* Governments fearful of shaking up bread system
* World's biggest wheat importer
* Pilot project could help tackle food import bills
By Maggie Fick
PORT SAID, Egypt, Feb 25 A device resembling a
credit card swiper is revolutionising some of Egypt's
politically explosive bread lines and may help achieve the
impossible -- cutting crippling food import bills.
Authorities who hope to avoid protests over subsidised
loaves sold for the equivalent of one U.S. cent have turned to
smart cards to try to manage the corrupt and wasteful bread
supply chain that has been untouchable for decades.
If it succeeds, the pilot project in the Suez Canal city of
Port Said could be used as a model for food and fuel subsidy
reform throughout Egypt, where bread, known in the local Arabic
dialect as "life", is the staple.
"This is an urgent project," said Dr. Ali Attria, an
official from the Administrative Development Ministry who has
helped manage the trial.
Egypt, the world's largest importer of wheat, purchases
around 10 million tonnes a year, draining its hard currency
reserves to provide the poor with a disc-shaped loaf.
The government spends around $5 billion a year on food
subsidies, which also cover items such as rice, oil and sugar. A
slide in the Egyptian pound's value since December 2012 is
pushing up the bill, as much food has to be bought for dollars
on international markets.
Profiteers exploit the system, and many people feed bread to
their livestock because it is cheaper than animal feed.
Yet, one cash-strapped government after another has resisted
attacking the problem, fearful that cutting subsidies could be
President Anwar Sadat triggered riots when he cut the bread
subsidy in 1977, while President Hosni Mubarak faced unrest in
2008 when the rising price of wheat caused shortages.
When Egyptians rose up against Mubarak's rule three years
ago, one of their signature chants was: "Bread, freedom and
TAKING A CHANCE ON PORT SAID
Before he was deposed by the army last July, President
Mohamed Mursi and his Muslim Brotherhood began working to ensure
that bread was delivered efficiently to those who truly need it,
a move designed to win over the public.
Distrustful of state bureaucracy, the Mursi administration
relied on mainly Islamist non-governmental organisations to
clean up the bread mess.
They decided to take a gamble, however, and use government
authorities in Port Said. Mursi is now in jail but the programme
is starting to yield results.
At a simple metal kiosk in front of an oven, a smart card
scanner hangs on a wall between windows that open onto two
orderly gender-segregated lines. Those who have complaints about
the new system can call a hotline.
The scene was unthinkable just a year ago.
"There was congestion, people were coming from outside Port
Said to buy our good bread in bulk," said bakery co-owner Adel
Hassan Shater, 63, referring to a once thriving black market.
"Now things are organised and this is better for everyone."
The now year-old programme in this city of 650,000 has
enabled the government to keep tabs on individual consumption of
bread via the electronic cards, already used for other
subsidized goods such as rice and sugar.
Smart card-holders are allowed five loaves per family
member per day, a number officials hope can be reduced.
A parallel effort to issue smart cards to drivers in order
to monitor fuel consumption is not yet operational, but is
likewise aimed at gathering data the government can refer to
when drafting its subsidy reform policies.
Army chief Field Marshal Abdel Fattah al-Sisi, who ousted
Mursi after mass protests against his rule, is expected to run
for president and win in elections due within months.
Even if Sisi, who became immensely popular after crushing
Mursi's Muslim Brotherhood, delivers on his promises of bringing
elections and political stability to Egypt, he will still have
to carefully manage the sensitive bread issue.
The top military commander could showcase the Port Said
project and spread it to other cities in the country of 85
million where poverty is widespread.
Safwat Emar, the top Supplies Ministry official in Port
Said, said that the project is hitting the people at the heart
of the problem: dishonest bakers.
But eradicating greed will not be easy in a country plagued
Bakers producing state-subsidised loaves siphon off flour
provided by the government and make a killing in the black
The government's flour is then baked into loaves sold at
private bakeries at prices beyond the reach of the poor.
Bakers have long been able to cheat authorities because
consumption data is hard to come by.
At Port Said's Freedom Bakery, owner Mahmoud El Kefery says
he works closely with government monitors who check data
registered by his smart card readers and allocates his daily
flour supply accordingly. Customers seem satisfied.
"We like systems, and we want things to be organised so
there can be security and everyone can get their fair share,"
said Baseema El Bani, a 55-year-old government employee.
After presenting her green plastic card in a transaction
that resembled purchasing a latte at a coffeeshop, Bani
folded her stack of loaves and placed them in a shopping bag.
Before the "smart card" system was introduced, the bakery
would often run out of loaves by midday, before the mother of
five got off work, leaving her empty handed.
Bani blamed the shortages not on low supplies, but on people
who abused the system.
The government, short on foreign currency and in dire need
of fuel imports, cannot afford to keep funding the inefficient
The Supplies Minister recently estimated that the food
subsidies bill amounts to 35 billion Egyptian pounds ($5.03
billion) per year.
Surprisingly, the smart card effort in Port Said has not
provoked protest among consumers or resistance from bakers who
stood to profit from the old system.
Implementing the programme nationwide would be a daunting
Attria of the Administrative Development Ministry cites
bureaucracy as the chief hurdle.
Port Said, known nationally for its high quality bread, was
seen as a safe site for a pilot. But progress here should still
be considered an achievement.
"It is a difficult decision to change the bread subsidy
system, but it is possible," said Dr. Magdy El Hennawy, an
ex-army officer who helped the government launch the nationwide
smart card system for other commodities.
($1 = 6.9611 Egyptian pounds)
(Editing by Michael Georgy, Veronica Brown and Keiron