Egypt’s sugar shortage could spell bigger problems for the country
Sugar is serious business in Egypt. The average Egyptian consumes about 66 pounds per year, the 5th-largest amount in the world, often by heaping spoonfuls of it into frequent cups of tea. Since Egypt doesn’t produce enough sugar to meet its massive demand, the country must import about 1 million tonnes per year, a third of what it consumes.
But that’s no longer possible. Since U.S. dollars are the global currency, Egyptian importers need them to buy and obtain sugar. But due to a lack of tourism, a decline in Suez Canal revenue, and an otherwise faltering economy, importers are either unable to legally procure hard currency or unwilling to do so at sky-high black-market rates.
Tariffs on sugar imports coupled with higher global prices have further compounded the problem, and as a result, the government just raised the price of subsidized sugar by 40 percent.
It’s one of many economic challenges with which the government has been unable to deal, and as a result, Egyptian frustration grows as President Abdel Fattah el-Sisi’s approval ratings fall. And the lack of sugar now serves as a daily reminder of Sisi’s failures.
As do frequent satirical internet posts. In one video put on Facebook by a Cairo-based creative agency, two young Egyptians meet a dealer in a vacant lot one night to, as they put it, “score.” After returning home with plastic baggies filled with a white crystalline substance, they stir it into tea. The illicit substance is simple table sugar.
Another post portrays a similar scenario, but in the form of a rap video.
Authorities have conducted sugar raids — including October raids of factories operated by PepsiCo and Edita, a snack food maker that produces Twinkies and HoHos in Egypt — and accused companies of hoarding sugar in order to ensure continued production. Edita saw the value of its stock fall almost 7 percent after the news broke.
Hoarding sugar in Egypt can even get you jailed. The law isn’t new, but the government’s increasingly strict enforcement of it is. Last month, an Egyptian shop owner convicted of hoarding the increasingly precious commodity received a five-year sentence and an $11,000 fine.
The government is continuing its efforts to boost domestic sugar production, but sugar cane, which accounts for 43 percent of that production, is a water-intensive crop, and Egypt is already facing water supply issues. This year, the government has been encouraging farmers to grow sugar beets, which are less thirsty.
Sugar beets could make some farmers a little more money while using a lot less water, but they’re hardly a solution to Egypt’s wide-ranging economic woes. Many Egyptians want an increase in government spending that they believe will help create more jobs, improve health care, and establish more educational opportunities. The government, however, is pursuing austerity measures that include the reduction of subsidies and a currency devaluation, both of which are likely to hurt the most vulnerable Egyptians.
Earlier this month, the Egyptian pound was free-floated, meaning that its value is no longer pegged to the U.S. dollar and is instead determined by the free market. It was a necessary step in order to receive an International Monetary Fund bailout, and in the long-term, the free-float will boost the economy by making Egyptian exports cheaper and the country more affordable for tourists. But in the short-term, it will mean increased inflation and budget deficits — which will in turn cause a lot of economic pain.
As the head of the Egyptian Armed Forces, Sisi led a coup in 2013 that enflamed much of the country. Sisi became president the following year with an overwhelming majority but no shortage of controversy. Since then, he has jailed large numbers of youthful opponents to his government.
Sisi was elected on a platform of security, stability, and economic prosperity, but he has yet to deliver on any of those fronts. And despite his tough reputation and the country’s recent history of upheaval, the viral video about scoring sugar — along with several other satirical Facebook posts — demonstrate that Sisi will continue to face vocal opposition from young Egyptians. One probable reason? More than 30 percent of them are currently unemployed.
The sugar shortage alone won’t doom his government — but it will add to the bitter taste in the mouths of a growing number of Egyptians.