Bicycle bread delivery, Cairo, Sept. 14, 2013. Khaled El-Fiqi/European Pressphoto Agency
July 05, 2015
The
ancient Egyptians developed their great civilization with a strong agriculture.
The Nile River and its fertile banks enabled Egyptians to be among the first in
human history to practice farming on a large scale. In our modern time,
however, Egypt faces crippling development challenges in feeding its people.
Its rapidly growing population is squeezing the country’s traditional farmland
along the Nile Valley and the Delta. For nearly a decade, Egypt has ranked as
the world’s leading importer of wheat, an indigenous crop for thousands of
years. Efforts to tackle food security are required on multiple fronts, such as
fostering rural development, promoting job-creating growth, providing a healthy
investment climate, and delivering sound health, education, and nutrition
programs.
Egypt, with a population of more than 85 million
people, is the largest Arab country. Despite having the fifth-biggest economy,
its per capita income is among the lowest in the region. Signs of development
challenges began to appear even before the January 25 Revolution and subsequent
turmoil dealt a severe blow to Egyptian tourism and other sectors. To make a
striking comparison, Egypt, India, and Brazil all enjoyed gross domestic
product (GDP) growth rates in the mid-1990s between 3 and 5 percent; an upward
trend ensued for India and Brazil through 2013, but in Egypt the overall trend
remained relatively flat over the entire period. India and Brazil saw upward
trends in exports and investments whereas Egypt’s export trend stagnated and
investment trend declined. Egypt, meanwhile, is more dependent on food imports:
since 2000, on average 17 percent of its import bill pays for food products,
compared to only around 3 percent for India and 4 percent for Brazil.
Egypt’s food security challenges include both the
availability of food at the national level and access to and utilization of
that food at the household level. From a macroeconomic perspective, this means
having the capacity to rely on domestic food production or having enough
foreign exchange earnings to finance whatever food imports the nation may
require. At the microeconomic level, households must be able either to grow their
own food or have the resources to buy food from the market.
Farming
Along the Nile
Egypt is largely self-sufficient in the production of
most agricultural products except for wheat, oil, and sugar. The country’s
agricultural yield for rice is among the highest in the world; throughout the
past six years, Egypt’s rice yields have consistently surpassed those of the
other leading producers, China, India, and Indonesia. This success is due to
new crop varieties that produce more rice with less water and land. Although
some production has been diverted to satisfy domestic demand, Egyptian rice
exports have risen steadily since 1980. Similarly, Egyptian exports of citrus
and potato have climbed over the past three decades. During the same period,
cotton exports have declined due to falling global demand for Egypt’s long and
extra-long staple cotton—shorter staple cotton is less expensive and, as a
result of technological advances, can now be used in fine textile production.
Cereals represent Egypt’s most serious shortfall.
Throughout the 1990s, Egypt imported a little more than one-third of its cereal
products including wheat. From 2009 to 2011, however, imports reached an annual
average of 44 percent. Since the mid-1990s, Egypt has been among the top three
wheat-importing countries; it has been the biggest importer since 2007/2008, an
upward trend that seems likely to continue in a country with one of the highest
per capita wheat consumption rates in the world. This reliance on wheat and
cereal imports to feed an ever-growing population makes Egypt especially
vulnerable to international price volatility and supply shocks.
In discussing food production,
it is also important to examine underlying factors affecting food availability.
Climate change is becoming one of Egypt’s most significant challenges. Rising
sea levels along the Mediterranean coastline are compacting soil areas and
increasing salinity in the Nile Delta, which comprises a large area of Egypt’s
high-value agricultural land. The Ministry of Environment expects climate
change to have a negative impact on the agriculture and fishing sectors;
studies indicate that wheat and corn production would be among the crops
affected, thereby increasing Egypt’s dependence on food imports and its
vulnerability to global price volatility. Changing Nile River flows related to
the construction of upstream dams such as the Grand Ethiopian Renaissance Dam
represent another potential threat to Egyptian agriculture. Studies indicate
that Egypt will be the country most adversely affected by the dam’s reservoir
filling time.
