Egypt Independent

Agriculture could be key to reviving Egypt’s economy, experts say



For decades Egypt’s economy was guided by political forces who wanted to enjoy the fruits of western capitalist democracy without sowing the seeds for the local economy to flourish on its own. Those forces looked to remittances, tourism or the Suez Canal for revenue, but ignored agriculture, an important part of Egypt's GDP with its roots firmly planted in the country's own backyard.

Egypt’s historically powerful agriculture sector has been in serious decline over the past 30 years, but still comprised 13.7 percent of GDP in 2010, according to statistics from the United Nations Food and Agricultural Organization (FAO), despite what many critics say is a lack of attention.

“A country’s agricultural sector is a vital characteristic of its strength as it symbolizes a nation’s ability to sustain life,” said Shaban Salem, an economist from Egypt’s Agricultural Economics Research Institute (AERI).

“It symbolizes independence through self-sustainability and trading strength, as well as opening the doors to an employment sector that makes use of large populations, with the effect of wealth trickling up, rather than trickling down,” Salem said.

During the 1980s in Egypt, however, Agriculture Minister Youssef Wali began aggressively putting into place the free-market policies initiated by former President Anwar Sadat.

“Though these policies were intended to liberalize the economy,” adds Salem. “ [But] they quickly widened the gaps between the rich and the poor, and import and local goods.”

This culminated in Law 96/1992, which granted landowners, whose land was seized and redistributed by former President Gamal Abdel Nasser, the incontestable right to reclaim it despite the fact that millions of ordinary Egyptians farmers had invested in and built their lives on the land since 1952.

Often the reclamation happened by brute force, resulting in hundreds of rural deaths and thousands of injuries annually. Millions of cases of dispossession occurred in favor of non-agricultural investments on arable land, according to Egypt's Land Center for Human Rights (LCHR). The most recent case of last dispossession occurred last May, when approximately 3000 families living on 40,000 feddans (168 square kilometers) in Madinat al-Sadat were displaced for the purpose of non-agricultural, private investment.

These policies have contributed to Egypt’s steadily declining agricultural sector

Additionally, large food subsidies and unfair trading systems has forced many farmers to re-prioritize their output in less efficient ways, which, according to Adel Beshai, a professor of agricultural economics at The American University in Cairo, is a major factor of smaller harvests. Once a key Egyptian crop, the output of cotton dropped over 75 percent from 1972 to 2009, according to the FAO Production Yearbook.

Spokespersons for the Agriculture and Land Reclamation says that agriculture remains a low priority because “only 3 percent of Egypt’s approximately 1,000,000 square meters of land is arable, therefore agriculture is naturally a declining industry in Egypt.”

Agriculture experts, however, say that percentage has hardly changed since 1972. Moreover, large arable parts of the Delta remain uncultivated while other parts do not get used to maximum capacity due to the lack of farmers’ education and lack of governmental assistance. According to FAO statistics, the land that is arable is extremely rich and could potentially, if properly cultivated, allow for two to three harvests per year of high quality crops, rather than the one to two it does now.

“Egypt has long been the victim of shortsighted, self-serving politics, dating all the way back to even Nasser,” adds Beshai, who believes that Egypt’s subsequent leaders have left the economy impotent by placing too much emphasis on foreign investment.

Rather, the solution is to put money into the hands of poor Egyptians, says Ray Bush, professor of African studies and developmental politics at the University of Leeds.“What successive governments fail to understand is that the country’s biggest assets are its people,” he says. “What you need to do is translate the large population into effective demand for goods and services, which means that if those people have money to buy goods and services, you boost the economy.” Since 40 percent of the Egyptian work force labor in agricultural, according to World Bank statistics, providing them with better wages would spur economic growth.

But, according to agricultural advocates, in Egypt’s cities, political dependence has partly been gained, and maintained, through the implementation of food subsidies. These subsidies create dependencies on patterns of consumption, due to, according to the World Bank, millions of Egyptians living below or just above the poverty line, that are easily controlled by those in power – but they are not without economic repercussions.

“Food subsidies are incredibly destructive for two reasons,” says Mahmoud Medany, chief researcher at Egypt’s Agricultural Research Center (ARC). “Firstly, it tunnels people’s patterns of consumption, allowing for mass state dependence and control. But secondly, farmers pay for these subsidies with their livelihood, which divides the country up into beneficiaries and benefactors, and is an extremely tough situation to reconcile when seeking democracy.”

Another blow to Egypt’s agricultural sector is the undermining of agricultural products' value. Because Egypt is a major producer of cotton, wheat, fruit, vegetables and rice, raw materials are exported at low costs. Finished goods, like clothes and expensive cereals, are in turn imported – again at the cost of the agricultural sector.

“The old regime was shortsighted in that it would carelessly import ‘added value,’” said Medany. “Rather than develop an agricultural industry here, we export the raw materials, and import the goods because it’s easier and requires no inertial change from policymakers. But ultimately the Egyptian people pay for the variation with their economy and their livelihood.”

Developing countries often encourage importation of added value goods, adds Medany.

In the wake of Egypt’s recent uprising, advocates of the agriculture sector are more optimistic about the potential for constitutional reforms that could potentially pave the way for a dynamic restructuring of the agricultural economy.

“Egypt has to once and for all rid itself of short-term solutions to its economic problems,” said Salem of AERI. “We need the policymakers to be made aware of the economic losses Egypt suffers yearly due to a neglected agriculture sector, and laws need to be put in place that will allow for the economy to create self-sustainable value.”

“Small changes in policy and developmental planning can lead to big results within the economy over time,” Salem said.

Agricultural advocates say that after, most importantly, reinstating the political rights of the farmers through constitutional reform, two issues will need to be reevaluated for Egypt’s agriculture sector to persevere self-sustainably.

Firstly, patterns of consumption will need to be readjusted so that reliance on subsidies and imports is relieved over time, which should create a more dynamic marketplace as versatility creeps into local demand. Second, patterns of production will need to be regulated and encouraged so that the agriculture sector can operate at maximum capacity in regards to both resources and produce, leading to improved food security as well as platforms for high value export.

“Additionally, farmers need to be encouraged and reminded that they are an essential part of society, not outsiders, which will then address the economic issues at a deeper level,” said Salem.

Embracing the agriculture sector would also address another troubling issue facing the country: unemployment, which official government statistics put at 11.9 percent, but many economists believe is higher. With government encouragement, the agriculture sector could provide a viable solution through various sustainable employment opportunities, such as farming, marketing, transport and storage.

“Improving the agriculture sector is especially important at the moment because Egypt needs to monitor its international dependencies, as that has a tendency to get out of control during times like these,” said Adel Beshai, the AUC professor.

“By investing in the agriculture sector, we can, during our transition to democracy, begin to increase the livelihood of lower socio-economic classes and increase foreign demand for Egyptian products, which is not only empowering, but also symbolizes economic, and political, seeds of change.”