A Review of Agricultural Policy in Egypt

Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
A Review of Agricultural Policy in Egypt

Moataz Eliw 1,2
1 2
College of Economics and Management Department of Agricultural Economics
Huazhong Agricultural University Faculty of Agriculture, Al-Azhar University
Wuhan 430070, Hubei, P.R. China Assuit, P.O. Box 71524 Egypt
Email: [email protected] or [email protected]
Abstract: - Agricultural policy is considered of the most natural resource managing and the development of the
important national economic policies through which the agriculture division. Barnes (2010; 2014) and (Abdel-
country can achieve the goal of improving the level of Gawad,2007), for illustration, reviewed water distribution
national agricultural income thus the economic and policies in Egypt with an emphasis on the irrigation system.
social standards for workers in the agricultural sector
in particular, and the whole population in general. Since This study assessments agricultural and other related
the 1980s of last century, the Egyptian economy has policies and their effect on the general economic
been witnessing radical changes that led to major and performance of the agricultural sector in Egypt. This
direct impacts on Egypt's agricultural sector. Such evaluation of policies is to serve as the basis for developing
changes continue to have many impacts that interact a more comprehensive agricultural strategy and policy
together and lead to radical changes in agricultural outline that aligns sectoral policy purposes with policy
development and the future of Egyptian agriculture. It events in an effective and dependable manner. The study is
is worth mentioning that Egypt embarked on intended to serve as an orientation for policymakers,
implementing economic reform policies in 1987 by researchers, and organizations. In addition, reviewing
undertaking a number of measures that aims to achieve previous studies related to the study subject is considered
liberalization of the agricultural sector, such as very important as it helps identify efforts other researchers
adopting indicative planning of cropping pattern rather exerted in the study subject and related economic studies. It
than central planning, in addition to activating the role also helps identify the statistical and economic methods
of market mechanisms in directing economic resources researchers applied and findings reached in order to link
towards optimal use, especially in regard to allocating such results to possible results to be achieved. The
investments among different production branches in the reviewed literature has been classified into three groups,
national economy, referred to as Structural adjustment. under which the reviewed studies are presented in a
In the framework of structural adjustment program, chronological order. The first group focuses on studies and
these policies have directly and indirectly influenced scientific research related to the impact of applying
agricultural price policy variables by influencing such economic reform programs to agriculture, while the second
main factors or variables affecting profit, namely yield focuses on the impact of agricultural price policy applied to
or productivity of the acre, farmgate price per produced major strategic crops. While the third one focuses on other
unit and the producing cost per acre, which directly Public Policies with Impact on Agriculture in Egypt.
affect the relative profitability of the produced crops
thus farmers' preference to grow crops that generate II. THE THEORETICAL FRAMEWORK FOR
high profitability. AGRICULTURAL POLICY
A. Keywords: - Agricultural Policy, Agricultural Price The theoretical framework for agricultural policy
Policy, Agricultural Economic Policy, Economic represents the main and basic structure for understanding
Reform Programs, Egypt. the nature of such policy and determining its relationship
with other economic policies. It is also critical for
I. INTRODUCTION identifying the concepts and milestones that can guide and
be applied when analyzing and evaluating price policies, in
Reviews of agricultural policy in Egypt has been addition to identifying the extent of aligning or not with the
completed by numerous teams over the years, each concepts, principles, laws and economic theories, where it
concentrating on a definite policy dimension. For example, represents a real reflection of the economic, social and
(Tellioglu and Konandreas,2017) underscored the political policies in the society. It is worth mentioning that
interlinkages between agricultural policies targeting self- agricultural price policy plays an essential role in the
sufficiency and Egypt’s agricultural trade balance. (Cassing implementation of the policies' objectives, especially
et al. 2009) analyzed obtaining and price policies within the agricultural policy, due to the multiple links it has with
agriculture sector, while (Gutner, 2002) and Ghoneim several aspects, the most important of which is determining
(2012) both studied the political economy about the food the pattern of agricultural resources' allocation, income
subsidy system. Egypt's long history of food subsidies has distribution and consumption, where price policies mainly
been the emphasis of many studies over the years, with aim to achieve an appropriate level of farmgate prices that
Alderman et al. (1982) and Ecker et al. (2016). Numerous helps improve farmers' incomes thus achieve fair
studies have also highlighted the interrelationship between distribution of incomes.
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the set of governmental actions directed to address a range
of problems in farm production, processing and distribution
B. Policy of farm goods, food processing and consumption and the
Osman sees that (2004). Policy is a branch of social rural society. Agricultural policy is also defined as the
sciences that deals with studying the origins of government practical constitution that comprises all the structural and
organization and State affairs. Policy can be defined as reform programs, the implementation of which results in
State science, or a combination of ways and means to improving the overall agricultural production in terms of
maximize the general welfare of all members of the society. quantity and quality, leading to higher, fair distribution,
The difference between policy and strategy can be continuity and stability of the National Agricultural
illustrated by the fact that policy is a set of actions, laws, Income.
regulations and programs that may be taken to achieve a
particular goal, i.e., policy requires planning and E. Economic Reform Policy
operational procedures that are followed by monitoring and Is a set of policies and programs that aim at
evaluation, while a strategy is based on broad lines to restructuring the economy to allow market forces and
achieve its objectives. In addition, policies' time frame can mechanisms to take place in order to achieve internal and
be short, medium or long, while strategies are always long- external balance, to transform the economy into a
term. Some argue that a policy is merely suggestions that developmental policy that is based on continuous economic
reflect specific needs through which plans, programs and and social development, and to activate the export sector, in
projects are directed as a guide and framework for current addition to encouraging and activating private sector's role
and future plans. Policy is also defined as "how power and in achieving economic reform (El-khouly et al., 1991).
influence are distributed within a given society or system",
or as "the relationship between the rulers and the ruled F. Agricultural Price Policy
peopled" or "the State and everything related to its affairs" Agricultural price policy is one of the main tools of
or "the great authority in human societies and everything economic policy that aims to raise the standard of living of
related to the phenomenon of power". all members of a given society. It plays a vital role in the
structure of agricultural economics and contributes to
C. Economic Policy achieving economic efficiency of agricultural resources'
According to Abd El-Hameed. (2001), Economic use. It also helps achieve fair distribution of national
policy refers to the approach adopted by a particular income among the agricultural sector and other economic
country in dealing with the goods and services' sector. In sectors (Osman, 2004).
this regard, either the State adopts a free policy/system, i.e.,
open-market policy, or adopts a directed economy III. AGRICULTURAL POLICY
system/policy. An open-market economy is a system in (A BRIEF HISTORY)
which the government abolishes restrictions on certain
goods and services in the circle of transactions between In the 1960s, farming was pivotal to Egypt’s growth
individuals or institutions within a single country and policies, with the rural national and the factory employee at
beyond borders. On the other hand, directed economy is an the middle of post-independence national Egyptian
economic system in which the authority of the State is the individuality (El-Kouny 2018). The period was described
dominant and guiding policy of economic activities in the by Nasser’s “Arab Socialism” stemming from the 1952
market of goods and services, such that prices are revolt, the 1956 nationalization of the Suez Canal that
determine by the State, and subsidized in case a difference shadowed, and the birth of mega-projects in the designation
exists between real prices and market prices under the of breaking out of foreign reins and structures. Policy
prevalence of low-incomes individuals. absorbed on leveling the playing arena via a additional
equitable distribution of income and the provision of
D. Agricultural Economic Policy affordable food to urban zones from peri-urban and rural
According to El-Khouly et al., (1972). Agricultural areas while strengthening the connection between rural and
economic policy is one of the branches of the State's urban areas.
general economic policy. It is defined as the part of
economic policy applied in the agricultural sector of the Crop revolving schedules1, crop zone allocations,
national economic structure. It is also defined as a set of compulsory quantity transfer quotas at prices fixed below
objectives, methods, programs, means and procedures that global market rates, and subsidized consumer prices stood
the society may resort to apply in the agricultural sector in all put in place during this period (Kassim et al, 2018).
order to maximize economic welfare. and (Tweeten,1970) Agricultural collectives were tasked with surveillance
defined agricultural policy as an action plan adapted to the inputs, production, and marketing at the community level,
economic situation of the State, drawn up by the while also coordinating accredit provision and output
Government, and implemented through clear and specific shares with agricultural credit banks. This officious
programs to raise the standard of living of agricultural
workers in general by helping them improve their 1
Generally typical for wheat, clover, and sugar beet to be
production in terms of quantity and quality, thus provide cultivated in the winter, and maize, rice, potato and tomato
food and clothing to the community at appropriate costs. and cotton to be cultivated in the summer (Ouda and Zohry
Also, (Spitz,1974) defined agricultural and food policy as 2015; Ibrahim and Ibrahim,2003).

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institutional structure eventually caused agricultural In the next, we describe crucial agricultural
stagnation as farmers became frustrated, yields dropped, policies that are now in place in detail:
cropping patterns became distorted, exports (such as
cotton) fell, crop self-sufficiency gaps grew wider, the food IV. PROVISION OF AGRICULTURAL INPUTS
subsidy system imposed a heavyweight on the
government’s financial plan, and the urban-rural revenue A. Agricultural Cooperatives
gap expanded as taxes took up a higher portion of what Next, the Egyptian revolution of 1952, agrarian
farmers gained via artificially low producer prices (Cassing cooperatives were established in each village to control the
et al., 2009). distribution of farmhouse inputs, such as chemical
fertilizers, seeds of strategic crops, and pesticides (Saad,
As a result, subsidies on farmhouse inputs were 2002; Cassing et al.,2009). Through the 1960s and 1970s,
increased, food subsidies were extended to rural zones, and the government depends on agricultural cooperatives in the
land reform laws tackled redistribution of land ownership. application of the country's development policy over
Initial in 1986 and over the 1990s, a reversal of these ensuring crop rotation schedules (Abdel Aal, 2008).
interventionist policies started with a sweeping wave of Cooperatives were also accountable for the procurement of
liberalizing economic reform policies, providing the private crop shares besides the marketing of the most important
subdivision a greater role in the agriculture sector and crops. Membership of farmers in agricultural cooperatives
reducing that of the government2. has been compulsory since 1961, with annual membership
charges being automatically deducted from farmers'
Two agrarian policy reform programs were applied transactions with the cooperatives (Kassim et al, 2018).
between 1987 and 2002: The Agricultural Production and Agricultural cooperatives as well played a role in the
Credit Plan (1987-1995); and the Agricultural Policy repair provision of credit to farmers in collaboration with the
Program (1996-2002). The Agrarian Production and Credit Principal Bank for Development and Agricultural Credit
Project included reduction of subsidies in some agricultural (PBDAC). Nevertheless, this changed after the shutdown of
inputs, in addition to the removal of controls on zone cooperatives between the mid-1970s and initial 1990s
allotments and price and marketing restrictions for some (Saad, 2002).
main crops (Baffes and Gautam,1996; Cassing et al.,2009).
It also flagged the way for the privatization of state-owned Later, credit services and storage facilities possessed
firms through the overview of a new law reorganizing by cooperatives were fully transferred to PBDAC. After the
community firms into holding companies in which the restructuring of farming cooperatives in 1992, their role
administration is a joint stakeholder (Ender and Holtzman, shifted towards the dissemination of information to
2003). The Agricultural Policy Reform Program which farmers. Currently, the central character of unions is linking
followed was broader in context and included the farmers in rural zones to information about markets,
privatization of public firms (Kassim et al, 2018). technical assistance, and supply chains for exports
(Christiansen et al., 2011). Nevertheless, the effectiveness
In parallel, the launching of the Economic Reform and of cooperatives in playing this role is questionable. One of
Structural Adjustment Program in 1991, with the the significant limitations of the existing unions structure is
International Monetary Fund and the World Bank, had an inflexibility in allowing unions to develop independent
indirect effect on the agriculture subdivision. By instable marketing activities (World Bank, 2014). As of 2013, there
government policy from a state-controlled to a market were 6,000 agrarian cooperatives in Egypt, with more than
economy, the structural adjustment program faster the 4 million members (CAPMAS, 2015).
liberalization of markets and encouraged the private sector
to play a bigger role in agriculture trading. This was ended B. Seeds
in part through the removal of most subsidies on agrarian The Egyptian government continues to play a
inputs, lifting the mandatory crop rotations, and removing significant role in the production and distribution of seed
pricing and marketing controls (Cassing et al., 2009; for staple crops, even though the policy reforms of the
Gouda,2016). 1990s have reduced government monopoly in the seed
division. Opening with Agriculture Law 53/1966, the
Agriculture Research Center (ARC) of MALR was made
responsible for the "control and regulation of seed
!
multiplication and production, domestic seed trade, and
Crop prices were liberalized as delivery quotas and input seed imports and exports" (Delouche, 1998). In the early
subsidies were relieved and the market was opened to 1990s, the national seed industry policy was directed
private investment. This evolution of policies impacted towards minimizing the involvement of ARC in seed
agricultural output and trade. Cotton has previously come at multiplication and marketing and replacing it with the
the top of Egyptian exports, constituting about 80 percent Central Administration for Seed Production (CASP) (Abd
of all exports in the 1960s. Rice exports followed. Both El-Wanis, 2001 CASP was restructured in order to
commodities fell in importance in the export market as oil implement the new policies for reforming the seed industry.
and gas came to take their place. Imports were also affected Mainly, CASP's role was to support the transfer of public
as imports of maize, sugar, and wheat came to hold a seed production plants to private centers. Nevertheless,
seemingly irreplaceable grip at the top of the list (Cassing ARC continues to play a significant role in the processing,
et al., 2009).