Another challenge is the declining interest in farming
among rural youth, who increasingly migrate to Cairo and other urban areas in
search of job opportunities. The young generation looks down on farming livelihoods
in favor of more technologically advanced professions. Furthermore, land
fragmentation is reducing income potential in agriculture and is thus a threat
to traditional farming.
Egypt’s bulging population, estimated to grow by an
average of two million people a year, is fast eroding the country’s ability to
rely on domestic production as the major source of its food. Population density
in the past half century has risen from under twenty-nine to more than
eighty-two people per square kilometer—an increase of around ten people per
square kilometer per decade. The figure takes on more worrisome dimensions when
factoring in that the population is concentrated along the Nile on less than 4
percent of Egypt’s total land area. Dwellings and infrastructure needed to
accommodate the expanding populace are encroaching on agricultural land,
placing constraints on the potential for increasing agricultural production.
If food self-sufficiency is thus not a realistic
prospect in
Egypt’s future, then the trade that is crucial for ensuring food availability
faces its own challenge. An overvalued Egyptian exchange rate has been an
obstacle to promoting the exports needed to generate foreign exchange in order
to finance food imports. Egypt’s competitiveness is in decline because the
goods it produces are overpriced. The Central Bank of Egypt protects Egyptian
currency through the use of reserves for the purposes of macro stability and
minimizing day-to-day volatility in the exchange rate. But Egypt’s foreign
currency demand problem has been compounded by the faltering of the tourism
sector, which accounts for almost a quarter of export earnings; government
statistics showed a 50 percent decline in tourist receipts from 2010 to 2013.
The Central Bank has been rationing foreign currency, but ultimately may wind
up having to depreciate the Egyptian pound to avoid depleting reserves. That in
turn would make food imports more expensive and trigger inflation.
Imperative
of Nutrition
Egypt began experiencing a growth
nutrition gap in 2003. The country succeeded in lowering the stunting rate from
a little under 35 percent in 1991 to just over 20 percent in 2003. But despite
Egypt’s high growth rates in subsequent years, child stunting began to rise
again—a surprising paradox, given that nations typically see health
improvements not reversals as they register economic growth. Some of the
increase in stunting may be due to recent economic crises and underinvestment
in nutrition-related infrastructure and public services. Another reason may be
a lack of nutritional awareness and also access to safe and stable sources of
nutritious food. An increase in child stunting figures reflects the serious
health and economic challenge of malnutrition. More than one-third of Egyptian
children are stunted. Egypt also registers one of the highest rates in the
world of what is known as the double burden of malnutrition: besides the
problem of stunted children, more than three-quarters of all women above the
age of 20 are overweight. One in five stunted children has a mother who is
overweight.
Childhood stunting is deemed one of the most
significant obstacles to human development. The adverse effects of stunting
include reduced cognitive development as well as an unhealthy physical
development, both of which will ultimately impact not only the individual’s
income and well-being but the nation’s economy as a whole. It has been
estimated that a 1 percent loss in adult height as a result of childhood
stunting translates into a 1.4 percent reduction in economic productivity;
income earnings of these individuals tend to be a fifth of those of their
healthier counterparts.
There appears to be a significant correlation between
income poverty and inadequate access to food in Egypt. One way the government has
addressed poverty and its manifestations is through food subsidies. Together,
food and fuel subsidies make up close to 10 percent of GDP, or 30 percent of
the national budget. The subsidies are a significant portion of the
government’s massive social safety net to protect citizens against food price
volatility. Subsidies have provided relief to millions of Egyptians, especially
after the multiple crises affecting food security of the past ten years; for
example, avian flu led to the extermination of thousands of poultry,
restricting the access of poor households to an affordable and consistent
source of protein. Subsidized food represents close to a fifth of the poor’s
spending on food. More than 70 percent of Egyptian households use or rely on
food subsidies for their dietary intake.
A longstanding problem with food subsidies, however,
is that they have promoted the consumption of an unbalanced diet overly rich in
calorie-dense and nutrition-poor foods. Subsidies have provided beneficiaries
with allotted quantities of food choices including bread, cooking oil, sugar,
and rice that may have exacerbated malnutrition. Weak targeting of food
subsidies is another problem. Studies have estimated that a significant number
of those covered by the ration card system are deemed non-poor, while nearly 20
percent of the vulnerable are not covered.
