11 - 17 January 2001
Issue No.516
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Al-Ahram Weekly On-line 11 - 17 January 2001 Issue No.516 |
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Cultivating knowledge
That the agricultural sector is in something of a quandary is fairly widely acknowledged. Far less attention, however, is paid to the fact that current dilemmas within the sector are rooted in the manner in which the competitiveness of agricultural products is undermined by a lack of coordination between production and marketing.
The most obvious manifestation of the absence of coordination are this season's unmarketable surplus of locally produced rice, and the concomitant slump in the production of a second staple crop, sugar cane.
One should not underestimate the number of farmers affected by the situation. Rice has traditionally been a major cash crop in the Delta, where vast tracts of land are given over to its cultivation, while the livelihood of farmers in Upper Egypt is almost exclusively dependent on the growing of sugarcane.
It is a dependency that is increasingly unsustainable given the structural imbalances that have, for some time now, characterised the industry. According to Minister of Agriculture Youssef Wali, one ton of locally produced sugar costs LE1,500, while the same quantity can be imported for LE1,350 per ton. And the discrepancy in these prices, which Prime Minister Atef Ebeid has pointed out, is costing the government LE550 million annually in subsidies.
The problems facing the local sugar producing industry have been exacerbated by the destabilising effects of government wavering over the tariffs charged on sugar imports. Investors complain that this fluctuating tariff policy has invalidated many of their decisions, and led to further deterioration of an already fragile situation.
Meanwhile, public sector sugar refineries also face a catalogue of problems, most of them the result of a long history of under-investment, over-staffing and low production targets. To turn the industry into a viable, long-term concern, then, is likely to be an uphill task that will require considerably more integration and long-term vision than is currently being displayed.
Rice, a traditional export crop, has a shorter history of problems than sugar cane. Yet the last few seasons had provided enough evidence that problems were in store, problems that surfaced in no uncertain terms in 1999-2000.
Encouraged by high profits gleaned in previous seasons, farmers, suddenly freed from planting directives as the government sought to liberalise the industry, planted rice in abundance. This sudden move to overproduction, a classic case of an exploding cobweb, took place against a backdrop of falling prices on the international market, and increased competition in the Syrian, Libyan and Turkish markets, traditional importers of Egyptian rice. Nor have the newly established private rice mills proved willing to mop up local over-production, preferring, naturally, to buy at more competitive international market rates. The result: 1.7 million tons of unmarketed rice is deteriorating in storage, while the price per ton has plummeted from LE650-700 in 1999 to around LE400. At the same time farmers are themselves facing increased costs, since annual rents have doubled in line with the liberalisation of land tenure, and have increasingly been forced into taking out loans at high interest.
Citrus fruit and vegetable producers, too, are facing similar problems, and are increasingly clamorous in their demands for a clear-cut export strategy, improved credit facilities and an overhaul of taxation structures.
As Egyptian farmers move from regulated to liberalised production systems, no one can blame them if their confidence is shaken. But it should not be assumed, either, that this is solely the result of facing increasingly intense global competition. They are hampered, as well, by a less-than-carefully synchronised liberalisation that has not always coordinated production with new conditions arising in the market.
Continuing to neglect the needs of farmers, leaving them prey to ill-thought out policies of which they are the last to hear and the first to bear the brunt, is no way to foster a successful industry. One cannot ask farmers to compete in the absence of support and knowledge of the highly exposed world in which they must now operate.
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