Utilization Patterns of the Primary Subsidized Food Commodities in Egypt

Keywords

food in Egypt, subsidized food, agricultural economics, utilization patterns

Abstract

Heavy subsidies to consumers of basic food items is an important feature of Egypt's economy. A subsidy exists when the price to consumers is fixed below the costs of supplying the commodity. Subsidies have become a substantial and growing fraction of the government budget and absorb much of the time and energy of public officials. The subsidy policy is highly controversial since it has significant allocation and equity effects. It severely distorts price signals to consumers since the subsidized prices understate the true opportunity costs of supplying consumers. This causes resource misallocation as consumers increase consumption levels beyond the level where the marginal value of the commodity equals the real marginal supply costs. In addition, because subsidies put such pressure on the government budget, a tendency exists to reduce procurement costs by fixing producer prices at levels far below world market prices. This policy is usually accompanied by government-imposed cropping patterns and mandatory delivery quotas, all of which misallocate resources within the agricultural sector and create a staggering food security problem for the country as the consumption-production gap is filled by imports.

Original Publication Citation

"Utilization Patterns of the Primary Subsidized Food Commodities in Egypt" (with Sobhy Ismail and Dyaa Abdou), ADS Working Paper No. 145, Dept. of Agric. Econ., U of California, Davis, May 1983.

Document Type

Peer-Reviewed Article

Publication Date

1983-5

Permanent URL

http://hdl.lib.byu.edu/1877/5930

Publisher

Econ Working Paper

Language

English

College

Family, Home, and Social Sciences

Department

Economics

University Standing at Time of Publication

Full Professor

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