Al-Ahram Weekly | Focus

There is a loud silence about Egypt's economic reforms: why are they continuing in the agricultural sector when they have been such an irremediable and costly failure? Although USAID is not the only source of blame, it wields enormous financial and political influence and it is time, at last, for it to accept responsibility, move on -- and out. Let's get one thing straight at the start. Reform in the agricultural sector was necessary. For too long the Nasserist social contract with the fellahin ensured that the rural surplus supported industrial and urban growth, while the rural poor and the countryside received little for their toil. Yet while changing farm-gate prices may have redressed some of that injustice, 15 years of USAID have accelerated rural underdevelopment and marginalised further the political voice of Egypt's maligned farmers.

Let us begin at the beginning, see what USAID's characterisation of Egypt's rural crisis has been, see what the policy outcome has been and then take a rare look at how the farmers have experienced reform. It's a curious observation, perhaps, but at a time when the Egyptian press comments on the importance of improving government, and debates democratisation, no farmer voices are heard and no one discusses what farmer perceptions of 'crisis' might be and how they view the transformation of their industry. This is strange: even if the figures are only approximations, agriculture accounts for about 19 per cent of Egypt's GDP, 36 per cent of overall employment and 22 per cent of commodity exports. More than half of Egypt's population lives in the countryside, yet how much space is provided for debating and implementing policy that relates to the fellahin?

USAID -- A PREDICTABLE POLICY QUAGMIRE: The four main obstacles to agricultural growth according to USAID are: the legacy of inappropriate pricing policies; the anti- competitive statist institutional framework; the need for technological innovation; and the more efficient use of available land and water. USAID's policy response has been to promote the liberalisation of markets and the withdrawal of the state from economic activity. Additionally, USAID and the World Bank have sought to promote high-value, low-nutrition foodstuffs, like strawberries (and cut flowers) for Europe.

USAID has provided about $1.26 billion for the development of the sector. Yet they admit that, while production increases seemed evident in the mid-1980s, production has slowed since 1990. Instead of concluding from this that the policies are at best inappropriate or at worst have further undermined the sector, USAID argues that "continued USAID support for the sector is essential."

USAID has spent a lot trumpeting the declared success of their reforms. They have argued, among other things, that there has been an increase in the real value of crop production for the 23 major crops between 1980 and 1990; an increase in farm incomes and a doubling of wheat production between 1986 and 1992. There has also been a decline in food subsidies and the deregulation of controls on cropping patterns.

REFORM FAILURES: Underneath the well- orchestrated rhetoric of reform success lie persistent concerns that gainsay the euphoria. There are at least five areas of under-achievement. The first of these relates to the reliance reformers have on unreliable aggregate economic data. Economic accounting has undoubtedly improved in Egypt but ministries simply do not have accurate and reliable agricultural data upon which to make sweeping judgements about success. I was asked, for instance, as a visiting researcher in Egypt, to bring to a meeting with a senior official any agricultural production figures that I may have: the official simply had too many gaps in his data. Second, it's remarkable that 15 years after USAID reforms began the liberalisers rely on evidence of early increases in productivity that have not been sustained. Moreover, it is probable that what was recorded as increases in productivity were instead simply a reflection of a greater willingness among farmers to reveal what they had grown.

Third, Egypt has been unable to benefit from an export-oriented strategy. The problem is that most of the country's agricultural imports include commodities with low elasticity of demand, like wheat, sugar and edible oils. But most exports are marked by high elasticity. While agricultural exports may have increased from LE418 million in 1980 to just under LE1.9 billion in 1998, agricultural imports for the same period ballooned from LE1.2 billion in 1980 to LE11 billion in 1998. Agriculture contributed in 1998 to 33 per cent of Egypt's trade deficit. While there remains intense optimism regarding Egypt's horticultural export potential, liberalisation has failed to deliver export-driven growth. In 1998, Egypt produced an estimated 21 million tons of horticultural crops, of which only five per cent were exported.

Fourth, agricultural reform has failed to deliver growth in employment and it has reduced rural employment opportunities dramatically, especially for women. According to Nader Fergany, a senior commentator on social policy, 700,000 jobs were lost in agriculture between 1990 and 1995.

Fifth, rural poverty has accelerated during the reform period as noted by the government's own statistical service.

