In case you missed it, there’s something far more terrifying than ancient mummies rising in Egypt this Halloween. They’ve run out of sugar and, believe it or not, it’s leading to civil unrest.
The Egyptian government has even resorted to raiding food companies and warehouses to ensure that no one is hoarding or smuggling sugar. Thus far, 9,000 tonnes of sugar have been seized, leading one prominent food trader to tell Bloomberg News in a recent interview, “They treat us like drug dealers now.”
Here’s how this horrifying tale has unfolded.
The Egyptian government exerts tremendous control over its sugar market. So much so that, according to the USDA’s outpost there, all of the country’s sugar cane refineries and four of its six sugarbeet processing facilities are owned by the government, which also subsidizes farmers’ profits and consumers’ grocery bills.
With the government’s backing, Egypt produces a lot of its own sugar, but it still relies on shipments from heavily subsidized exporters like Brazil to supply about one-third of its market.
However, worldwide sugar surpluses have recently declined, sending prices skyward and making it harder for Egypt to attract imports. At the same time, Egypt has a currency crisis on its hands, complicating import transactions.
As the problems began, the USDA reported in May, “Egypt’s Minister of Industry and Trade has temporarily imposed barriers on sugar exports through an export tax while reducing those for raw sugar imports by removing its 20 percent tariff.”
That wasn’t enough, and problems quickly escalated into a full-blown supply emergency, which was recently described by the New York Times like this:
[A] weekslong sugar shortage has plunged people into a panic. The sugar crisis, as it is known, has quickly become shorthand for the brewing anger against President Abdel Fattah el-Sisi’s management of the economy and his overall rule.
“The people are going to snap,” Ahmad el-Gebaly said as he turned away customers seeking sugar he did not have at his subsidized-goods store in Bulaq, a working-class neighborhood of Cairo.
“Nobody can stand him anymore,” he added of Mr. Sisi. “Sugar is like rice and oil and wheat. You can never run out of it. You can never mess with it. Who can live without sugar?”
Bloomberg reported on Oct. 23, “To alleviate the crisis, Egypt’s state-owned trading arm announced plans to buy sugar and the government has promised to create stockpiles that would last six months.”
The article continued: “The General Authority for Supply Commodities bought 134,000 tons of sugar in an Oct. 15 tender and the country has contracts to import 450,000 tons. The supply ministry said Sunday the government plans to pump 50,000 tons of sugar into the market at 5 Egyptian pounds per kilogram for subsidized card holders [consumers] and 7 pounds per kilogram [36 cents/pound] for industry.”
At the same time, the government started forcibly confiscating sugar from Egyptian food makers, making it impossible for them to do business. Unfortunately, nothing seems to be working and the panic continues.
With Egypt’s food market unraveling, it kind of seems silly that, this Halloween, U.S. confectioners are complaining that America’s no-cost sugar policy has slowed their remarkable economic growth – even though they enjoy an adequate supply of sugar at prices that are as low today [28.5 cents/pound] as they were in the 1980s.
Big Candy should be careful what it wishes for in its lobbying pleas to unilaterally disarm and become dependent on subsidized foreign suppliers. It’s obvious that a country cannot depend on sugar imports alone to feed its people.