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storage, and distribution of foundation and registered seeds Agricultural Credit (PBDAC) was the primary institution
with coordination from CASP. CASP's structure contains a within MALR responsible for the provision of fertilizer for
general directorate for seed marketing and distribution as each crop until the early 1990s. Then, the government
one of its four central departments. The role of this began to break up PBDAC’s monopoly. In 1992, the
directorate is to set prices and market seeds produced by fertilizer subsidy was phased out (Gruhn et al., 2000).
CASP. As of 2000, the seed market share of CASP was 100
percent for cotton, barley, and lentil, 82 percent for fava Fertilizer production was entirely state-controlled
bean, 67 percent for wheat, and 65 percent for rice (Abd El- until the early 1990s. Since 1991, the government's
Wanis, and Weisbecker, 2001). At the retail level, the approach has been to privatize public sector enterprises,
structural reforms of the early 1990s included the transfer including fertilizer factories. However, many fertilizer
of seed distribution from the Principal Bank for factories are organized in collaboration. In 2001,
Development and Agricultural Credit (PBDAC) to approximately four-quarters of the production of chemical
agricultural cooperatives and the private sector. In IFPRI’s nitrogen fertilizers and total phosphorus production were
1998 Egypt Wheat Producer Survey, unions were the most transferred to companies regulated by the law on private
important source for modern seed varieties, with 55 percent companies (Saad, 2002).
of farmers in the survey purchasing seeds from
cooperatives (Gruhn et al., 2000).3 Since 1992, private traders have been allowed to
compete with PBDAC and agricultural cooperatives in the
C. Pesticides distribution of mineral fertilizers (FAO, 2005; Cassing et
The Agricultural Pesticide Committee has been the al., 2009). Private traders include wholesale distributers
main government entity responsible for the assessment, that deal directly with fertilizer factories and smaller
evaluation, and registration of agricultural pesticides in retailers located in villages, some of them not even licensed
Egypt since 1966 (Abdel Megeed, 2017). The subsidy for (FAO, 2005). The government previously set quotas for
pesticides was phased out as part of the 1986 reforms. This wholesale distributors based on their storage capacity and
ended the government monopoly over the provision of past transactions with manufacturers. However, there were
pesticides to farmers (Baffes and Gautam, 1996; Ender and important interruptions to this new system, particularly in
Holtzman, 2003; Cassing et al., 2009). 1995 when the government intervened by instructing
PBDAC to take over the distribution of all domestic
Since 1999, the government has authorized production due to substantial shortages in supply. PBDAC's
agricultural cooperatives to offer pest control services and quota in the distribution of fertilizers then fluctuated
sell pesticides to village farmers (Kassim et al, 2018). between 10 percent in 1998 and 50 percent in 2002. It is
However, the government still provides registration and popularly believed that the government tends to change the
standards. Controls and licenses pest management through quota for private traders from year to year in order to
pesticide companies (Ender and Holtzman, 2003). reduce fertilizer exports at times when there are shortages
in the local market.
In 1998, the government introduced new registration
procedure for pesticide companies as part of an integrated The government obliges factories to supply these
pest management strategy. Nevertheless, concerns quotas to PBDAC at a price set below market price (Werr,
remained over the exposure of farmers and agriculture 2017; Ghoneim, 2012). Two factories, Abu Qir and Delta,
workers to hazardous substances due to limited are supposed to supply threequarters of the required
enforcement of regulations (Fleischer et al., 2002). In 2017, quantities (Elgerzawy, 2014). According to the Ministry of
a ministerial decree was issued by MALR giving the Investment and International Cooperation, there are twelve
Agricultural Pesticide Committee additional control over major fertilizer producers in Egypt, only three of them are
the licensing and regulation of the pesticide industry in state-owned, while the rest are shareholder companies (El-
Egypt (MALR 2017). gabaly, 2015). In some cases, however, the government still
holds the majority in shareholder companies, which can be
D. Fertilizers considered parastatals.
The Government of Egypt has a history of direct
intervention in the fertilizer market with a general impact of PBDAC in turn sells fertilizer to cooperatives at only
increasing access by farmers to fertilizer and holding prices a small mark-up. Farmers obtain fertilizer from
below world levels. As a result, fertilizer use in Egypt is cooperatives at the artificially low price and are only
generally high on the global scale (Kassim et al, 2018). allowed to purchase an amount that is determined by their
landholding size and type of crop produced. Experts
The monopoly of MALR over the distribution of explained during field interviews that this distribution
fertilizers lasted for about three decades starting from the system tends to prioritize wheat cultivation over other crops
mid-1960s. The Principal Bank for Development and problems associated with the fertilizer subsidy scheme
include a poor distribution system, lack of supervision, and
3
International Food Policy Research Institute, 2000, sometimes a lack of sufficient fertilizer entitlements for
“Egypt Wheat Producer Survey, 1998”, farmers (Ghoneim, 2012) As a result, a black market is a
https://hdl.handle.net/1902.1/17087, Harvard Dataverse, major drawback of the subsidy scheme.
V1.

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A second distortion to the fertilizers market is the savings and credit associations played a significant role in
imposition of import taxes at some points, including high the provision of informal credit. In some cases, informal
levels in the 1970s, which artificially constrains further the finance provides financial services that are not offered by
supply in Egypt. These tariffs were likely implemented for PBDAC, but for which there is a high demand, such as
the benefit of the fertilizer industry rather than as part of a small, short-term loans.
comprehensive agricultural policy (Cassing et al., 2009).
In terms of access to formal credit, women farmers are
In addition to direct intervention in the fertilizer more limited than men. Only 7% of women farmers
market, the government also subsidizes nitrogen fertilizer represent formal financial administration, while 12% for
production indirectly by subsidizing natural gas, a main men. This is the case - rural women playing a major role in
input in producing nitrogen fertilizers. The fact that the producing food in local markets for consumption and
government is gradually reducing natural gas subsidies is domestic sale - food production accounts for around 60
pushing the official price of nitrogen fertilizer up over time percent (World Bank, 2014).
(Werr,2017). Moreover, restrictions on imports of liquified
natural gas by fertilizer factories is further limiting their Recent reforms to PBDAC aim at improving the
production. It is estimated that in 2016 private fertilizer bank's efficiency and transforming it into a "commercially
factories on average were running at 70 percent of their run agriculture-focused bank serving rural Egypt" (World
capacity (Kassam and Dhehibi, 2016) suggest that this Bank, 2014). In November 2016, PBDAC was renamed the
indirect subsidization of nitrogen fertilizers relative to Egyptian Agriculture Bank and its supervision was
phosphate fertilizer is another way in which the transferred from MALR to the Central Bank (Werr, 2016).
government prioritizes wheat production over other crops, Under Central Bank management, the bank will be required
several of which do not require nitrogen fertilizer to the to adhere to reserve ratios and capital requirements on par
same degree as wheat. with other commercial banks. The World Bank has also
recommended the restructuring of PBDAC to include
V. AGRICULTURAL CREDIT reform of interest rate subsidies in order to improve subsidy
targeting (World Bank, 2014).
While official agricultural policy has long provided
subsidized access to credit for agriculture, in practice According to the chairperson of the Egyptian
formal loans have been inaccessible for the vast majority of Agriculture Bank, the bank is planning to expand its client
farmers. Reforms in 2016 may somewhat increase the share base from its current level of approximately 3 million
of farmers who can access credit, but the impact of these clients to reach 7 million clients, which is still a small
reforms is not yet known (Kassim et al, 2018). number relative to the population (Mounir, 2017).
The Principal Bank for Development and Agricultural VI. PRICE AND PROCUREMENT POLICY FOR
Credit (PBDAC), established in 1931, is the most important KEY CROPS
financial institution with strong presence in rural areas.
Prior to the restructuring of PBDAC in December 2016, it The Egyptian food subsidy system, which dates back
was classified as a special bank under the supervision of to 1941, has strongly influenced agriculture policy in Egypt
MALR. Hence, PBDAC was exempt from the Central (Alderman et al., 1982). The political significance of the
Bank's reserve requirements. Most of its deposits were bread subsidy in ensuring stability has motivated strong
owned by cooperatives and other agricultural organizations, government intervention in the wheat sub-sector in
while loan funds were mostly financed by commercial bank particular. However, government policy has encompassed
loans at subsidized interest rates (Baydas et al., 1995). The other major crops as well, such as cotton, rice, maize and
credit subsidy provided through PBDAC was universal, sugar cane.
which implied that both large agriculture corporations as
well as smallholder farmers can benefit from subsidized During the 1960s, Nasser's regime adopted a socialist
loans (World Bank, 2014). policy characterized by central planning and price controls.
The government-imposed crop rotation schedules, crop area
PBDAC accounted for 70 percent of all formal allocations, and compulsory procurement for most major
institutional lending to the agriculture sector in 2014. crops, usually at prices lower than the market price (Scobie,
However, the agriculture sector's access to credit is still 1981; Cassing et al.,2009). The intuition behind such policy
inadequate. It received only one percent of total lending was to transfer agricultural surpluses to the government in
compared to 38 percent and 26 percent for the industry and order to finance industrial growth.
services sectors, respectively (World Bank, 2014).
As mentioned above, the agricultural policy reform
A study by (Baydas et al., 1995) demonstrates that process that began in 1987 partially liberalized these
demand for credit in the agriculture sector is primarily met policies. However, the state remains heavily involved in
through the informal sector (Kassim et al, 2018). This study setting the prices farmers receive for key crops.
showed that, even among employees of PBDAC, rotating

