IFPRI Egypt Seminar : "Improving Nutrition in Egypt: What is the Role of Agriculture and

How do we Document Impact?"

ROLE OF AGRICULTURE IN FOOD AND NUTRITION SECURITY IN EGYPT

Gamal Siam 16, November 2016

Main points

Contribution of agriculture to the Egyptian economy Population/agricultural resources in Egypt Food and nutrition insecurity as a driver for social

vulnerability Constraints of agricultural and food policy Egypt’s food markets: bottlenecks, regulations, and

food safety Towards right agricultural and food policy

Contribution of agriculture to the Egyptian economy

• Contributes to GDP : 13 %• Shares in national labor force : 27%• Ag. Exports as % of national exports : 15%• Produces 60 % of Egypt food needs in average: 55% of wheat, 65% of maize, 70% of sugar, 10% of ed. oil, 80% of meat• Generates income for 40% of population

Population/agricultural resources in Egypt

Total population (mn,2015) 92 Agricultural land (feddan) 8.5 Agricultural population (mn) 36 (40% of Eg.pop)Nile water (bn cub.m) 55.5

16( bn cub.m )Other water resourcesNo. of farmers (mn) 5

Average farm size (feddan) 1.7Holdings less than 3 feddans 80% of total no. of holdingsWomen-headed farm households 20% of total no. of holdingsPer capita

Land (fed.) 0.09 Under WPL)) Water (cub.m/year ) 603

Evolution of per capita land and water

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1000

2000

3000

4000

5000

6000

1897

1907191

7192

7193

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1960 1970198

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2000

2025

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Food and nutrition insecurity as a driver for social

vulnerability

Social vulnerability is derived from a large number of physical and socio-economic risks among which is food and nutrition insecurity :

Food and nutrition insecurity Poverty Climate change Vulnerability to natural disasters, Water scarcity, Conflict, Policy and political instability risks. Interactions between drivers result in a multiplier effect on

social vulnerability.

Food and nutrition insecurity as a driver for social vulnerability )cont’d(

Affordability to food and poverty are affected by price policies.

Poverty, hunger and water stress are intrinsically linked. Low income households spend the largest share of their

income on food, which makes them more vulnerable to food price instability

Drivers of Social Vulnerability

Food Insecurity

Water Insecurity

Climate Change & Vulnerability

to natural disasters

Poverty

Conflict

Inequalities

Politics & Policies

Source: Gamal Siam, 2016

Agricultural and food policy

Agriculture and Food sector has been marginalized in terms of :

public investments R & D and Institutions.

• Non-targeted subsidy for consumers proved to be ineffective because of the mismanagement and significant portion of it goes to non-needy people .

Reasons behind weak performance of agricultural sector

Agricultural investment• Share of agriculture in public expenditure : 2%• Weak investment climate • Weak rural infrastructure • New lands Problems of desert land Do not contribute much to food security Produce much of F& V of which 40 % is lost Significant part of land and ground water diverted away from agricultural production

Reasons behind weak performance of agricultural sector (Cont’d)

Lack of technology Share of agricultural R&D in AGDP nearly nil Budget allocated to Agricultural Research Center L.E 3 million Budget allocated to Desert Research Center L.E 4 million Budget allocated to Water Research Center L.E 5 million Total R&D budget: L.E 12 million Lack of agricultural extension services

Reasons behind weak performance of agricultural sector (Cont’d)

Lack of agricultural institutions Farmers organizations Laws and legislations Markets failure Output markets Input markets Ag policies Wheat price policy Rice policy

Egypt’s food markets: bottlenecks, regulations, and food safety

• In Egypt , the food production side is dominated by small-scale producers with limited capacity of production.

• In the absence of market regulations and lack of information and weak producer institutions, they are usually exploited by big traders.

• There are many of bottlenecks in the supply chains of most of food commodities particularly with the lack of marketing services and post-harvest processing /transport/warehousing/distribution infrastructure, food labeling, food safety measures.

