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Impacts of the Economic Reform Program on the Performance of the Egyptian Agricultural Sector

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  • Ibrahim Soliman
  • Jacinto F. Fabiosa
  • Mohamed Gaber Amer
  • Siham Kandil

Abstract

From 1986 to 2007 Egypt's agricultural policy transitioned from a tightly controlled to a more liberalized regime. This study examines the impact of this change on the performance of the wheat (imported grain) and rice (exported grain) sectors. In terms of profitability, we found that the cost of production increased substantially in both grains, driven primarily by the rise in land rent and labor wage. But the wheat and rice sectors' profitability did not suffer significantly, as advances in new seed technologies and adoption of better farm practices including farm mechanization increased yield and compensated for the higher cost. Considering market efficiency, we found that over the study period the farmer's share of the consumer's expenditure dropped from 51% to 37% in the case of wheat, while it increased from 24% to 26% in the case of rice. The reverse happened for wholesale and retail margin share, where it increased for wheat and decreased for rice. It is likely that the discipline from foreign suppliers of imported wheat and foreign market opportunities for exported rice may explain the difference in the changes of the distribution of consumer expenditure. Finally, we found that area response elasticity decreased over time from 0.58 to 0.12 for rice and 0.60 to 0.38 for wheat. The lack of response in rice area despite rising prices is attributed to the land limit strictly imposed by the Government of Egypt because of water supply constraint considerations. On the other hand, the lack of response in wheat area despite rising wheat prices may be attributed to the rising competitiveness of Egyptian clover, which is a main feed ingredient for the growing livestock sector.

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Bibliographic Info

Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 10-wp509.

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Date of creation: Jul 2010
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Handle: RePEc:ias:cpaper:10-wp509

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Keywords: agricultural liberalization; area response elasticity; market efficiency; profitability.;

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  1. Soliman, Ibrahim & Eid, Nafissa, 1995. "Impacts Of Egyptian Socio-Economic Environment On Dietary Pattern And Adequacy," Reprints 107278, Zagazig University, Department of Agricultural Economics.
  2. Soliman, Ibrahim & Ewaida, Osama, 1996. "Impact of technological changes and economic liberalization on agricultural labor employment and Productivity," MPRA Paper 31165, University Library of Munich, Germany, revised 29 Dec 1996.
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