Thursday,25 April, 2019
Current issue | Issue 1331, (9 - 15 February 2017)
Thursday,25 April, 2019
Issue 1331, (9 - 15 February 2017)

Ahram Weekly

Hard times for farmers

Rising fertiliser prices are destroying farmers’ hopes of holding onto their land

Rising costs for farmers might prompt them to abandon farming
Rising costs for farmers might prompt them to abandon farming

Moussa Qareen sits in his hometown in the Qena governorate waiting for the government to once again change the prices it pays for the sugarcane harvest after the last hike in the price of fertilisers destroyed his hopes of making a profit from growing sugarcane, his sole source of income.

Qareen is waiting for the government to raise the price it pays for Egypt’s sugarcane harvest so that he can make some money from planting this strategic crop. But his joy at the increase in price to LE625 per ton has not lasted long.
Two years ago, he said, when the official exchange rate was LE7.63 to the US dollar and the price of growing the crop was no more than LE400 per ton, farmers growing sugarcane in Egypt could make a profit of up to LE5,000 per ton.
Today, profits are down to LE2,500 after prices rose in tangent with the rising costs of diesel fuel, labour and transport. Qareen said that one feddan of land typically yielded 40 tons of sugarcane, meaning that the income for farmers after raising the price of one ton of cane to LE620 was about LE24,800.

On 4 January, the government decided to raise the price it paid for a ton of sugarcane to LE620. Farmers spend around LE5,500 per feddan, including LE2,000 for tilling the soil before planting and nearly LE6,000 on fertilisers.

“Farmers are given 13 sacks of fertiliser per feddan by the local agricultural association at a cost of LE150, but one feddan of sugarcane needs 25 sacks of fertiliser,” Qareen said.
“This means farmers have to buy the extra 12 sacks at market rates at around LE300 per sack. As a result, the cost of fertilisers for one feddan including transport is an extra LE6,000.”

Sugarcane growers add that the cost of irrigation of one feddan and labour could reach LE3,000, and then there was the cost of clearing the land for sowing and harvesting of around LE2,500. Other added costs include transporting the cane to refineries (LE1,200), renting the land (LE3,000) and interest on loans from the Development and Agricultural Credit Bank (LE1,200 per feddan).

According to statistics from the Central Agency for Public Mobilisation and Statistics (CAPMAS), Egypt produces around 16 million tons of sugar cane a year.
Khaled Megahed, head of the Farmers Union, said that the state had dealt with farmers unfairly when it decided to raise the price of sugarcane by LE200, or 55 per cent. This had been negated by the rising cost of fertilisers and production, meaning that profits had dropped.
“Raising the costs for farmers will force them to abandon farming,” Megahed said.  
Meanwhile, the price of rice is rising, with traders justifying the rise by the leap in the exchange rate of the dollar against the pound. However, the rice harvest is still greater than local consumption, and farmers feel that the price set by the government is less than what they could earn by selling to non-state buyers.
Some farmers have stopped selling their rice harvests to the state, selling them to traders instead to meet the needs of ration-card holders. There are 21 million ration cards in circulation, benefiting 71 million people.

Fathi Salama, head of the Kafr Al-Sheikh Mills Company, a public-sector entity, said buyers were paying more to farmers than the official price, depleting the amount of rice supplied to the General Authority for Supply Commodities (GASC).

Farmers deliver rice to government-owned mills at the rate announced by the government, which fluctuates from year to year. Salama said the cost of rice for farmers could reach LE6,000 per feddan, including LE300 for seeds, LE500 for ploughing the land, LE3,000 for labour, LE500 for pesticides, LE700 for fertilisers, and LE1,000 for diesel fuel.

Depending on yield, rice production can reach 4,300 tons, while Egypt’s consumption is estimated at 3,800 tons. This means there is an extra 500 tons, but the government has been importing rice to fill the gap because farmers are not selling to it.

According to Article 29 of the constitution, the government is obligated to buy strategic commodities and market crops such as rice, wheat, cotton and sugarcane.

“The government caused the rise in rice prices,” Salama said. He said that former minister of supply Khaled Hanafi had rejected farmers’ demands to raise the price to LE3,000 per ton instead of LE2,100. In response, the farmers had refused to supply rice and sold it to traders instead.

The government needs to buy rice to meet the needs of the rationing system, which recently saw a rise in price to LE9 per kg. Rice is grown in Egypt between April and August, and the harvest begins in September.

Ragab Nassar, a rice farmer, said that he had asked an adviser to the former minister of supply to raise the price of a ton of rice to LE3,000 instead of LE2,100. “I told him that this price would be well received by farmers and that they would sell their crops to the state. But he refused and insisted on LE2,100 per ton,” Nassar said.

He said that many farmers were selling to traders and the state was not receiving enough rice to secure a strategic stock. “The crop is sold to traders at LE3,000 and picked up from farmers’ doorsteps, eliminating the burden of delivering it to state mills,” Nassar added.

The farmers said that the yield of one feddan of land was 640kg of white rice, and the sale price of one ton is LE3,000. If the government had agreed to the higher price and sold rice at LE5 per kg in the ration card system instead of the older price of LE4, the government would have covered its costs and made a profit, they said.

It would also have benefited from the rice straw which is sold as fodder.

On 4 January, the government also agreed to raise the price of the nitrogen fertilisers distributed by the Ministry of Agriculture to around LE3,000 per ton, or around LE150 per 25kg sack.

A statement said the decision had been based on a formula whereby each ton of fertiliser consumes 28 million BTU of energy to make multiplied by $4.5 on the basis of an average exchange rate of LE16.3, as well as a LE595 basic cost, five per cent sales tax, marketing costs, especially for storage and delivery, and transport costs.
The government is forced to import rice to meet consumption needs at present. In October, before the floating of the Egyptian pound, it imported rice at $300 per ton, making the price per kg close to LE6.
In recent months, the price of ration-card rice has leapt from less than LE5 to LE9 per kg.

The writer is a freelance journalist.

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