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Paying a fair price for Egypt's crops

The government has promised to pay farmers higher prices for strategic crops, but experts say more is needed for Egypt to achieve self-sufficiency

Mona El-Fiqi, Monday 14 Mar 2011

Last week, the ministry of agriculture and land reclamation announced an increase in the delivery prices of strategic crops for the current season. The decision raised the delivery price of wheat to between LE350 to LE360 per ardab (one ardab equals 150 kilograms) depending on wheat quality. The minimum price for corn is LE250 per ardab, while the price per ardab of sugar cane stands at LE289, compared to LE234 the previous season.

The sugar beet price was raised from LE285 per ardab last year to LE355 per ardab. The ministry explained that the decision is part of a comprehensive plan approved recently by the ministries of agriculture, finance, trade and social solidarity, to encourage farmers to expand cultivation of strategic corps.

Moreover, the plan includes the increase of land cultivated for cotton to reach 500,000 feddan in the past year. The ministry asserted that it provides cotton seeds which are sufficient to cultivate 650,000 feddans. International cotton prices reflect that prices will continue to be high which will encourage Egyptian farmers to cultivate cotton.

The government's decision was welcomed as a way to help increase the production of strategic crops in an attempt to fulfil local needs.

Hussein Hegazi, professor of economics at Mansoura University, said that the delivery prices according to cost price of this season are satisfactory for farmers. Hegazi explained that when setting delivery prices, the government should consider the costs of each crop and add a suitable profit margin for farmers to encourage them to continue cultivating the strategic crops.

The government should also be committed to pay farmers the previously announced prices even if international prices go down. But when the international prices increase, the local delivery price should go up to cope with them.

In order to guarantee that the profit margin will go directly to farmers, not to mediators or traders, Hegazi suggested that the ministry should promptly find a unified system for collecting harvests from farmers to prevent the interference of traders who buy the crops from farmers and sell them at high prices at the markets.

As for wheat, Hegazi explained that the ministry should provide enough stores and high quality seeds to help in raising wheat quality. "Last year, the seeds provided in the markets were enough only to cultivate one third of the wheat areas, in addition to the government's delay in collecting wheat crops from farmers due to the lack of stores. So farmers sold wheat to traders who mixed it with a lesser quality imported wheat and sold it at high prices," said Hegazi.

The recent decision came to satisfy farmers who are complaining that they do not make enough profits to encourage them to cultivate strategic crops. Nader Noureddin, professor of agricultural resources at Cairo University, explained that it is a good step for the benefit of farmers who have suffered for years. Noureddin said that although last year international sugar prices doubled registering $800 per tonne compared to $400 per tonne, Egyptian farmers did not get any profits since they sold their harvest to the government according to previously set prices which were far below international prices particularly after hikes.

"The difference in prices between producers' price and market price was collected by the Holding Company for Food Industries as annual profits distributed to employees while nothing went to farmers," said Noureddin.

To match international prices, Noureddin said that the corn price should be raised from LE240 to LE280 per ardab since the international corn price is currently estimated at $300 per tonne. This move will help raise local production in an attempt to reduce Egypt's annual corn imports estimated at 5.5 million tonne.

Noureddin explained that Egypt can double the corn cultivated area to three million feddans.

Although the delivery prices are to some extend profitable to farmers, Ali Sharafeddin, chairman of the Cereals Chamber at the Federation of Egyptian Industries, explained that the time of the announcement is unsuitable. "The Ministry of Agriculture should announce the prices early enough before the cultivation season of each crop, but now the aim of the decision which is to encourage farmers to cultivate these crops is futile," he said.

However, one positive impact of the decision is that it is expected to help increase the corn cultivated areas since the season will start in May so farmers have enough time before cultivation to buy seeds and fertilisers, according to Sharafeddin.

Moreover, Sharafeddin added that the government should give more importance to cereal cultivation, particularly wheat which witnessed an unprecedented increase on its international prices due to a production shortage.

Experts believed that a package of policies should be taken in coordination with concerned ministries to change the agricultural policies which for decades have focussed on developing an export-oriented agricultural production, leading to the marginalisation of cultivating crops needed for local consumption.

It is worth to mention that although Egypt is a leading country in exporting some agricultural goods, it imports the majority of its food products. Some farms that have been created in the Egyptian Western Desert export 100 per cent of their production which is not a sustainable agricultural policy, according to experts.

Noureddin said that the government should change policies to provide financial support to farmers, not to exporters, since they are the real producers of agricultural products, and also to encourage them cultivate strategic crops.

Moreover, Noureddin explained that the ministry should give priorities to produce the local needs of wheat, corn, cotton, sunflower and soy beans which are used in producing cooking oil to reduce Egypt's imports which reach 90 per cent of cooking oil consumption.

(Published in Al-Ahram Weekly)

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