Most Egyptians see the bread subsidy as a social
entitlement, which makes removing it a politically sensitive issue. As part of
a wider food subsidy reform, President Anwar Sadat eliminated the bread subsidy
in 1977; the move triggered riots, and was quickly reversed. Since taking
office in 2014, President Abdel Fattah El-Sisi has initiated new reforms to the
food subsidy system especially covering the baladi bread favored by the
Egyptian masses. Though still priced at five piasters a loaf, it is now a part
of a ration card system under which beneficiaries are entitled to up to 150
loaves a month. The new system eliminates quantity-based quotas for subsidized
food items. Instead, beneficiaries receive a monthly cash allotment on a smart
card, which can be redeemed for any of the subsidized commodities in any of the
available packaged units. The change may have a positive effect on dietary
habits, as it reduces—but does not fully remove—the considerable economic
incentives that promoted the consumption of an unbalanced diet.
A
Comprehensive Policy
Egypt’s current food security
challenges can be traced back to policies that tried to improve rural poverty
and inequality and to fuel growth and development through industrialization.
Instead, they created a growing food import bill, poor public service delivery,
inequality, and more poverty. In the 1950s, President Gamal Abdel Nasser’s
attempt to abolish feudalism and tackle inequality led to cronyism throughout
the agricultural sector. His agricultural price controls and urban bias in
investment further crippled incentives for small farmers. In the Sadat era, the
migration of workers to oil-boom Gulf countries disrupted the agricultural and
other labor markets; greater urbanization increased food subsidies and food
imports; and land fragmentation (due to inheritance customs) and worsening
drainage sent agricultural sector growth rates into decline. President Hosni
Mubarak eased or even removed price and quantity controls from strategic crops,
and opened agriculture to the private sector; yet the growing population, urban
bias, rampant cronyism, and worsening public service delivery continued to
threaten Egypt’s food security.
Tackling Egypt’s food security challenges will require
a commitment at the highest level—no less than a presidential initiative. The
key drivers of food insecurity must be identified and addressed in their
entirety. The national development strategy needs to be an integrative exercise
that addresses food security at the macro and micro levels as a theme across
all development sectors, bilateral initiatives, and programs. The strategy must
include upgrading public health services, investing in water and sanitation, and
engaging in large-scale nutritional interventions, among others.
Egypt requires better
information for better lives. Economic and development strategy research in the
Arab region has a history of lagging behind other regions. The Middle East and
North Africa region ranks poorly in the number of research publications between
1985 and 2010. Key goals should include improving data quality, availability,
analysis, and presentation across Egypt, and identifying knowledge gaps and
synergies across all the global, regional, and national development partners.
In Egypt, there are several initiatives that indicate a changing perspective on
data transparency and accessibility. The Central Agency for Public Mobilization
and Statistics, supported by the Economic Research Forum, is enabling online
availability of Egypt’s labor market surveys and portions of its Household
Income, Expenditure and Consumption Surveys. Recently, the Arab Spatial
Knowledge platform, a regional information tool that attempts to provide this missing
data and information, also includes the first-ever food and nutrition security
blog on the Arab World. A handful of ministries keep the public informed either
through updated releases of policy changes or through frequent statistical and
economic reports on development challenges and indicators of development. All
are positive achievements that signal a movement toward open access to data.
Prospects for deriving higher productivity from
Egypt’s traditional farmland along the Nile are limited due to the problems of
rising soil salinity and increasing urban encroachment. The government has
plans to reclaim one million acres of land to increase agricultural area and
thus volume, which will require using non-renewable groundwater for 90 percent
of the irrigation needs. But there are questions about the sustainability of
drawing on non-renewable water sources. Egypt’s agricultural sector relies
almost completely on irrigation from the Nile—rainfed agriculture in the county
is nonexistent. The Nile accounts for more than 97 percent of both Nile and
groundwater sources together, of which 85 percent is used in agriculture.