A VIEW FROM THE GRASSROOTS: One of USAID's declared policy initiatives has been to support "grassroots activities," yet there is little evidence of this. Indeed, the biggest criticism of this international agency might be that it promotes a theoretical concern with the benefits said to accrue from market reform while failing to understand the dynamics of the people who actually shape policy on the ground -- the farmers themselves and, in particular, Egypt's majority fellahin who own less than five feddans each.

My work in Egypt, visiting and talking with farmers over the last 10 years has confirmed more and more the need to listen to what it is that farmers themselves have been saying about the need for reform and what it is that they themselves believe will promote sustained agricultural growth. This is not simply a belief in "peasant populism" but a recognition that the proponents of the panacea of market reform fail to grasp the dynamism of Egypt's countryside, or how farming communities are socially reproduced. Policy initiatives without farmer representation throughout the country have failed. This has been confirmed in recent work in several Delta villages where the consequences of Law 96 of 1992 have accelerated the rural poverty accompanying USAID policy. Law 96 has removed tenant rights in perpetuity and instead laid tenancies open to the vagaries of the market. Farmers have noted across the Delta, and in one Upper Egyptian governorate:

- Perceived difficulties of farmer households before Law 96 were concerns with livelihoods, focused on access to credit, transport, health and education facilities. During the transition period 1992-1997, concern was singularly focused on fear of losing land and debt. After 1997, respondents were concerned with how to cope without access to land and fulfilling what they saw as basic needs: access to food, education and health at a time when their income base had been severed.

- Tenant households are not the poorest households in rural Egypt, and almost four years after the full implementation of Law 96, it is still possible that some households are relying on income that may have accrued from previous tenancies, livestock or other asset sales. This safety net is now close to expiry with the consequence that a further rise in poverty awaits.

- The downward spiral will further reduce household autonomy and control over its circumstances, and make household members more vulnerable to future economic and social shocks over which they have little control.

- Tenants that were able to renew contracts have, it seems, made cropping calculations to increase cash crops of vegetables and rice and to move away from berseem and cotton. But this should not necessarily mean that more will be available for the market and, therefore, be seen as a positive result of the economic reforms. Farmers also increase their own household consumption to reduce the burden of purchase. Cotton and berseem production has either become irrelevant for farmers who no longer own cattle, or too expensive to cultivate for poor peasants.

- Only large landowners are now seen to have the necessary resources of labour and cash to cultivate cotton. Shifts in cropping patterns were shaped more and more by short-term considerations of access to land and the new insecurity of tenancy that has become dependent, as one respondent, noted "on the mood of the owner."

- The concern reform advocates have regarding farmer choice shaped by market considerations is inappropriate in the real world of farmer calculations affected by tenancy struggles.

- Law 96 of 1992 generated considerable insecurity. The flexibility given to landowners by the law, their ability to move tenants during contract periods, the fact that payment for tenancies had to be made before cultivation and the fact that formal contracts were seldom held by tenants led to a perception by tenants that they should no longer make soil enrichment calculations that exceeded a calendar year. They were simply frightened that they would be denied access to land after a contract period.

- Women have suffered much more than men in the process of losing tenancies, even where they had successfully maintained agreements before 1997; landowners sought market gains from higher rents rather than supporting village rights.

REVERSING THE SPIRAL: The end-of-term report on USAID reads overly confident and arrogant. Does not seem to want to learn, does not listen. USAID has assisted the decline in rural livelihoods and it is time it returned to Washington. Any reverse in the decline of rural livelihoods indicated here is dependent upon either a dramatic increase in the levels of rural economic growth, which is unlikely given the past record, or the promotion of a more equitable re-distribution of rural assets. This latter seems equally unthinkable, which is strange. After all, a moderate one per cent increase in the income of the poor would lead to more than a four per cent increase in the consumption of items like beef and milk while such an increase in the income of the wealthy only increases such consumption by one per cent. There is an enormous potential market for domestic production in Egypt, but it currently does not have the income to translate its needs into effective demand.

* The writer is at the Institute for Politics and International Studies, Leeds University, UK, and is director of the university's Centre for African Studies.

F o c u s: USAID in Egypt: 25 years
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		Al-Ahram Weekly Online 21 - 27 June 2001 Issue No.539
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