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VII. OBJECTIVES AND INSTRUMENTS IN progress of agricultural policy. These objectives, which to a
AGRICULTURAL POLICY greater degree are similar from country to country, clarify
and set the grounds for the instruments in agricultural
Intervention through agricultural policy is an actual policy. There is a numeral of common features in the
important phenomenon in the agrarian sector in many objectives that are found in agricultural policy in developed
nations. Often, the intervention takes place through the countries.
market, and the goal is to progress or stabilize the economic
situations. Intervention itself is not an objective, but it is an Many different kinds of instruments can be used to
instrument to achieve the general objectives and goals set achieve the given objectives, and it is a very complicated
by society. Previously the examination of the different relationship. Approximately instruments can be used to
instruments, it will be valuable to expose the underlying achieve several different objectives, whereas other
factors that legitimize those instruments, including support instruments benefit the achievement of some and limit the
and price policy, of agricultural policy. There is a close achievement of others. Lastly, important differences with
relationship between the objectives and the instruments in respect to financing, impact on production and trade,
agricultural policy. Essentially, society has set up a number transparency, and other elements are observed.
of aims, which lay down guidelines and directions for the
Income in agriculture.
Income distribution amongst farmers.
Yield in agriculture.
Objectives of agricultural policy: Efficiency in the processing and marketing chain.
Agricultural policy aims at improving Supply and price constancy.
Rural development and the demographic condition.
Environmental position.
Export, Employment, Production, added value, etc.
Price Support
Support in the form of greater market prices than, for example, on the
global market.
Deficiency Payments
Transfers from taxpayers to farmers corresponding to the production
multiplied by the variance between the global market price and a given
target price on the local market.
Instruments in agricultural policy Support Coupled to Input Factors
Area premiums
Financial funding
Other supports to reduce charges
Direct Support Coupled with Other Factors
Support to enhance structural change
Economic development in rural zones
Table 1: - Objectives and Instruments of Agricultural Policy

According to (Henning, 2016)
VIII. IMPACT OF APPLYING THE ECONOMIC forces became the main determinants of agricultural
REFORM PROGRAMS IN EGYPTIAN commodity prices.
AGRICULTURE
The following are studies that focused on explaining
Throughout the stage of governmental planning in the the impacts of economic liberalization of Egyptian
national economy, the agricultural sector was managed by a agriculture on agricultural production:
plan designed using several tools to ensure its
implementation (such as the organization of the crop A study by El-Bahnasawy (1992). that was conducted
rotations, pricing, cooperative marketing, control over to assess agricultural policies adopted by the Arab Republic
inputs, etc.). However, after launching the economic reform of Egypt in order to identify the impacts of adopting such
programs, the government stopped intervening in the policies and their repercussions, either negative or positive,
management of the agricultural sector. Economic on Egypt's agricultural sector, revealed year-over-year
liberalization in Egypt's agricultural sector was based on fluctuations in the productivity of main field crops. The
the abolition of: compulsory delivery of agricultural crops; study attributed such fluctuations to the adoption of variant
government's intervention in determining the areas of agricultural policies that did not encourage the adoption of
agricultural crops and cropping patterns, and subsidies on modern technology packages that lead to increasing yield
agricultural production inputs. Market mechanisms and per acre, in addition to low investments allocated to the

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factors leading to higher productivity in the agricultural those that prevailed during the first period. In addition,
sector. The study recommended increasing investments farmer's share of retail price declined during the second
allocated to research studies that focus on increasing period. The study assumed that this might be due to the
productivity and production, improving the quality of nature of the liberalization period and the emergence of
seeds, abiding to proper planting dates, as well as the new marketing services that did not exist before. Studying
proper method and timing of harvesting to reduce losses, in the main determinants of the supply response of
addition to ensuring proper performance of agricultural agricultural crops showed that 60% of the changes in wheat
operations, as well as implementing the recommendations area is due to reductions in the area under faba bean, and in
of research studies. The study pointed out that achieving local and international prices during the pre-economic
self-sufficiency is an elusive goal that contradicts with liberalization period, while about 90% of the changes
economic principles, and deprives the society of the during the post-economic liberalization period is due to the
advantages of specialization and maximizing economic world price and decline in cotton planted area. In addition,
output. To avoid that, the study suggested that the main aim around 65% of the changes in the price of maize are due to
should be to try to achieve the greatest possible self- cotton planted area, world price and the price of rice during
sufficiency rate by applying appropriate policies that the first period, while about 96% of the changes during the
motivate farmers to increase production. Another study by second period are due to the world price of rice crop.
(Habashy et al., 1995) conducted to assess the economic
impacts of agricultural policy in light of economic A study by (Emara, 1996) on economic liberalization
liberalization found that the area under grain crops during policies and programs and structural adjustments and their
the period (1991-1993) outmatched that recorded during the impacts on some important variables in the agricultural
period (1985-1987) by 32.9%, which the authors attributed sector estimated that the value of gross agricultural product
to the higher prices of grain crops compared to other crops and net agricultural income in current prices have been
in which Egypt has no comparative advantage like forage increasing at annual rates of 15.6% and 15.4%,
crops. Study results also showed an increase in the respectively, during the period (1980/1981) when structural
production costs of wheat, rice, maize, cotton, broad beans adjustments were applied. In regards to the impact of such
and sugarcane during the period (1991-1993) as a result of policies and programs on crop patterns, results showed that
eliminating subsidies on production inputs and increases in areas under wheat, barley, broad beans, potatoes, winter
land rent due to adjusting the relationship between tenants tomatoes and summer maize have been increasing, while
and owners of agricultural lands, even though the increase areas under cotton, clover, soybeans, Nile Maize and Nile
in farm prices was higher than the increase production sorghum have been declining during the period (1987-
costs, especially for cotton and wheat crops. 1993) compared to the period (1980-1986). Moreover, total
area within control of agricultural land increased from 5.86
A study that was conducted by (El-Batran, 1995) to million acres during the first period to about 6.67 million
assess the impact of economic reform programs on some of acres during the second period, in addition to achieving
the strategic crops in Egypt showed that the low efficiency significant increases in the productivity of most crops,
of the performance of Egypt's agricultural sector during the especially food grains.
sixties and seventies of the last century was due to heavy
governmental interventions in the agricultural sector, and A study by (Gab-Allah and El-Ashmawy, 1997) was
tightening the government's grip on this sector, and that conducted to assess the impacts of implementing economic
applying the policy of economic liberalization in the liberalization policy on the economics of production of
framework of implementing economic reform programs major agricultural crops in Egypt, including wheat, cotton,
resulted in affecting the efficiency of resource use, which rice and potatoes, and farmers' income from such crops.
led to higher coefficients of the elasticities of output of Findings showed that yield per acre of wheat and rice
capital used in the production of major crops. However, the increased during the period of economic liberalization,
use of such resource remained below the optimal level of while yield per acre of cotton declined. At the same time,
production. In addition, analysis results of measuring the farmgate prices increased at a rate higher than the increase
impact of economic liberalization policy on the production in the production costs of such crops, which resulted in
cost structure showed a significant increase in the improved net revenue from the study crops during the
production costs of strategic crops, especially those that period of economic liberalization compared to the period
were subject to partial or full intervention by the prior to liberalization, indicating that the increase in
government. The study also found that the most significant farmers' incomes is a result of implementing the policy of
negative impacts of implementing such programs were the economic liberalization.
higher costs of production.
A study conducted by (Ghaneima, 1997) on the
According to study by (El-Sabaa, 1996) to assess the impact of economic liberalization policy on cotton
impact of price relations on the production and production in Egypt aimed to measure the impact of
consumption of major field crops in Egypt, and to evaluate Egyptian production policies on the economics of cotton
and compare agricultural price policies applied before and production during the period (1985-1996) through studying
after the implementation of economic liberalization showed planted area, production, yield, production costs, total and
that farmgate prices that prevailed during the second period net revenue and comparative advantage of the crop during
has been characterized by substantial increases compared to the mentioned period. Results showed that production

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policies adopted during the study period were not in favor imports during the period (1995-2003). Also, the role
of producers due to the high implicit taxes imposed, which agricultural policies play in confronting repercussions of
led to negative impacts on incentives that encourage the global financial crisis on Egypt's agricultural sector has
producers to increase planted area and productivity thus been studied by (El-Bahnasawy, 2009). Results revealed
crop production. The study recommended that agricultural that implications for the agricultural sector is not due to the
research development programs align with the implemented global financial crisis that occurred in (2008) as much as to
economic reform programs to increase cotton yield, in the applied agricultural policies, where the period prior to
addition to conducted more studies on the comparative implementing economic liberalization program has been
advantage such that it starts at the level of production areas; characterized by many negative aspects such as the
drawing new production plans in the light of new changes; diminishing contribution of agriculture to GDP, the weak
studying the future of the economics of Egyptian cotton rates of growth in agricultural production, the increasing
after the implementation of the GATT so as to minimize burden on the government's budget due to subsidizing food
the expected negative impacts on the future of cotton commodities and agricultural production inputs, the
production in Egypt; studying the conditions of small diminishing rates of self-sufficiency and the increasing
farmers to identify the proper crop rotations they should deficit in the Balance of Agricultural Trade. As a result, the
adopt and the funding policy appropriate to their government adopted the policy of economic liberalization
capabilities in order to reduce the negative impacts on in the agricultural sector with the aim to remove restrictions
limited-income farmers. Such results mean that not all of imposed on that sector, whether production, marketing or
the impacts of economic reform programs are positive. legislative restrictions. The government gradually left the
economic decisions related to crop production, pricing and
According to (Atia, 2002) Evaluating effectiveness of marketing to producers and market forces. The study
price policy mechanisms applied within the framework of pointed out that when market forces fail, this is due to the
the implemented economic liberalization policies and lack of supportive and effective institutions. Therefore, the
structural reform programs by analyzing the structures of study recommended that the government should play a role
price levels of some agricultural crops, with the aim to in building better marketing institutions. And since this
measure some indicators and price relations necessary for cannot be done by governmental marketing institutions as
policy makers, and implications of such findings to they cannot solely balance the conflicting governmental
optimum allocation of resources and taking production objectives, (including credit, tax collection, food security
decisions. The study highlighted evolution of various price and price stability), it is important that the government
levels, in current and real values, over the period (1975- facilitates the establishment of private marketing
1999), which the study divided into two periods: pre- institutions as one of pillars necessary for the success of
economic liberalization period (1975-1989) and the post- economic liberalization policy.
economic liberalization period (1990-1999). Findings
showed that price levels of the study crops (wheat, rice, A study conducted by (El-Gendy, 2010) on the impact
maize and cotton) followed statistically significant of agricultural policy on main economic features of wheat
increasing trends during the two study periods, whereas grown in Egypt showed that the implementation of
their real prices have been declining. Econometric analysis economic liberalization policy represented a new stage that
of the efficiency and effectiveness of price policies applied influenced Egyptian agriculture in the short and long runs
to the study crops using the Policy Analysis Matrix showed in terms of resource distribution, production efficiency and
differences between the computed nominal protection the level of prices. The study aimed to identify the impacts
coefficients, and between the two study sub-periods. of applying economic liberalization policy on the various
Results indicated high protection levels for wheat and production and economic phenomena related to wheat, in
cotton producers due to receiving implicit subsidy from the addition to forecasting the future outlook of such
government. The study also analyzed the applied price phenomena under the assumption that influencing factors
policy mechanisms using two indicators, total transfers continue to prevail during the study period until the end of
outside the agricultural sector and measuring change in the forecast period (2013). Findings revealed a number of
producer surpluses. characteristics that distinguish the two periods prior and
post implementation of economic liberalization policy, the
The study conducted by Siam et al., (2005) on the most important of which are: a statistically significance
analysis of changes in the consumption, production and impact of the implemented economic liberalization policy
imports of food grains aimed to clarify the main features of on wheat planted area, productivity and the total
change in such variables as a result of the changes that took production, where forecasts for the year 2013 showed that
place in the local and international arenas in order to take wheat planted area, yield and total production are
them into account while making decisions regarding the forecasted to reach about 3322.6 thousand acres, 3.12
development of food security policies, cropping patterns ton/acre and 9656.2 thousand tons. The study also
and international trade. Findings showed an increase in the forecasted a decline in wheat imports from 5911 thousand
relative prices of wheat as a result of applying price reform tons in 2007 to 5048.4 thousand tons by 2013. The study
policy. Such finding and devoting more attention to recommended continuing to apply economic liberalization
research related to developing and the use of high-yielding policy due to positive impacts on wheat production cost and
varieties resulted in increased production and a noticeable net revenue.
improvement in self-sufficiency rate thus a 10% decline in