If the government develops new agricultural land, it
will need to take certain considerations into account. Given that Egypt has a
history of land reclamation, it is important to carefully study its experience
and apply the lessons learned in the process of planning new projects. To make
the most efficient use of scarce water resources, the focus should be on
producing high-value, high-quality crops and livestock (such as poultry and
large animals for dairy) rather than staple crops like wheat and corn. The
government should also consider using reclaimed land for expanding Egypt’s
services sector and establishing new industrial communities, which would
contribute to economic growth and employment opportunities.
There may also be alternatives to relying solely on
groundwater depletion for agriculture in reclaimed lands, such as increased
water harvesting from rain occurrences and flashfloods, desalination, and
improved treatment of wastewater for agricultural and industrial use. Currently
around 50 percent of wastewater is treated, and less than 25 percent of that is
reused in agriculture.
The right incentives and the
management of those incentives will be important factors in the success of new land development. There needs to be
a significant investment in a reliable road
and transportation system that will connect the reclaimed areas with the
nearest cities, towns and villages, as well as functional markets. If the
government wants farmers to settle on the new lands, it must carefully study
how to create well-integrated and self-sufficient new communities—research is
needed on the infrastructure to entice these settlers to reside there with their
families, and on the upstream and downstream economic activities best suited to complement the new agricultural production.
Preferably infrastructure including road networks
and public services like water and electricity should be in place before the settlers
arrive. Planners must find meaningful
incentives for private investors and effective public-private partnerships, or PPPs. They must also provide
land ownership opportunities that will entice Egyptians to pass up a potential
city job for work in remote marginal areas. The scheme must be devoid of political pressures and corruption that could
contribute to failure.
Rural development must become a broad national
priority, going beyond agricultural development to increasing and expanding
rural livelihoods in general. Employment opportunities are scarce in rural
areas, driving young graduates to migrate to metropolitan cities and other
urban areas in search of employment. More often than not they wind up in the
informal sector working in menial jobs not commensurate with their educational
background. The random migration, which began when President Nasser launched
major industrialization initiatives in the 1950s, places unbearable economic
and social stresses on urban areas that are unable to absorb the expanding
number of arrivals.
The private sector, both Egyptian and foreign, can be
an important partner in rural development and in the promotion of inclusive
growth. However, this will require rules and regulations that are not stifling
for investors, and arrangements that reconcile the private sector’s goal of
maximizing profits with the government’s goal of maximizing social welfare.
Economic structural reforms are needed to enhance competitiveness for exports
and attract foreign direct investment—building a more conducive business
environment, promoting the transparency of rules, and ensuring fair and speedy
settlement of disputes.
The government must address various issues related to
monetary policy. It will be necessary to allow a flexible exchange rate to
fight the loss of competitiveness and rising speculative currency demand all
the while managing domestic inflationary pressures. The government’s strategy
must include more long-term solutions for increasing and diversifying Egypt’s
sources of foreign currency; the new project to expand the Suez Canal is a step
in the right direction.
Improvements along the value chain across all
activities are necessary to improve producer and consumer access to domestic
and international markets. This will mean more diverse and higher quality
products for consumers and larger markets for producers. To drive greater
exports, especially of perishable goods, the government must ensure reliable
road transport networks, proper storage facilities, and efficient export clearance
procedures at the ports.
At the household level, a significant public awareness
campaign must be launched to promote a more nutritious Egyptian diet. The fact
that the stunting prevalence also includes some children in higher income
brackets points to the dire need for nutritional education. Programs targeting
mothers will be crucial in preventing nutrition deficiencies during the
important first thousand days of a child’s physical development. Focusing on
better public service delivery can go a long way toward reversing food
insecurity at the household and individual levels. More spending on improved
water and wastewater infrastructure is necessary in order to reduce chronic
occurrences of diseases such as diarrhea that exacerbate micro nutrient deficiency
in children.
Perrihan
Al-Riffai is
a senior research analyst in the development strategy and governance division
at the International Food Policy Research Institute. She served as a consultant
for the United Nations Development Programme in Damascus during 2008-2009. She
is co-author of How to Build Resilience to Conflict: The Role of Food Security,
and other publications.