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Thursday, 12 October 2017

Food manufacturers cry out against regulation for pricing labels

Food manufacturers condemn new regulation requiring prices be printed on product packaging: Food manufacturers were livid yesterday about a snap Supply Ministry decree forcing them to print prices on their packaging or face fines and jail time, arguing it “risks increasing pressure on an industry already squeezed by austerity measures,” Reuters reports.

Hani Berzi and Ashraf El Gazayerli flew the flag for industry, while lawyer Ziad Bahaa-Eldin spoke for the wider business community when he noted, “You cannot place compulsory pricing anyway and think you can implement it. What kind of message are you sending to investors?” Manufacturers say the move will have no impact on inflation and is really just “stripping the market of needed competitiveness and flexibility.” Aside from the additional costs entailed, the directive will also be disruptive to the production process, Edita Chairman Hani Berzi explained, especially for exporters who have to consider the difference in prices for different locations.

The Supply Ministry insists printing prices on stickers is a tool in the war on inflation and will protect consumers from “unjustified” price increases, according to Supply Ministry spokesperson Mamdouh Ramadan.

Lobbying campaign to start next week? Members of the Chamber of Food Industry (CFI), the Chamber of Commerce, and the Federation of Egyptian Chambers of Commerce are drafting a proposal they intend to submit to the Supply Ministry in a meeting next week that will include measures that “‘ensure the decision doesn’t have a negative impact on the investment environment, exports and production, and that it doesn’t violate pre-set regulations by mother companies,” CFI Chairman El Gazayerli told Reuters.

The local press, a bastion of socialist fellow-travelers whose incomes are being eroded by record-high inflation, will ultimately come out in favour of the regulations, but are asleep at the switch right now. The story is getting no traction one way or the other with the domestic press this morning.

Our bottom line: This is one of those threats that may never be implemented, but that government will use as a bargaining chip — and cudgel — against both manufacturers and retailers who don’t outwardly promise to get in line and hold the line on price increases. Either way, it’s not a message investors should welcome and bodes poorly for the healthcare sector, where the government has also signalled it will move forward with price controls despite the dismissive eye-rolling of some industry executives.

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