
How many
could fall into
poverty
should SBB
increase?
And what are
the fiscal
savings?
0.14% of
GDP
2.3% of the population will
move down in the
expenditure ladder and
0.7% will fall in poverty
1.2% of the population
will move down in the
expenditure ladder and
0.4% will fall in poverty
Increase the
SBB price to
15 pt
Policy Option Fiscal Savings Poverty Impact
0.07% of
GDP
Increase the
SBB price to
10 pt

z
Other Reform Policy options
Other Suggestions to Enhance the Effectiveness of Food Subsidies During Food and
Inflation Crises:
1.Price Stabilization Measures: Combine subsidies with price stabilization measures,
such as strategic food reserves and market interventions, to mitigate price fluctuations
and prevent sudden price surges during crises.
2.Transparent and Efficient Distribution: Establish transparent and efficient distribution
systems to minimize leakages and ensure that subsidized food reaches the intended
beneficiaries promptly.
3.Monitoring and Evaluation: Regularly monitor and evaluate the impact of food
subsidy programs to identify any shortcomings or areas for improvement. This allows for
adjustments and enhancements to be made to ensure the effectiveness of the subsidies.
By implementing these measures, food subsidies can be made more effective in
mitigating the impact of food and inflation crises, providing essential support to
vulnerable populations, and ensuring food security for all.

Sherine Alshawarby at Egypt NPS Seminar

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