CIHEAM - IAMM EU-MED AGPOL, European research Program CHARACTERIZATION OF AGRICULTURAL AND AGRO-INDUSTRIAL SECTORS IN EGYPT BY DR. GAMAL SIAM UC-CAES

CONTENTS Major determinants Evolution of agricultural performance Evolution of agro-industrial performance Agricultural and agro-industrial policies International trade policies; with special reference to fresh and processed fruits, vegetables

I. Major Determinants of Agricultural and Agro-industrial Production

1. General Indicators, 2003 82 GDP Billion$ 12 Agriculture (Billion$) 3.3 Agric. land (000 ha) 6.0 Total cropped area 57.0 Total water (BCM) 70.0 Total population (m) 35.0 Rural population (m) 30. Agricultural population (m) 8.0 Agric. labour force (m worker) 3.5 Number of farmers (m) (m,ha)

1. General Indicators, 2003(contd.) 1170 GDP per capita ($) 16% Agriculture to GDP (Percentage) 33% Ag. labour force to total (Percentage) 0.05 Per capita ag. Land (ha) 812 Per capita water (CM)

2. Infrastructure Transportation facilities Generally, shortage of adequate transportation and cooling facilities is an obstacle to horticultural exports. Land Transport -- Egyptian trucking rates are 50 percent higher in competitor countries. Air transport Lack of air cargo space for perishable products. Air cargo is more expensive. Cold store facility exists only in Cairo Airport. Sea transport Port facilities for refrigerated containers are poor. Food consignments must be inspected by four agencies.

3.Agricultural Marketing Systems The AMS comprises: Collection, transportation, packaging, transformation, storage and wholesale and retail market systems that are reinforced by regulatory institutions.

II. Evolution of Agricultural Sector Performance

1. Cropping Pattern in the Egyptian Agriculture in Selected Years 2004 1995 1990 Cropping pattern 6081 5804 5118 Total cropped area 000 ha Percentages (%) 45.6 47.0 44.6 Cereals total 18.1 18.2 16.0 Wheat 10.4 10.1 8.5 Rice 13.6 12.7 16.2 Maize 20.1 19.2 22.0 Green fodder 10.8 9.4 9.2 Vegetables total 3.1 2.6 3.0 Tomatoes 1.4 2.1 1.6 Potatoes 7.3 6.1 5.7 Fruit, total 2.4 2.2 2.5 Citrus 0.3 0.2 Bananas 0.5 0.4 Dates 1.1 0.8 0.7 Grapes Olives 4.4 5.1 8.2 Cotton 7.4 8.0 10.3 Oil crops

2. Area, Yield and Production Growth Rates (%) for Selected Crops in Egypt (1990-2004) 3.1 1.7 1.4 Cereals, total 3.8 1.6 2.1 Wheat 4.7 1.9 2.7 Rice 1.5 0.0 Maize 3.5 0.6 2.8 Vegetables tot. 3.4 Tomatoes -4.8 5.8 Onions 1.3 0.8 0.5 Potatoes 0.4 3.0 Fruit, total 1.0 Citrus 4.6 0.7 3.9 Grapes 5.5 Bananas 15.6 2.4 13.0 Olives

3. Dominant F&V Crops Fruits and Vegetable Production and Marketing Main fruit include citrus, grapes, strawberries, dates, mangoes, guavas, apples and olives. Vegetables Tomatoes, potatoes, cucumbers, onions lettuce, watermelons, green beans, and peppers.

4. Marketing margins of selected F&V crops, 2003 Share in Retail Price retailer (%) wholesaler (%) Producer Retail price LE/ton Crop 16.7 20.0 63.0 1500 Garlic,Total 43.5 10.1 46.4 1023 Tomatoes 40.8 10.7 48.5 1194 Potatoes 40.1 19.2 40.7 808 Onions 42.3 18.9 38.8 2058 Green beans 27.0 23.0 50.0 1202 Oranges 22.3 28.2 49.5 2045 Grapes

5.The grape value- chain Producers ( 1,100,000 tonnes ) 50% Packing house Local traders Governorate markets Official wholesale Cairo, Alex Processing Wholesalers Retailers Domestic consumer Pre - cooling Over seas markets 6,000 tones . 55% Un official shalayesh Retailers, super markets, hotels … Cold storage 5.The grape value- chain

6.The green bean value-chain Producers (85,000 tonnes) Local traders Governorates wholesale markets Processing Main official wholesale markets Cairo,Alex (35%) Unofficial wholesale markets(25%) exporters Retailers,supermarkets, tourist villages Overseas markets 6850 tonnes (6.6%) Domestic consumers 6.The green bean value-chain

7.The cantaloupe value- chain 40 % 60 Growers 230 , 00 tonnes Local traders Governorates wholesale markets Exporters Retailers supermarkets Tourist villages Unofficial Overseas markets 3 500 tones 1 .5 Domestic consumers Official Main whole esale ( Cairo Alex… ) 7.The cantaloupe value- chain

