Agricultural market reforms in Egypt

initial adjustments in local output markets

This study represents one of the first attempts to examine the process of adjustment within the farming and marketing sectors to the reform of agricultural markets in Egypt. Even though it is primarily based on rice sector data, it gives the following interesting insights into the initial responses to the reform process. First, farmers are reacting with higher output levels and marketed surplus, although the bulk of the expansion has taken place among farms larger than 5 feddans. Marketed surplus among smaller sized farms has hardly changed. Second, the reforms have brought about increased private sector participation in the distribution of foodgrains. However, the level of participation is significant only in terms of local trading. Third, private sector participation in the processing industry has increased in terms of milling capacity, due primarily to the large increase in the number of larger private sector mills. In terms of milled quantities, however, public millers still process the bulk of the output, and have even raised their milling share, while small private mills are losing market shares. Furthermore, millers continue to procure paddy rice and traders continue to process paddy rice, so that it would appear that specialization has not yet occurred in the two subsectors. Finally, concomitant to changes in output levels and marketing behavior are falling real farm foodgrain prices, except for wheat. At the same time, real farm wages and real fertilizer prices have also declined, offsetting some of the effect of falling output prices. Combined with the strong increase in output levels, this would suggest that farmers may be already gaining from the reforms, to the extent that changes in the other cost elements (land and equipment) do not exceed these gains.

Author: 
Badiane, Ousmane
Published date: 
1994
Publisher: 
International Food Policy Research Institute (IFPRI)
Series number: 
2
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