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A study was conducted by (Ismail, 2011) to assess the A study conducted by (Swaidan, 1990) to analyze the
role agricultural development strategies play in improving current state of price policies applied to major grain crops
the production of major grain crops in Egypt and analyze and determine the bases that can be used in formulating
agricultural development strategies over the period (1980- alternatives showed that average monthly net return per
2010) in order to identify their impacts on developing the pound invested in grain crops is lower compared to
agricultural sector in terms of raising self-sufficiency in traditional and forage crops, and that a strong correlation
grain crops. Results showed potentials for increasing self- exist between domestic and international prices. Comparing
sufficiency rates in wheat, maize and rice under some the prices estimated using different pricing methods and
assumptions, these are increasing yield per acre by 1.44 applying ANOVA revealed that prices estimated using
tons, increasing planted area by 1.97 thousand acres and production costs method (allows a net revenue equivalent
reducing per capita wheat consumption from 190 kg/year to to 35% of the total cost of production) were low, especially
155 kg/year, which can help raise self-sufficiency rate to for wheat. However, farmgate prices estimated using other
about 80% by 2017. As for maize, assumptions include: methods, such as multiplying the base price by the
increasing yield/acre by 1.61 tons, increasing planted area wholesale price index, consumer price index in rural areas,
by 1.01 thousand acres and reducing per capita or by the export/import price index returned higher values.
consumption from 156 kg/year to 130 kg/year, based on Measuring the price efficiency of the study crops by
which self-sufficiency rate can be increased to 66.2% by estimating the nominal protection coefficients during the
2017. In regards to rice, assumptions include: increasing period (1976-1987) returned figures less than unity for
yield/acre by 1.57 tons, reducing planted area to 1.35 wheat, rice and maize. The study attributed such result to
million acres and keeping average per capita consumption the governmental policies that impose indirect taxes on
at 74 kg/year, based on which self-sufficiency rate in rice producers of the study crops. Results of applying the partial
can be increased to reach 93.4% by 2017. equilibrium model to gain crops grown during the period
(1980-1987) revealed that the adopted pricing policy led to
A study by (Eid et al., 2013) on production policies losses for the society, both on the production and
applied to main export crops in the light of local and global consumption sides, where it resulted in reducing producers'
variables showed that, since the mid-eighties of the last welfare as it works in favor of consumers' welfare. In
century, the government has adopted economic policies that addition, the implemented policy resulted in negative
aim to liberalize the economic sectors and stop impacts on the country's foreign exchange earnings due to
governmental interventions. For the agricultural sector, increased consumption of wheat and maize on the one
such policies focused on abolishing: compulsory delivery hand, and the decline in rice exports on the other hand.
of agricultural crops, governmental interventions in However, the government can increase foreign exchange
determining planted areas and cropping patterns, and earnings in case of applying a price policy whereby
subsidies to production inputs. As a result, market producers can get actual revenue from their produce and
mechanisms and forces became the main determinant of the consumers bear the real cost of consumption. In addition,
prices of agricultural commodities. And since agricultural findings revealed positive response in rice planted area to
production, like other economic activities, is influenced by lagged changes in rice planted area, cost/benefit ratio, and
the extent of success and soundness of agricultural policies adjusted average farmgate prices of wheat and maize. Also
pursued by the government, the study targeted analyzing according to study by (Aqladius, 1991) that aimed at
production policies applied to rice and cotton in light of the identifying the features and components of Egypt's
changes in local and international prices in order to agricultural policy, how it evaluates and the impacts it has
measure Nominal and Effective Protection Coefficients for at the national level and the level of Assiut governorate in
producers and consumers, in addition to the coefficient of order to establish solid bases for a long-term agricultural
domestic resource cost. Findings showed that rice and strategy revealed that the strongest changes in the prices of
cotton producers are not receiving protections that agricultural crops was that witnessed during the eighties,
encourage them expand in cultivated areas, and that indicating higher impacts of the supply and demand forces
reducing subsidies to input resulted in increasing the in determining such prices, which led to prices increasing at
production costs of both crops. The study recommended rates higher than the cost of production for the majority of
applying protection measures to the two crops as both are agricultural crops. Nevertheless, the prices of many
among the main export crops for Egypt, in addition to agricultural crops are still less than international prices. The
setting appropriate prices, close to international prices, in study also found contradictions between farmers' wills and
order to eliminate imbalances between domestic and governmental measures regarding crop rotations and the
international prices, as well as following a stable compulsory delivery of agricultural crops, thus
production policy that helps achieve competitive advantage recommended gradual removal of state control and
under the current international agreements Egypt singed encouraging competition between farmers.
with various economic blocs.
According to Mousa (1996) conducted qualitative and
IX. IMPACT OF AGRICULTURAL PRICE quantitative analysis to the implemented agricultural policy
POLICY ON MAJOR STRATEGIC CROPS IN using agricultural policy assessment methods. One of the
EGYPT most important results reached was the necessity of
formulating agricultural policies related to land use and
cropping patterns on sound scientific bases that take into

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account the value of the water per unit of land and capital in producer surplus is the cost of domestic resources. It
per unit of land. The study explained that applying the should be noted that Egypt's comparative advantage in the
pricing policy in the agricultural sector was not in its favor, production of this crop is declining in the light of
where change in governmental revenues in the case of increasing production costs. The study recommended
wheat was not accounted for until after the partial regular calculation of the difference between the nominal
liberalization in 1986. Not only that, self-sufficiency in and effective protection coefficients, and changes in
wheat also improved by 56% in 1990. Part of such improve producer surplus as guides for designing price policies.
is due to eliminating subsidies, which led to rationalizing
consumption. Therefore, the study recommended The impact of economic liberalization on
implementing free tools and setting flexible achievable consumption patterns and food content before and after the
goals, in addition to regular evaluation of agricultural implementation of economic liberalization was also studied
policies using internationally accredited methods and tools, by (Khidr, 1998). Results showed that consumer prices of
and establishing an agricultural policy information center wheat flour and rice remained fixed for a long period,
that comprises an integrated field information unit and a leading to a gap between prices. Consumer price of fine
unit that takes care of the technical aspects related to the flour was liberalized in 1993, while that of rice was
implementation of agricultural policy. liberalized in 1992. The study also showed a widening
food gap after applying the policy of economic
In their study, (El-Mallah and Soliman, 1997) focused liberalization to some commodities, namely wheat and
on competition in the English market of potatoes, and maize, in which the food gap increased by 15% and 8%,
reflections on Egyptian potato exports. Results revealed the respectively. A study by (Mahmoud, 1999) explained the
importance of Egyptian potato in the English market, where impact of economic liberalization policies on field crops
demand proved relatively inelastic (-0.69). Therefore, the production and developments in Egyptian plant production.
implemented policy of reducing the prices of Egyptian Results showed that increases in the prices and productivity
potatoes usually has a limited impact in the face of of crops are higher than the increases in their production
competing countries, especially the Netherlands, Belgium costs. Profitability of annual crop rotations or cropping
and the rest of the world, unless accompanied by a good patterns, especially for field crops, helped in such trends,
quality of the exported potatoes. which proved the soundness of implementing economic
liberalization to Egyptian agriculture to achieve the
A study by (Abd El-Hady, 1997) investigated the objectives of raising farmers' living standards. Wheat
impacts of some global variables on the farmgate prices of production increased by 36.67% compared to that achieved
some major crops in Egypt. Results revealed some of the during the pre-liberation period. In case of rice crop, results
basic influencing factors, including unit cost of production, showed that after the implementation of the economic
parity prices, cost trends, crop budget, production function, liberalization policy rice planted area has been increasing at
demand projections, farm incomes, consumer prices and an annual rate of 1089 thousand feddans, while farmgate
trends in international prices. It was also found that price increased by 10.66%. In addition, rice production cost
determining farmgate prices in Egypt mainly depends on increased and net revenue per acre increased by 70.74%.
the cost of production. Such method is based on two basic According to (Haggag, 1999) study the results of
components besides the costs; these are the value of measuring the impacts price policies have on grain
byproducts and yield per acre. The study found that the consumption in Egypt, analyzing the levels of grain prices
annual growth rate of wheat, rice and maize prices and estimating the functional relationship between price
increased by 12.5%, 12.42% and 10.7% respectively during levels over the period 1974-1990 showed that adjusted farm
the period (1980-1994), which affects the supply of such prices of grains followed annual increasing trends estimated
crops, and that crop price has a significant impact on the at 3.1% for wheat, 1.8% for rice and 1% for maize, which
dependent variable during the post-liberalization period. proved statistically significant for wheat and rice, but not
After applying economic liberalization to rice production, for maize. Measuring the relationship between wholesale
the significant impact of rice farmgate price on the and farm price showed strong correlation exceeding 0.90
dependent variable was very apparent during the post- for wheat and maize, while reached 0.84 for rice due to the
liberation period. As for maize, results showed no increase in annual rates of adjusted wholesale prices, nearly
significant impact of the explanatory variables on the three times the annual increase in adjusted farmgate prices.
dependent variable during the study period, and also The study also showed that, contrary to maize, farmgate
showed that prices have significant impacts on some of the prices of rice and wheat remained lower than the world
price policy indicators regarding the study crops, including prices of the two crops. It was also noted that rates of
nominal protection coefficient, effective protection exchange for the agriculture sector were less than 100, i.e.,
coefficient, net loss to producers, producer's welfare and they were not in favor of the agricultural sector, indicating
domestic resource cost. Nominal Protection Coefficient that prices farmers received for their products were less
reflects the government's tendency to reduce taxes, while than the prices they paid for production inputs. The study
Effective Protection Coefficient is an indicator for also showed that farm prices during the previous season did
producing the commodity under subsidies in favor of not have significant impact on crop production or area
producers and taxation of the consumer. The third during the current year, except in some cases. Lack of
indicator, Net Loss, reflects farmers' attitude towards the response to price indicators from farmers' side can be
economic use of the of production inputs. Finally, change explained by the constraints and imbalances resulting from

