The distribution of Food consumption in Relation to price and distribution policies In the urban and rural areas of Egypt.

This paper discusses the distribution of consumption of important agricultural commodities in rural and urban areas in Egypt. It attempts to shed light on three questions: (1) Does per capita consumption of a given commodity very among classes and between urban and rural areas. (2) what is the direction of per capita consumption of various commodities over the decade 1964 – 65 to 1974 – 75. (3) Is the distribution of consumption related to the subsidy and rationing policies of the government It is expected that per capita consumption of various agricultural commodities would be significantly affected by the government’s agricultural and trade polices. Consumer subsidies exist for staple commodities such as bread, other wheat products, rice, beans, beget able oil, and sugar. Policy makers need to know changes in subsidies and other price policies might affect. Consumption. In recent years the subsidy policy particularly has become highly controversial. Defenders see it as contributing to the national welfare because: (1) The subsidy policy provides basic food requirements at low and affordable price and thus contributes importantly to the standard of living of Egyptian consumers. (2) It keeps food prices low which some believe is anti-inflationary. (3) The subsidy policy insulates the Egyptian consumer from highly volatile price that would ensue if domestic prices were. This research was financially supported by the Agricultural: Development Systems Project, Cairo. Egypt. Macaroni is an especially interesting case since the Gini coefficients changed markedly from 1964 – 65 to 1974 – 75. In the urban areas the coefficient fell from. 19 to 50 whereas in rural areas it increased from 27 to 43 Since macaroni is a manufactured product that is produced in urban areas, the explanation for these trends is probably that macaroni consumption had become very widespread in cities; whereas, in rural areas it was simply not available except to higher income people who may have done some of their shopping in the cities. SUMARY AND CONCLUSION Per capita expenditures by households, as revealed by family budget Surveys, were substantially higher for urban areas than for rural areas in both periods surveyed. 1964 – 65 and 1974 – 75. Per capita food expenditures were also higher for urban than for rural areas in absolute terms, but as a percent of total expenditures they were higher for rural areas than for urban areas. In both areas, real per capita total expenditure and real per capita food expenditures increased from 1964 – 65 to 1974 – 57. Given the increase in real precipitate total expenditures (a proxy for real income) between 1964 – 65 and 1974 – 75. it was possible to infer whether individual commodities were superior or inferior. Wheat, corn, rice, no granulated beans, fresh beef, poultry, fish, milk, white cheese, butter, butter oil, sugar, coffee, and tea were. 10 many important causal variables affecting consumption have not been considered in this analysis simply because data were not available. Increases in real income are one important source of increasing consumption levels. For two classic studies of the relationship between consumption behavior and income, the reader might refer to Modigliani, F.C. and R.E. Brumberg, “Utility Analysis and the Consumption Function” in K.K. Kurihara (editor) post Keynesian Economics, (New Brunswick, N.J. Rutgers University Press, 1954) and Friedman, M.M. A Theory of the consumption Function (Princwton: Princetion University press, 1957). Superior in both areas. Sorghum, granulated beans, granulated lentils, and local cheese were inferior in urban areas, whereas, only sorghum was inferior in rural areas. The distributions of per capita total expenditures and per capita food expenditures were measured and expressed as Gini coefficients: both distributions were more unequal in urban than in rural areas. Gini coefficients were also utilized to reveal the concentration of consumption of individual commodities, measured in physical rather than in value units. Special cognizance was given to the distribution of consumption of those commodities which were subsidized and rationed as contrasted with those which were not. The results were quite apparent: those commodities which were subsidized and rationed (sugar, tea, vegetable oil, and rice) had low Gini coefficients meaning distributions of concumption that tended toward equality. So did those commodities that were subsidized but not rationed (wheat flour and bread). Those commodities that were subsidized and sometimes rationed (beans, lentils, and frozen beef) has Gini coefficients that tended to be low in urban areas, but much higher in rural areas. This could indicate that the rationing policy for these commodities was more effective in urban areas. The major nonsubsidized and nonrationed food items surbeyed tended to have “high” Gini coefficients in both urban and rural areas (fresh beef, poultry eggs, milk, coffee, and white chees, especially). The conclusion seems inescapable: the subsidy and rationing policies were clearly associated with commodities that were equally distributed in consumption than those commodities that were not rationed and not subsidized. Caution must. Be exercised, however, in inferring that the rationing and subsidy policy caused the greater equality of consumption. Those commodities that had widespread use among the entire population were probably the ones the government chose to subsidize (bread, rice, beans, sugar, etc.). it is not too surprising, therefore, that they had low Gini coefficients. What would have been the size of the coefficients had the subsidies not been given, and had rationing not occurred, however, is conjecture, but we believe the evidence suggests that they would probably have been higher