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Al-Ahram Weekly 25 February - 3 March 1999 Issue No. 418 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 25 February - 3 March 1999 Issue No. 418
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports People Time Out Chronicles Cartoons Letters Shura debates agricultural marketing
By Gamal Essam El-Din
A Shura Council report adopted this week says the government has to give greater attention to the marketing process in agriculture because of its prime role in boosting farm exports, raising farm incomes and supporting economic development. "Egypt ranks first in terms of raising the productivity of certain crops, especially rice, but farmers are denied satisfactory returns because of grave marketing problems," the report said.
The 167-page "Agricultural Marketing" report, which was prepared by the council's Agriculture Committee, argues that the switch to a market economy in Egypt has highlighted the role of efficient marketing in increasing the volume of Egyptian exports. "Under the socialist system of the sixties, the state adopted cooperative marketing to ensure that limited-income citizens obtain their needs at cheap prices. This, however, was achieved at the expense of efficiency and quality. With the switch to a free economy in the early nineties, producers are required to give the utmost attention to quality and adopt highly sophisticated techniques of marketing in order to face cut-throat competition from foreign exporters," the report said.
In this light, the marketing of agricultural produce in Egypt currently faces two main problems, according to the report. The first is that obvious discrepancies have begun to emerge between the prices of agricultural commodities on the international markets and their counterparts on the Egyptian domestic market. A similar gap has also emerged between the prices of some agricultural products and their costs of production.
The report explained: "Last year, as a case in point, the state's decision to adopt an entirely free system in cotton marketing led to a drop in its domestic prices, although the costs of production remained high. In previous years, the government used to buy cotton from farmers at a price which was 40 per cent higher than international prices. When this subsidy was phased out last year and cotton was left to the free market mechanisms, farmers began to suffer great financial losses. This was hard because it came at a time when productivity rates were very low per feddan due to adverse weather conditions, while land rents went up by 150 per cent." The report added that last year's drop in international rice prices also subjected producers to a financial squeeze because the average price per ton of rice dropped from LE850 in 1997 to LE450 last year.
Consequently, the report calls upon the state to play a stronger role in protecting consumers and producers from the ravages of the market economy. This, the report added, could be achieved by preventing the marketing process for certain products from falling into the grip of monopolists' cartels. "This is necessary because some merchants have managed to monopolise the sugar, red meat, poultry, fruits and vegetables markets," the report said, adding that the government should protect the market from dumping and subsidies.
The report emphasised that Egypt enjoys high export potentials which are not yet fully tapped. "Egypt produced 21 million tons of horticultural crops last year. It is sorrowful that, out of this huge figure, Egypt exported a mere five per cent although it enjoys such a high comparative advantage in the field," the report said. Similarly, Egypt's production of vegetables and fruits reached 21 million tons last year, but exports were almost half this figure. According to Shura Council member Ali Abu-Gazia, Israel managed to export a large portion of its vegetable and fruit production last year, generating revenues of $1.8 billion. The report revealed that the total value of Egyptian agricultural exports last year was a mere LE1.1 billion. "This has to be increased to at least LE5 billion in the next few centuries," the report said.
Trade Minister Ahmed Guweili, however, argued that agricultural exports managed to make up for the drop in oil exports last year. He asserted that last year, Egypt was able to increase cotton exports by 500,000 qantars to reach a total 2.2 million qantars valued at LE800 million. Besides, he added, rice exports climbed from 300,000 tons in 1997 to 430,000 tons in 1998. Guweili also stated that the rapid growth in wheat production from two million tons in 1982 to 6.1 million tons in 1998 led to the reduction of wheat imports by one million tons during the same period.
According to Guweili, the government closely coordinates with the private sector to open new markets for farm exports in East Europe and Russia. He added that agricultural exports to African countries climbed by 32 per cent in 1996 and by 66 per cent in 1997. He expressed his hopes that Egypt's joining of the Commonwealth of East and South African Countries (COMESA) will double its agricultural exports to 20 African countries. For example, Guweili explained, Egypt managed for the first time to export grapefruits and oranges to Kenya. Besides, he said, Egyptian imports from Kenya dropped from LE292 million in 1996 to LE209 million in 1997.
Guweili also stressed that the government is keen to protect consumers from monopolies and dumping activities. "I'm sure that a draft anti-trust law will be passed by the People's Assembly in this session which will greatly help in fighting monopolies and regulating the market," said Guweili.
The report concluded by urging the state to restructure agricultural production and marketing processes in an integrated way by adopting a package of urgent reforms. Foremost among them, the report added, are establishing a number of information centres covering commodity markets throughout Egypt and coordinating with private producers to establish a sound pricing system for agricultural crops. The report also called for the renovation of the cooperative marketing system in order to make use of its wide network of marketing outlets for providing the poorer classes with their needs. Also recommended was the establishment of price-balance funds to protect farmers from fluctuations in international crop prices and the setting up of commodity marketing councils to help in controlling monopolies and to contribute to upgrading marketing processes, especially packaging and handling techniques.