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governmental interventions in agricultural price policies. policy to support producers and the policy of imposing
The study recommended devoting more attention to price taxes on consumers as of 1991, and that the value added of
and marketing policies concerning cereal crops under the maize in local price exceeds the value added at border
implemented free market policy. A study by (EL-Batran, price. Measuring the impacts of price changes on the
2002) investigated the impacts of some agricultural policies production and consumption of the major agricultural crops
in Egypt. She explained that until the early 1980s, the using some indicators like net economic loss in production
implemented price policy focused on formal pricing of and consumption; change in producer and consumer surplus
products. By the beginning of 1986/87, the government in order to assess the welfare for each of them, as well as
embarked on implementing economic reform programs to changes in government's revenue, change in hard currency
price policy. Subsidies to production inputs were abolished earnings and net economic loss for the society. In 1987, net
and their prices were liberalized, while prices of economic loss in of wheat, rice and maize production
agricultural crops were gradually moved according to world averaged 176.3, 589.1 and 192.4 million pounds,
prices. In addition, guarantee prices were set to ensure respectively, and followed increasing trends. On the other
compensating farmers for the difference between actual hand, net economic loss in consumption averaged 277.2,
cost and market prices. Results showed increases in current 340.8 and 160.7 million pounds for the three crops,
farmgate prices for most of the major crops during the respectively. By assessing the impact of fluctuations in
average period of the nineties, namely wheat, rice and international wheat prices on Egypt's economy and the
maize, indicating the significant impact of agricultural economic cost the economy (El-Sawalhy et. al., 2003) will
policies during the nineties on increasing wheat, rice and bear in case world prices of wheat rise to $ 250 per ton, and
maize planted areas and net revenue per acre for the three under two alternatives, either keeping imports at the current
crops in current prices. It was also found that the burden level, 6 million tons, or to reduce imports to 5 million tons
incurred by the government due to wheat imports during per year. Results revealed that, in case world prices of
the 1990s has been higher compared to that incurred during wheat rise by 10%, the cost of importing 6 million tons of
the 1980s. As for the rice crop, although the burden wheat will increase by 93.6 million dollars a year; in case
incurred by the country during the 1990s has also been imports are reduced to 5 million tons, imports cost will
higher than that incurred during the 1980s, revenues have increase by 78 million dollars a year; in case world prices
been realized during the 1990s due to increases in rice of wheat rise by 30%, the cost of importing 6 million tons
exports. The study also found net losses at the level of wheat will increase by 281 million dollars a year; in case
consumer increased for all crops under study during the world prices of wheat rise by 50%, the cost of importing 6
1990s, except for cotton, which can be explained by million tons of wheat will increase by 468 million dollars a
implementing consumer-subsidy policy, which led to year; and in case imports are reduced to 5 million tons,
increased consumption under low domestic prices thus imports cost will increase by 390 million dollars a year.
misallocation of consumer expenditure. As for net social
loss, results showed that it has been higher during the 1990s According to (Emara, 2004) enquired "Where are
compared to the 1950s for all the study crops. In regards to Agricultural Prices Heading To"? She investigated factors
welfare indicators for producer and consumer, findings affecting market prices and found them to be collapse of
showed increases in average losses of wheat, maize and prices, high production cost, deterioration in the
rice during the 1990s compared to average losses during the competitiveness of Egyptian agricultural sector,
1980s, which witnessed the implementation of free prices uncontrolled equilibrium prices within the framework of
and marketing of agricultural crops, optional guarantee market mechanism and inaccurate impacts of price
prices for strategic agricultural crops such as wheat and incentives. She further applied supply response to price
maize, and establishing price balance funds for agricultural changes and found that cereal crops showed significant
crops, including cotton. supply response to price changes in case price incentives
are offered to producers of such crops, mainly wheat, rice
A study by (Daif, 2003) aimed to identify the features and maize. The study explained that increases in the
of price changes in Egypt for main vegetable crops during equilibrium prices of the mentioned crops and the prices of
the periods before economic liberalization (1973: 1986) and inputs used in their production is sometimes justified and
after economic liberalization (1987: 2001), and the sometimes not, which resulted in negative impacts on farm
effectiveness of price changes in determining farmers' incomes thus instability of agricultural income, and
decisions. Results revealed significant impacts of economic therefore agriculture has been regarded as an undesirable
liberalization policies on the real retail prices of wheat and investment profession. Also, a study that was conducted by
rice, as well as on real wholesale prices, and responses of (Abd El-Sadeq, 2006) to measure the impact of some
wheat, maize and rice planted areas to change in prices. domestic and foreign variables on the production and
Results of estimating price protection indicators for major exports of Egyptian potatoes revealed that potatoes planted
field crops indicated that the government has been area followed an increasing trend during the period 1991-
imposing direct or indirect taxes on wheat producers, in 2003, both at the level of total and the level of the three
addition to subsidizing and protecting the crop in domestic seasons. Results also showed that farmgate prices, net yield
market in favor of the consumer, then turned to per acre and total revenue demonstrated noticeable
implementing protection measures in favor of producers at fluctuations during the study period.
the expense of consumers. In regards to maize, results
revealed that the government started applying protection

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In a study conducted by (Ismail, 2007) overlaps in Consequently, wheat imports declined from 5.7 to 5.2
price relationships between major cereal crops, namely million tons between the two periods. However, increases
wheat, rice and maize have been examined. The study in the world prices of grain led to increasing deficit in the
examined demand and supply of the three crops and price balance of trade of wheat by US$519 million in 2007. Self-
relations, in addition to presenting a multi-market model for sufficiency of maize declined from 69.4% to 62.5% due to
the three commodities. Results revealed that the estimated increased consumption, which resulted in increasing maize
elasticities of supply for wheat, rice and maize reached imports to 4.1 million tons over the period (2002-2007),
0.57, 0.87 and 0.76, respectively, indicating that the three leading to increasing deficit in the balance of trade by
commodities are necessary. The study used a sophisticated US$389.6 million in 2007. The study predicted the total
model for estimating consumer demand for goods as an value of imports from the study crops at US$4.1 billion in
integrated model of demand that reflects the impact of 2010, and US$4.7 billion in 2015.
prices and income on consumer behavior. This model is
Almost Ideal Demand Model (AIDS), the results of which Another study was conducted by (El-Gundy, 2010) to
showed an inverse relationship between commodity price analyze the Impact of Agricultural Policy on the most
and quantity demanded according to the estimated Important Economic variables of Wheat Crop in Egypt, as
elasticities of demand, while showed a substitution well as to evaluate Egyptian agricultural policies applied to
relationship between rice and both wheat and maize on the wheat crop using Policy Analysis Matrix. The study
basis of cross elasticities of demand. In addition, results of concluded that the estimated nominal protection coefficient
the multi-market model showed that wheat and maize of output during the pre-implementation of economic
producers did not receive opportunity cost equivalents, liberalization period reached 0.63, which implies that
which calls for designing a proper price policy based on farmers incurred high taxes while consumers received
which consumers are charged the real consumption cost subsidies during this period. As for the value of this
and producers receive real revenues from wheat and maize coefficient reached 0.93 during the post-implementation of
production according shadow prices in production and economic liberalization period, indicating that domestic
consumption sides. price of wheat is close to world price, which also means
reduced value of indirect taxes and subsidies to consumers
A study by (El-Saeed and Atta, 2008), which during the second period compared to the first period. Such
investigated the marketing efficiency of potato crop grown results indicate reduced price distortions. The study
in Egypt, revealed that planted area and production of recommended pursuing economic liberalization policies for
winter potatoes recorded the highest annual rate of increase, the positive impacts on the cost and net revenue of wheat
while planted area and production of summer and Nili production.
potatoes followed a declining rate. The study also found
that productivity of summer potatoes recorded the highest A study that was conducted by (Mohamed, 2011) to
rate of increase; followed by productivity of winter potato, estimate and analyze the supply response of major cereal
while productivity of the Nili potatoes ranked last. As for crops grown in Egypt using several statistical models
the efficiency of potato production, it reached 1.85, revealed that lagged real net yield per acre and lagged
indicating that potato production falls in the economic stage planted area represented the main factors affecting wheat
of the production function, which also reflects economic planted area in the current year. Results also showed that
efficiency in production. Studying the impacts of biofuel factors affecting rice planted area in the current year
production on world prices of cereal crops revealed include lagged real agricultural price as well as lagged farm
increases in the quantities of ethanol produced at the level area. The study recommended taking into account such
of world over the period 1997-2008, which led to a rise in factors, especially farmgate prices and real net revenue per
the world prices of wheat and maize. Brazil ranked first in acre, in addition to lowering their productions costs in order
terms of ethanol production, followed by the USA. to promote farmers grow them.
However, such ranking differed in 2008. Findings revealed According to study that applied a number of research
a positive relationship between the world price of maize methods by (Tolba and Kamel, 2011), including descriptive
and ethanol production, where 1% increase in the amount and quantitative analysis, PAM and Partial Equilibrium
of ethanol produced leads to increasing world prices of Model to measure the impacts agricultural price policy
maize, rice and barley by 0.82%, 2.52% and 0.76%, have on wheat variables revealed that wheat planted area
respectively. The study recommended diversifying the and yield amounted to 2.8 million acres and 2.73 tons/acre,
import markets wheat and maize, taking into account respectively, and that annual rate of decline reached -0.01
quality standards, in addition to pursuing efforts to raise the ton/acre, while average production reached 7.6 million tons
profitability of domestic wheat over that of competing and has been increasing at an annual rate of 2.2%. Average
crops such as clover, maize, and rice in order to enhance national consumption reached 14.3 million tons and has
farmers' response, thus the quantities and quality of cereal been increasing at a statistically significant annual rate of
crops, especially wheat and maize. (Salim, 2008; El-Bahaee 3%. Results revealed that producers received subsidy
and Nagaty, 2008) to estimating self-sufficiency rates of representing 33% of their product's value, and that the
major grain crops and the impact of increasing world prices implemented policy aimed at encouraging producers
of grain crops on Egypt's balance of trade revealed that expand in wheat planted area to increase domestic
self-sufficiency of wheat increased from 47.9% over the production. The study also found that domestic value of
period 1992-1997 to 58.6% over the period 2002-2007. inputs used in wheat production was less than the

