Egypt: Preliminary Research Findings

The findings below refer to the first year of the project, which focuses only on the adjustment process within the wheat marketing sector.

• Private traders have an average length of experience of only 5 years, with activities covering an average of about 20 kilometers.

• Commodity movement is primarily determined by the physical distance between markets rather than by the difference in local prices.

• Average investment has doubled in the Frontier Governorates, but fluctuates significantly to reflect major policy changes.

• Price differences over time have fallen while price differences over space have increased. On the other hand, price instability seems to converge across regional markets.

• Even though the level of segmentation has declined after the reforms, the level of integration between wheat markets in Egypt is still quite low in comparison with other developing countries and much lower than would be expected from the level of infrastructure development in the country.

• If the intention of the government is to provide cheap baladi bread and wheat flour for the poor, then it would be more efficient to target the subsidy at the consumer level and eliminate the subsidy to the mills, warehouses and bakeries. This would reduce the remaining distortions in wheat marketing and improve the efficiency and stability of the emerging private-sector based wheat marketing system.

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• Research Findings