Egypt’s food markets: bottlenecks, regulations, and food safety )Cont’d(

• In the supply chain of food commodities, farmers obtain a little share in the consumer price because of market imperfections, where traders and distributers gain the largest share.

• Traders do have stronger organizations compared to both producers and consumers.

• Producers are many and the majority are small and have very weak organizations.

Egypt’s food markets: bottlenecks, regulations, and food safety )Cont’d(

• Furthermore, the role of governments is weak concerning the food safety and hygiene.

• These circumstances result in market failure with high transaction costs, low quality and less diversified goods available, high consumer prices, lack of access and nutritional quality.

• However, big supermarkets and retail stores are now spreading widely in the urban centers and big cities. They offer high quality diversified food affordable to high income consumers.

Agricultural POLICY CONSTRAINTS

Lack of ag.investment

Weak Ag. Institutional

settings

Lack of expenditure on

R&Dand Advisory

Services• Irrigation system

•Infrastructure •Public Services

Climate

change Unutilized and Underutilized Resources

Agricultural and food production: low performance

Low Yields (Yield Gap)

External Shocks and global changes: )Global Market Fluctuations , oil & Energy prices , Bio fuel Production , Global Competition

pressure , Global Crises , Political Manipulation , Multi-national Corporation (

Technological gapShortage of InputsLow –quality InputsInefficient ag.practicesLack of international technology transfer

Source: Gamal Siam, 2016

.

Production curve

Economic

80% of farmers

Non-economic

Factor production

Production

Fragmented agriculture and efficiency

The right food policy What are the elements of the right agricultural and food policy ? Targets : Improve food production Enhance farm household income Improve affordability Improve nutrition Elements/instruments : Institutions Innovation (R&D) Advisory services Investment climate Contracting agriculture Consolidation of landholdings

1. Institutional Reform Institutions: legislations, organizations and policies Reforming and development of the institutional and legislative

structure governing agricultural sector Appropriate agricultural policies Agricultural laws Government organizations and public services Farmers organizations : cooperatives, associations and unions Civil society organizations related to agriculture

Decentralization and partnership Collective action

2.Innovation: capacity for R&D and technological upgrading

• Improved extension services plays a significant role in raising yields through adoption of new technologies and good agricultural practices

• Sharp increase in expenditure allocated for R&D must be at the top of the policy agenda.

• Facilitate international transfers of agricultural technology

3.Extension services• Improved extension services play significant role

in raising yields through adoption of new technologies and good agricultural practices

• Extension services are out of reach for many small farmers who constitute more than 80% in Egypt

• Small farmers can not afford the cost of extension services ,while large farmers can

4. Agricultural Investment and Finance

• The share of agriculture in the public investment should be increased to 10% from (3%)

• Farmers access to finance should be improved to facilitate use of quality inputs at the right time

• Support the creation of insurance schemes and improved instruments to manage risk

5. Promote contracting agriculture

• Contracting agriculture is an effective instrument for overcoming land fragmentation problem and commercializing agriculture

• Contracting agriculture could be promoted through farmer training or education

• Judicial system should be strengthened

6. Consolidation of land holdings

• Alternative mitigation solutions encouraging collective farming, through: 1.agricultural cooperatives; 2. agri- business integration and contract farming

farmer groups agree to aggregate their adjacent land parcels for a given season and plant the same crop benefiting from linkages to private sector enterprises for value addition.

Future water deficit and implications for the food situation

• Year Pop1 WNAU2 WA3 w.p.c.4

Ag.A5

2015 92 18.4 37.1 603 8.5 2030 118 23.6 31.9 470 7.3 2050 156 31.2 24.3 355 5.3 2100 300 60.0 (4.5) 185 (1.0) Food situation will be worsened with increasing population pressure

on increasing water scarcity Climate change and Ethiopian Dam will exacerbate food gap in the

future1. Pop.: Population2. WNAU: Water for non-agricultural use3. WA: Water available for agriculture4. w.p.c: Water per capita5. Ag. A: Agricultural (Cultivated) area

Thank you