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international prices of corresponding inputs, and that wheat prices early enough before planting season to help farmers
enjoyed governmental protection, which all indicate that make proper decisions, which might encourage farmers
the implemented production policy has been in favor of expand their wheat planted areas. Moreover, the study
wheat producers, where the government pursued protection recommended revisiting producer taxes imposed under the
policies represented in increasing the value added per ton in implemented economic reform program in order to
farmgate price over the corresponding border price value. eliminate the negative impacts producers suffer, where
Distortions in domestic market prices of production and higher taxes resulted in raising net economic loss wheat
production inputs have also been eliminated after producers incur.
implementing economic liberalization policy. The study
indicated that local production of wheat to cover domestic Another study by (Georgi and Hanna, 2013)
demand is preferred to importing the crop due to the investigated the impacts agricultural price policies have on
continuous increase import cost, which proved higher than some cereal crops in Egypt between two periods: (1977-
producing the crop domestically. The study attributed 1987) and (1998-2011), with the aim of identifying the
fluctuations in net losses over the study period to variations between domestic and international prices of
fluctuations in domestic prices of wheat and inputs use, such crops and assess the impacts of the implemented
which caused fluctuation in production costs. Results polices by applying Policy Analysis Matrix. Results
indicated increase in gains and reduction in losses in revealed statistically significant differences between wheat,
consumer surplus, which the study attributed to the decline maize and rice grown over the two study periods in terms
in domestic prices of wheat, indicating inefficiency in of planted area, yield and total production, except for maize
consumption expenditure on wheat, decline in government planted area. The study also found that planted area, yield
revenue and thus decline in hard currency earnings over the and total production of all the study crops followed
study period. The study offered some recommendations increasing trends over the two study periods, but the rates
including: continuing to pursue price policies that promote of increase during the second period proved less than the
farmers expand wheat planted areas in order to raise self- rates of increase over the first period. The study assessed
sufficiency rate of this strategic crop such as early the financial and economic values of production cost items
announcement of procurement prices, enhancing the role and found that the financial assessment of labor wages
agricultural extension services play in improving farm outmatched the economic assessment of labor wages for all
operations and pest and insect control, in addition to the study crops over the two study periods, which means
immediate payment to farmers upon crop delivery, that domestic labor wages are higher than international
dissemination and distribution of high yielding varieties, labor wages. By contrast, economic assessment of the cost
and maintaining fair procurement prices to farmers. The of mechanical work outmatched the financial assessment
study also recommended rationalizing consumption and over the two study periods. As for production inputs (seeds,
consumption expenditure on wheat, revisiting wheat chemical fertilizers, pesticides), economic assessment
domestic prices and exerting efforts to achieve stability in outmatched the financial assessment over the two study
price levels. periods, indicating that production inputs are subsidized by
the government. Turning to revenue per acre, economic
A study that assessed the impact of agricultural price assessment outmatched the financial assessment for the
policy on wheat production and consumption in Assiut three study crops over the two study periods. On the other
governorate by (Isa et. al., 2012) divided the study period hand, results of PAM analysis revealed that subsidy to
into three sub-periods; the first before applying economic production inputs declined from 31%, 30% and 29% during
liberalization policies (1980-1986), the second is the partial the first period to 8%, 7% and 9%, during the second
liberalization period (1987-1992) and the third is full period. Results also revealed that producers' shares of the
liberalization period (1993-2010). Results revealed value of their products have been increasing; indicating
statistically significant changes estimated at 111.16, 80.64 positive incentives that contribute to curbing the differences
and 71.11 thousand feddans for planted area; around 8.60, between international and domestic prices, and help
14.75 and 14.9 ardabs for the yield per feddan; and around accelerate the wheel of economic development. The
969.65, 1204.40 and 379.56 thousand ardabs for total computed effective protection coefficient revealed
production of wheat for the three sub-periods, respectively, reduction in implicit tax producers incurred during the two
indicating higher levels of the study variables for each study periods, where it declined from 32% to 23% for
annual growth rate, which clarifies the impacts of economic wheat, from 37% to 27% for maize and from 52% to 34%
liberalization on structural change in the study variables. for rice, respectively, indicating that full liberalization of
Results also revealed statistically significant annual change farm land rent led to raising the value added for the study
in wheat planted area over the first sub-period, estimated at crops, and to reducing the difference between value added
-3.33 thousand acres. The study also estimated nominal in local price and that in international price. The study
protection coefficient for wheat in fixed prices in Assiut, revealed that Egypt enjoyed comparative advantages in
the results of which showed that wheat producers received wheat, maize and rice produced during the two study
43%, 84% and 40% of the value their product is worth in periods, where the computed values of the coefficient of
international prices over the three study sub-periods, comparative advantage reached 0.30, 0.31 and 0.23 for the
respectively. Finally, the study recommended that the mentioned crops during the first study period, respectively,
government set minimum guarantee procurement prices and 0.41, 0.42 and 0.43 for the mentioned crops during the
close to international prices, in addition to announcing such second study period respectively. The study recommended

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designing production policies that aim to raise the A study that assessed the impacts of implementing
comparative advantage in wheat and maize production; and policies on producer and consumer welfare by (El-Gundy,
to enhance farmers expand wheat and maize planted areas 2014), on the efficiency of input and outputs use and on
by setting procurement prices close to international prices national income, and the relationship between these
to guarantee rewarding net revenues to farmers, and variables and curbing the wheat gap revealed that the
pursuing early announcement of prices before the start of estimated multi-regression model and all the estimated
the planting season, in addition to designing policies that regression parameters proved statistically significant,
aim at: reducing direct and indirect taxes producers incur; indicating defined trend line for each of the periods under
subsidizing producers, especially where major import study. Equations derived from the estimated model
commodities are concerned in order to reduce net losses revealed that wheat planted area followed increasing trends,
producers and consumers incur; and reducing the burdens at annual rates of 19.52, 76.98 and 58.55 thousand acres,
producers incur to save hard currency. representing 1.48%, 3.8% and 2.17% of the average planted
area at the level of each of the three study periods,
According to study that applied Partial Equilibrium respectively. In addition, wheat yields followed increasing
Model by (Sied, 2013) to assess the imposed value of trends, at annual rates of 0.016, 0.041 and 0.001 tons
implicit taxes, or the value of domestic subsidy for representing about 1.1%, 1.88% and 0.04% of the average
producers and consumers over the period 1995-2011 yield per acre at the level of each of the three study periods,
revealed that maize production and yield followed respectively, while total wheat production followed
increasing trends estimated at 0.03 tons/acre and 79.38 increasing trends, at annual rates of 81.68, 235.68 and
thousand tons/acre, respectively, and that domestic 169.96 thousand tons representing 4.29%, 5.32% and
consumption, gap between production and consumption, 2.34% of the average wheat production at the level of each
and farmgate price also followed increasing trends of the three study periods, respectively. Results also
estimated at 289.42 thousand tons, 210 thousand tons revealed that wheat planted areas, yields and total
respectively, at rates of change of 2.69%, 4.21% production quantities followed increasing trends during the
respectively. Results of applying Partial Equilibrium Model study periods, however, the rate of increase recorded during
to real prices revealed average values for nominal the third period was lower than that recorded during the
protection coefficient and rate estimated at -0.59 and 0.41, second period, which the study attributed to the sharp
respectively, indicating that maize producers received 41% increase in production cost as a result of liberalizing the
of their product's value in international prices, and incurred rental relationship between owners and tenants, which led
59% of implicit tax during the period 1995-2011. The study to negative impacts on the rate of increase in the study
recommended designing agricultural price policy that variables during the third study period. The computed
guarantees closing the gap between domestic and nominal protection coefficients for the study products
international prices of maize to encourage farmers produce reached 0.49, 0.76 and 1.13 for the three study periods,
the crop, which helps save hard currency, in addition to respectively. Such result revealed that producers incurred
guaranteeing subsidy and protection for domestic maize high taxes during the first study period given the fact that
producers to reduce net economic loss in production. The they did not receive real prices for their products, which in
study also recommended reduction of implicit tax imposed turn resulted in shrinks in planted area. This situation
on producers in order to reduce economic losses, which changed during the second period, where the government
leads to positive impacts on producer and national welfare. reduced taxes imposed on producer. After that, the
The results of the agricultural policy analysis matrix government started offering subsidy to wheat farmers,
that applied by (Abu-Rajab, 2013) indicated that the value which led to increasing farmgate price over the border
of the nominal protection coefficient for output per feddan price. At the level of consumer side, nominal protection
of the potatoes crop during the period 2000-2010 was less coefficient over the three study periods reached 0.7, 1.16
than the correct one. It also indicates that the local farm and 1.56, respectively, indicating that the first period
price per ton of potatoes was less than the border price. The witnessed promoting consumer support policies, whereas
existence of hidden taxes bear by producers of the potatoes the second and third periods witnessed gradual shifts in
crop in general, as indicated by the results of the matrix that policies not in favor of consumers. The study recommended
the coefficient of nominal protection of the inputs traded continuing to pursue economic liberalization policies given
for the potatoes crop was less than the correct one, which the positive impacts on the supply side, in addition to
indicates that the cost of inputs at local prices less than its setting procurement prices close to the international prices
counterpart at the border, To be there The value of the of wheat. The study stressed the need to reorganize and
coefficient of effective protection of potatoes crop was less develop the role of agricultural cooperatives in providing
than the correct one throughout the study period. This production inputs at appropriate prices to help wheat
means that the value added of the potatoes crop at local farmers overcome some of the negative impacts of
prices was lower than that of world prices. There are hidden implementing economic liberalization policies, such as the
taxes bear by the producers of the crop. Relative to the increasing cost of production, and the need to reformulate
potatoes crop is less than the correct one, which confirms consumer support policies that led to irrational
the comparative advantage enjoyed by Egypt in the consumption of wheat.
production of the crop as a result of lower cost of locally According to study by, (Khamis, 2015) investigated
produced than the cost of importing from abroad. price policy applied to some of the cereal crops grown in