8-Agricultural Exports (Fresh) Commodity Composition, 2003 Crops US$ % Total Ag. Export 938152 100 Cotton 365865 39 Rice 149926 15.98 Oranges 39185 4.18 Potatoes 43972 4.69 Grapes 2930 0.31 Onion 3301 3.52 Garlic 335 0.36 Artichokes 179 0.19 Strawberries 1469 0.16 Others 296737 31.63

9. Agricultural Exports Growth rates, 1990-2003 Crops % Total Ag. Exports 6.24 Cotton 5.34 Rice 17.62 Oranges 1.72- Potatoes 5.32 Grapes 33.88 Onions 7.53 Garlic 3.04 Artichokes 2.97 Strawberries 21.81 Others 6.45

Products Volume exports (Tones) 10. Export Destination of Selected F&V Crops (2001) Destinations Products Volume exports (Tones) Italy (27%), Germany (26%), Lebanon (20%), UK (16%) 185150 Potatoes KSA (61%), Lebanon (14%) 166360 Onions KSA (79%) 4510 Tomatoes KSA (69%) 257860 Oranges, fresh

III. Evolution of Agro-industrial sector Performance

1.Value Added for Food Processing Industry The total value added of the food processing industry is US$ 6.1 billion in 2000, representing 27 percent of the aggregate value added of agriculture and food processing industry.

2.Traditional Markets Versus Modern Supermarkets Many of Egypt’s food exports with higher value- added have been more targeted toward meeting regional tastes, rather than those of EU markets. The supermarkets in Egypt have targeted not the middle and working classes but upper income consumers. The quality of Egyptian produce is markedly inferior compared to the requirements in North America and Western Europe.

Frozen vegetables & fruits 40.8 Dehydrated vegetables 11.1 3.Processed Food Exports, 2003 Million US$ Product 15.7 Frozen vegetables & fruits 40.8 Dehydrated vegetables 11.1 F & V juices & concentrates 10.3 Canned vegetables 77.9 Total

IV. Agricultural And Agro-industrial Policies

1. Brief History of Major Developments In 1986, Egypt started the implementation of the Economic Perform and Structural Adjustment Program (ERSAP) The following reform measures have been taken: Eliminating the subsidies on farm inputs; fertilizers, animal feed, pesticides and seeds. Liberalization of input prices. Eliminating the government monopoly of main farm inputs and strategic crops. Eliminating subsidy on interest rate for farm credit. Unifying the exchange rate regime and recently (in 2003) floating the Egyptian pound

2. Marketing and Price Policies During the reform period, guaranteed floor prices were offered for wheat and rice as well as cotton. But recently, guaranteed prices for rice and cotton have been cancelled. The GOE still maintains administrative price for voluntary procurement (for a quantity of 2 million ton annually). Marketing of sugar cane and sugar beet is still controlled by the government.

3. Natural Resources Policies Egyptian agriculture relies on the Nile water which is fixed at 55.5 BCM annually. Water policy aims to increase the water resources by about 10.7 BCM through increasing water reuse, expanding the use of underground water, and treatment and reuse of wastewater. Land resources base is planned to increase from 3,3 million hectares to 4,7 million hectares by 2017. National mega projects including Toshka, Sinai Development and Alowaynat East Projects are part of this land reclamation program.

V. International Trade Policies with special attention to fresh and processed Fruits and Vegetables

1. Multilateral and Bilateral Engagements Egypt is a party to several important trade agreements: WTO, 1995 Egypt-EU Agreement, 2004 Greater Arab Free Trade Agreement (GAFTA), 1998 -Zero tariff for agricultural products as of Jan 2005 COMESA, 1997

۩Egypt´s Commitments in to the WTO Egypt is among Net Food Importing Developing Countries (NFIDC) Applied tariffs on Egypt’s imports of fresh vegetables are fixed at 20 percent. Applied tariffs on Egypt’s imports of processed vegetables are 30 percent, 10 percent lower than the bound tariffs in Egypt schedules. Applied tariffs on Egypt’s imports of fruit products range 30-40 percent. High applied tariff rates on fresh and processed fruits and vegetables induce producers to market their producer in local markets thus discourage them to export.

√ EU-Egypt Partnership Agreement (EUEPA) Expanded windows for some products. Enlarged zero duty quotas for other products. EUEPA implies significant improvement in market access for Egypt’s exports of horticultural products, but it works as a restriction on Egypt’s promising products in the future.

√ SPS/TBT in the WTO with Respect to Fruit and Vegetables of Egyptian products face strict import regime of SPS/TBT in the EU markets. Examples include: Potatoes exports with brown rot standards. Citrus exports with white fly infection.

2. New Potentials for Egypt´s F&V Exports Expanding production of early mature varieties to extend market window to the EU. The mega projects in Upper Egypt i.e. Toshka and Owynat East could contribute significantly in that direction. EUEPA extended the export window of specific horticultural crops. For example, it extended the window for grapes 15 days (the new window is 1/2 – 15/7 while the old is 1/2 – 30/6 ). Opportunities for Egypt to expand its exports of processed fruits and vegetables are reasonably attractive in the Near East countries and the EU as well.

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