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Egypt in the light of economic liberalization in order to cubic meter of irrigation water. The study offered some
identify the features of price policies applied to wheat, rice recommendations including: promoting expansion in rice
and maize and in the same time monitor the currently planted areas in the governorates that enjoy higher
applied policies. She applied some of the models used to comparative advantages in rice production and higher
estimate the supply response of areas under the study crops average revenue per cubic meter of irrigation water and
so as to identify factors affecting planted areas. Results cutting rice planted areas in the governorates that proved
revealed that lagged farmgate price (two and three years) otherwise, especially under the current water scarcity
affects changes in current year planted area by 73.2%, conditions. The study also recommended increasing
while farmgate price of maize lagged three years affects implicit taxes on rice producers in Egypt to boost the
changes in current year planted area by 77.8%; and competitive ability of Egyptian rice in world markets,
farmgate price of rice lagged one, two and three years where it represents a source of hard currency earning for
affects changes in current year planted area by 98%. The Egypt, in addition to exerting efforts to improve the
study applied Policy Analysis Matrix to calculate nominal production efficiency of rice and pursuing efforts to
and effective protection coefficients, and also applied develop new varieties that consume less amounts of water
partial equilibrium models. The study recommended to tackle the problems associated with the changing water
devoting more attention to studying markets in general, and condition in Egypt.
prices in particular, in addition to devoting great attention
to developing the agricultural sector, reducing subsidies to Studying the impacts of applying agricultural policies
production inputs, moving towards implementing indicative on rice and maize by (Mahmoud, 2018) revealed that rice
pricing policy to encourage producers grow the required planted area reached 1.22 million acres representing 22.8%
crops, examine the negative impacts of cultivating rice due of the total summer planted area, estimated at 5.36 million
to excess water consumption, rationalizing food acres in 2015; whereas maize planted area reached 2.26
consumption patterns and redistribution of income. million acres representing 65% of the total summer planted
area, estimated at 5.36 million acres in 2015. In the
Studying the economic impacts of price policies on framework of limited water resources, Egypt's agricultural
rice production in Egypt by (El-Saeed and Mansour, 2017) policy targeted reducing rice planted area, which called for
revealed that rice planted area reached a maximum of 9.1 conducting a study to measure the impacts such policy has
million acres in 2015 and a minimum of 7.1 million acres on rice and maize as two competing crops during the
in 2010. Rice planted areas increased as of 2011 due to summer season. The research applied partial equilibrium
political instability after the 25th of January 2011. Findings model to rice and maize production and consumption over
revealed that rice exports reached a maximum of 1203 the two periods 2010-2012 and 2013-2015, and applied
thousand tons in 2006 and its minimum in 2010. Exports descriptive and quantitative methods to secondary data
share in production recorded a maximum of 8.17% in 2004 published by the Central Administration of Agricultural
and a minimum of 8.3% in 2014.The study computed Economics and Food and Agriculture Organization of the
Egypt's comparative advantage in rice production by United Nations (FAO) for the period 2003-2015. The
applying PAM to identify protection indicators (nominal research concluded that the policy of reducing rice planted
and effective protection coefficients), and to identify area has not been accepted by farmers, where indicators
comparative advantage indicators (domestic resource cost) attained from applying partial equilibrium model returned
at the country and governorate levels. Results revealed that negative values. Nominal protection coefficient for
the computed nominal protection coefficient reached a consumption amounted to 0.54, indicating that the
minimum of 0.32 in 2008 and a maximum of 0.83 in 2003, implemented policy had negative impact on consumers,
which means that it is less than unity, indicating that where the estimated elasticity of demand amounted to
domestic rice prices are less than the international prices of 0.016, nearly zero, indicating no response from consumers'
rice, which means that rice producers incur implicit taxes. side to change in rice price, which means that rice is a
As for the computed effective protection coefficient necessary commodity which consumers cannot reduce the
reached a minimum of 0.29 and 0.24 in 2008 and 2009, quantities consumed of. In addition, increasing the
respectively, and a maximum of 0.84 in 2001. The quantities supplied of rice led to reduced price, where the
estimated value of domestic resource cost revealed that estimated elasticity of supply amounted to 1.32, indicating
Egypt enjoys a comparative advantage in rice production, that producers did not abide to the announced policy. Also,
and that such advantage is higher in some governorates average maize planted area increased from 1.97 million
than others. Applying partial equilibrium model revealed acres during the first study period to 2.19 million acres
that the implicit taxes producers incurred have been during the second study period, up by 11.34%, which
reflected in the form of implicit support to consumers, resulted in increasing domestic production by 1.28 million
which led to higher consumer surplus on the account of tons and reducing imports to 802 thousand tons during the
producers. On the other hand, the country bears the burdens second study period, down by 12.4% compared to average
resulting from the net losses incurred by producers and imports during the second first period, resulting in reduced
consumers, which together form net losses incurred by the deficit in the balance of trade in maize. On the other hand,
society. Results of computing the average revenue per it can be stated that, in case farmers implemented the issued
cubic meter of water used in rice irrigation revealed that governmental policy, part of the water resources would
Dakahlia governorate ranked first in terms of comparative have been saved, but violating the issued policy resulted in
advantage and average return on Egyptian pound paid per planting extra 73.65 thousand acres of rice, an extra area

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which if planted with maize would save some 170 million 2013/2014 (Abdalla and Al-Shawarby,2018). In addition to
cubic meters of water to be used in other cultivations, or in the high cost of food subsidies, the system was perceived to
horizontal expansion. be poorly targeted, with 88 percent of Egyptian households
having access to a ration card allowing purchases of food at
X. OTHER PUBLIC POLICIES WITH IMPACT ON subsidized prices. Starting from 2014, the government
AGRICULTURE IN EGYPT introduced comprehensive reforms to the food subsidy
system with the aim of increasing efficiency, minimizing
A. Food Subsidy System leakages, and improving targeting.
Egyptian food subsidy system was a driver of
significant interventions in the agricultural sector. As part The baladi bread subsidy became limited to ration
of the socialist policy adopted by the Nasser regime, the card holders and shifted to a direct subsidy of production
food subsidy program was expanded in the 1950s and costs for bakeries, rather than supplying bakeries with
1960s to provide basic commodities at subsidized prices to quotas of subsidized flour. Advantages of this new system
all Egyptians (Kassim et al, 2018). included interrupting leakages of subsidized flour to the
black market and incentivizing bakeries to improve the
A universal subsidy of baladi bread was the quality of subsidized bread rather than attempting to
cornerstone of the subsidy system. Until recently, minimize the use of flour. In addition, instead of only
government had directly intervened at every level of bread fixing a limit per capita on how many loaves of bread can
production from wheat procurement to flour milling to be purchased at the subsidized price, the new system allows
bakery production so as to maintain production quotas at beneficiaries to substitute other commodities for baladi
the subsidized price. There was a high rate of leakage in the bread. For every loaf of bread less than the maximum used
system as economic incentives were misaligned. In by the beneficiary per month, EGP 0.10 are transferred to
consequence, government was forced to procure more the smart ration card, which can then be used to purchase
wheat than would have been demanded even at the other commodities under the ration card system (Abdalla
subsidized price (Kassim et al, 2018). and Al-Shawarby,2018). In 2017, the sale price for baladi
bread was EGP 0.05, or less than one tenth of production
The number of subsidized commodities increased
cost, so the opportunity cost introduced by this reform is
gradually until the early 1970s, reaching 18 food items
expected to reduce household bread consumption and
(Cassing et al., 2009; Ecker et al., 2016). After an
waste.
unsuccessful attempt to remove the subsidies in 1977 was
met with riots, in the 1980s and 1990s, the government In parallel, the new system expanded the basket of
gradually reduced food subsidies in order to ease the subsidized goods to include more food items, such as pasta,
growing fiscal burden of the subsidy bill (Löfgren and El- lentils, milk, and frozen beef, as well as non-food items,
Said, 2001). A few foods items, such as meat, chicken, and such as soap (Ecker et al.,2016). Beneficiaries must
fish, were removed from the subsidy system between 1990 contribute an out-of-pocket cash co-payment in addition to
and 1992. Government also increased the prices of the the amount that is deducted from their smart ration card. On
remaining subsidized food items incrementally (Abdalla average, the out-of-pocket co-payment ranges from 5 to 10
and Al-Shawarby, 2018). However, this trend was reversed percent of the card deduction amount for all commodities.
in the 2000s, as government attempted to contain public The price of subsidized commodities, i.e., the amount
discontent about high inflation and high food prices, in deducted from the ration card plus the cash co-payment, is
particular, by providing subsides on more food items, such fixed at below market prices, while government pays for
as beans and lentils, and increasing the quantities the difference between the subsidized price and the market
consumers received of some rationed goods, such as rice, price from the fiscal budget. The monthly allowance for
sugar, and cooking oil (Ecker et al., 2016). each person registered on the ration card increased from 21
to 50 EGP in June 2017, and is expected to increase further
During the global food price crisis in 2008, Egypt to compensate for increases in prices following the energy
solved the problem of food delivery and delivery in two subsidy cuts introduced in June 2018. The reform program
ways. First, the Egyptian army assigned its personnel to also includes a national project to upgrade wheat storage
mass production of bread (Ghoneim,2012). Second, facilities to further reduce leakage of domestic wheat.
subsidized bread sales were no longer reserved for the Consequently, about 40 percent of the open-land barns have
bakeries where they were produced. (Ghoneim,2012; been upgraded with proper ventilation and improved
Coelli,2010). Distribution locations, operated by local storage capacity. Additional silos have also been built to
states, have been created to manage food sales, with home- increase the government's storage capacity of wheat
based housing services introduced in some areas. The (Abdalla and Al-Shawarby,2018).
World Bank (2010) estimated that about 60 percent of
subsidized bread sales happen through these outlets. B. Land Rent and Tenure
As part of an agrarian reform effort, a law was
As a result of the economic contraction in the promulgated in 1952 ,1961 Law and 1969 which was
aftermath of the 2011 revolution, food subsidy costs important for the distribution of feudal land. According to
represented 25 percent of total public expenditure and these laws, the amount of land an individual could own.
about 8 percent of GDP between the years 2011/2012 and The amount of land an individual could own; starting at

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200 feddan, then falling to 100 feddan, and settling at 50 Megaprojects are large-scale, with broad visions (usually
feddan per individual and 100 feddan per nuclear family. accompanied with political dimensions), multiple
Before 1952, 65 percent of arable land was owned by only objectives, and extremely high costs. Their impact is often
5.7 percent of the population (Ibrahim and Ibrahim, 2003). large enough to be irreversible. Today, between one quarter
Between 1951 and 1970, about 12.5 percent of all arable to one-third of cultivated lands are classified as New Lands
land (87,000 feddan) was sold at below market prices to by the Ministry of Agriculture and Land Reclamation 4. In
342,000 farmers, predominantly in plots of less than five addition, MALR estimated that one million feddan had
feddan. been reclaimed informally by 2010 by peasants expanding
into the desert on the edges of cultivated area (Sims, 2015).
The laws also made the rights of tenants more robust
against landlords. Cancelling of land leases became easier, The General Authority for Reclamation Projects and
and tenants had the right to pre-emption in cases where Agricultural Development (GARPAD) was created in 1975
landlords wanted to sell their lands. (This was done, in part, to manage the entirety of the land reclamation process.
to reduce the prevalence of absentee landowners.) The laws According to Sims (2015:7879), this includes identification
have exacerbated the fragmentation of agricultural of areas to be reclaimed and their “planning, subdivision,
landholdings in the country. This arose due both to provision with infrastructure, pricing, allocation and post-
increased sales of land to smallholders and to Islamic award monitoring and policing”. GARPAD also oversees
inheritance partitioning. Egypt’s plethora of smallholders the auction process through which these lands can be sold.
originates from this (Kassim et al, 2018). The average In 1987, the Mubarak Youth Program allowed college
landholding is now between 0.8 and 0.9 feddan (Ibrahim graduates and landless peasants to respond to newspaper
and Ibrahim, 2003; Sims, 2015). announcements by GARPAD. If they met a certain set of
criteria, beneficiaries would be awarded small parcels of
In 1992, government raised rents for land more than land in any of the newly reclaimed Western Desert oases
threefold, which impacted smallholders’ ability to pay their watered solely by groundwater. No Nile water reaches this
annual per feddan rent. With the New Land Reform Law of desert. In many areas, 5 feddan plots of land were awarded
1997, landowners were further able to evict current tenants to university graduates, while 2.5 feddan plots were
and rent the land to new tenants at the higher rental rates set allocated to landless farmers. Until the Investment Law of
in 1992 (Ibrahim and Ibrahim, 2003; Adriansen,2009). 2002, settlers neither held the titles to their lands nor were
About one million tenants lost their land, as a result, they allowed to sell or lease them out until full repayment
becoming sharecroppers instead. They came to be known as to the government had been achieved, usually over a 30-
El Mutadarerin (“The Affected”) which later land year period. The law also reversed a prohibition on the
reclamation initiatives would attempt to compensate (Sims early settlement of this payment (Bush, 2007).
2015). Today, an annual change of tenants on rented
agricultural land is not uncommon, which could have Other notable megaprojects in which the government
adverse effects on soil quality. engaged include the El-salam Canal and the Toshka project.
The El-salam Canal project sought to find a way to
C. Land Reclamation innovatively provide irrigation water to North Sinai. The
As Egypt suffered from a water shortage, its political project planned to divert 4.45 billion cubic meters of water
vision shifted from land adjacent to the river to desert from Lake Manzala from the Nile’s Damietta branch into
farmland. The presence of groundwater in the desert made North Sinai for the reclamation of 400,000 feddan and the
this a possibility. As a result, land in Egypt is described in settlement of 3 million people. It was announced by
two separate categories; Old Lands and New Lands, as President Sadat in 1976. The canal would mix freshwater
discussed earlier in the section on water and irrigation with Nile Delta drainage water and transport it to the Sinai
policy. via a siphon that passes under the Suez Canal (constructed
between 1995 and 1997). Land was offered for sale to
Land reclamation involves several stages, including investors by GARPAD starting in 1996. By 2002, the
land surveying, clearing and rclearing of soils, project was announced to be fully operational. As a
classification and classification of land, preparation and megaproject, El-salam Canal had the objectives of reducing
installation of wastewater and water infrastructure. waste. loss of Nile water into the Mediterranean and increasing
Irrigation and apply soil remedies as needed. The planting agricultural production by settling people into North Sinai,
phase is then followed by other soil treatments, product thus reducing overcrowding and unemployment in the Nile
selection and selection of axes, as well as fertilizers and valley (Sims, 2015; Tutwiler, 2010; Nile Water Lab; Hafez,
pesticides. On a policy-level, land reclamation involves 2005).
another sequence of phases, including planning, transition, The Toshka project, which began in 1997, had the
economic and social development, handing over, and objective of creating a “new delta” in the Western Desert. It
incorporation (Adriansen,2009). sought to reclaim and develop 540,000 feddan of new
Efforts to expand outwards from the Nile Delta and farmland that would be used to produce fruits and
Valley have been in place since the early 1900s. However, vegetables for export to Europe. The project would pump
the period beginning in the 1970s, following the completion
of the Aswan High Dam, is notable for a series of 4
government desert development megaprojects. Calculation based on data provided by MALR 2015 and
2016.

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water out of the Toshka Lakes and Lake Nasser, the 2000s, was active in its pursuit of a policy of selling desert
reservoir for the Aswan High Dam, via the Mubarak land to raise revenues and encourage private investment in
Pumping Station’s 24 pumps, which opened in 2005. The land reclamation. There has been and continues to be
water would be transported up the 50 km length of the significant efforts in support of agriculture in the New
Sheikh Zayed Canal, which opened in 2002, before Lands.
diverting it into various areas in the Western Desert
(Tutwiler, 2010). The project was to rely on private sector Critics of land reclamation projects question whether
investor financing. The Kingdom Agricultural the funds invested in these projects could have been better
Development Company (KADCO), Al-Dahra, and Sheikh spent on agricultural improvements in the Old Lands.
Zayed Al-Nahyan were all Arab Gulf stakeholders that Environmental issues caused by land reclamation projects
invested in the project along with the Egyptian Armed have also been a point of discussion. These problems
Forces Engineering Company. The development of the include short or long-term groundwater contamination,
Toshka project however was hindered by high levels of groundwater depletion, and water quality loss. Additional
water seepage, which could potentially cause groundwater questions circle around whether there is enough water in
contamination, as well as high levels of soil salinity due to Egypt to sustain the New Lands and any further expansion
evapotranspiration. The project, therefore, has yet to reach into the desert, as well as how agricultural development in
its goals. the desert may impact other regions.
Additional megaprojects include the moderately D. Trade Policy

successful South Tahrir Province project, which started in Despite Egypt's agricultural trade deficit, which has
1958, and the East Oweinat project, which now been growing since 1974, there is potential for increasing
successfully includes 115,000 feddan of cultivated land exports of high value crops in order to increase export
(Sims, 2015). Dr. Farouk El-baz’s Desert Development revenues (Tellioglu and Konandreas,2017b). The Egyptian
Corridor is a megaproject discussed across several decades, government is one of the major global importers of wheat.
although it so far has not been operationalized. More In general, Egypt is a net importer of cereals and pulses,
recently, planning is underway for the 1.5 Million Feddan with a widening gap between domestic production and
project, which was announced in 2015, and the New consumption since 2008. On the other hand, production
Capital project, which is now under construction. exceeds consumption for fruits and starchy roots. Indeed,
fresh fruits, e.g., oranges and grapes, and vegetables, e.g.,
Overall land reclamation projects have both potatoes and onions, have recently been the major sources
widespread support and face significant challenges. While of agriculture export revenues for Egypt. The value of
privatization and liberalization policies appear to have agricultural export revenues has been increasing over the
substantially improved the economic performance of past decade. Noticeably, the value of agricultural exports as
agriculture in the New Lands, the technical performance of a share of the value of agriculture imports shows an upward
agriculture in these lands would improve with continual trend, which implies an increase in export revenues relative
cultivation and a technically sound approach to long-term to the costs of imported agriculture products (Figure 1)
improvements (Tutwiler, 2010). Government, in the late (Kassim et al, 2018).
Fig 1:- Trends in value of Egypt’s agricultural exports and imports, 1990 to 2016
Source: Authors' calculations based on FAOSTAT 2017
The agricultural trade policy of the Egyptian maize of 81 percent and 92 percent, respectively (MALR,
government focuses on increasing production, and hence 2009). This policy has been criticized for not considering
self-sufficiency, of crops that have high domestic the economic value of scarce resources, such as land and
consumption. For instance, the Agricultural Development water. The opportunity cost of growing cereals is
Strategy 2030 sets self-sufficiency targets for wheat and

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considerable when compared to fruits and vegetables that XI. THE MAIN RECOMMENDATIONS THAT
have relatively high economic returns. SHOULD BE APPLIED IN THE FUTURE:
Land reclamation initiatives are gradually shifting  Continue to implementing food subsidy policy and
government policy towards promoting the cultivation of reforming the implemented price policy at the sectoral
exportable high value crops on reclaimed lands (Sims, and national levels.
2015). The fact that production on reclaimed land is  Multiplicity of entities formulating price policies and
characterized by relatively low productivity and high lack of coordination between them resulted in negative
production costs implies that only high value crops would impacts on farmers' income. In addition, Under-pricing
provide farmers with economic incentives to move to and of major cereal crops represented the main factor
produce on these lands. The government of Egypt also influencing quantities produced from such crops.
promotes exports through the establishment of trade zones,  Setting appropriate procurement prices for agricultural
especially around major ports such as Alexandria, Suez, crops at some point in time must be revisited
and Port Said. Moreover, in 2002 a new export promotion periodically based on: evolutions in the production costs
law was adopted, setting the stage for the establishment of of producing such crops, yield, profitability of
an Export Development Fund and the introduction of an competing crops, evolutions in international prices, and
export subsidy program under the supervision of the comparing domestic to world demand for such crops.
Ministry of Trade, Industry and SMEs (General Authority  Improve the state of food security depending on
for Investment and Free Zones 2002; N Gage Consulting domestic production through improving self-sufficiency
2015). Agricultural and agri-food products qualify for an rate in food commodities.
export subsidy in the range of one to ten percent, which is  Self-sufficiency rate in wheat, wheat flour and maize
financed by the Export Development Fund. The Fund can be raised by reducing losses along the chain, in
generates part of its budget from import fees. addition to devoting attention to some other factors.
 Should analyze actual production costs, its change over
The main challenges for increasing agricultural time, and compare them with other criteria when
exports are quality considerations, particularly pesticide determining farmgate prices.
damage and residues that disqualify Egyptian exports from  It is important to study the international prices of crops
meeting sanitary and phytosanitary requirements of trading periodically to use them as guides when setting the
partners, especially in the European Union. High humidity prices of export and import crops, which helps in
during storage and transportation also affect the quality of promoting exports and reducing imports.
agricultural products, especially in Upper Egypt due to lack  It is important to link price policy to non-price policies
of cold storage infrastructure (USAID, 2017). In addition, and procedures in order to realize successful
non-value adding intermediaries that connect farmers to implementation of the designed price policy.
exporters add a price margin in the range of 25 to 40  Establishing a high institution responsible for prices that
percent, decreasing the cost advantage of Egyptian exports comprises all bodies responsible for agricultural price
and reducing farmers revenues (Tellioglu and policies in Egypt, with the participation of
Konandreas,2017b). representatives of producers and consumers, which aims
to propose and follow up agricultural prices in the light
Processed agri-food exports have a high potential in of economic interdependencies between multiple
Egypt. The share of processed agri-food products in sectors and commodities in order to realize the
agricultural exports has increased from 46 percent in 2002 maximum possible of national economic and social
to 53 percent in 2014 (Tellioglu and Konandreas,2017b). goals.
However, this figure includes items that are primarily  Establishing an Agricultural Policy Information Center
processed without much value addition, such as frozen and that comprises an integrated field information unit and a
prepared fruits and vegetables. Excluding these semi- unit for technical aspects related to the implementation
processed items, Egypt's processed agri-food exports would agricultural policy.
represent only 31 percent of agri-food exports in 2014.  Must calculate the difference between both nominal and
effective protection coefficients and change in producer
The quality and safety of agri-food products is being surplus to use them as guides when formulating price
given increasing attention by the Egyptian government. In policies.
January 2017, the National Food Safety Authority (NFSA)  Linking agricultural price policies in the production side
was established with the aim of adhering to "the highest to that in the consumption side to achieve coordination
standards of food safety and hygiene" (Mansour, 2017). between the two.
The procedures and conditions set by NFSA apply to food XII. CONCLUSION
produced and processed for both the local and the export
markets. In addition, government controls the quality of This study sheds light on the agricultural policy in
agricultural imports and exports through regular inspections Egypt by evaluating the performance of government
by the Central Administration of Plant Quarantine (Central policies in the farm sector. The study included a theoretical
Administration of Plant Quarantine, 2015). framework for agricultural policy to understanding the
nature of such a plan and determining its relationship with
other economic systems. The government has regularly

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shifted from full control towards more considerable [8]. Abdel-Gawad, S., (2007). Actualizing the Right to
liberalization through increased involvement of private Water: An Egyptian Perspective for an Action Plan.
firms. Historic attention on self-sufficiency in main crops International Journal of Water Resources
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Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology

A Review of Agricultural Policy in Egypt

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Table 1: - Objectives and Instruments of Agricultural Policy

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Additional megaprojects include the moderately D. Trade Policy

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