The effects of food price and subsidy policies on Egyptian agriculture

Joachim von Braun, Hartwig de Haen
research report
Food subsidies affect various sectors of the Egyptian economy, but the irinfluence on agriculture, which employs a considerable share of the nation’s resources, seems particularly strong (vonBraun and de Haen, 1983).A major objective of this research was to analyze the agricultural policy-making in the environment of a large and growing food subsidy system.In efficiencies and misallocation of resources in agriculture arising from food subsidies are hidden costs of such systems. However, it is crucial to separate out from the whole bundle of policy goals and related instruments those that are directly or indirectly linked to food subsidies. The basis for this can be provided only by a complete quantitative assessment of a country’s agricultural policy and its determinants.Those commodities that are strictly rationed at fixed prices on the food distribution side are also strictly controlled on the production side.Rice, pulses, and sugar are examples. Nonrationed or not strictly rationed commodities like wheat, maize, sorghum, and meat have experienced considerably less interference in allocation and marketing. Agricultural input and output prices are distorted in different ways: whereas field crops are usually taxed, the production of meat and milk has typically been protected by import restrictions and by the supply of subsidized feed. The special situation for feed and livestock indicates that food policy may cause a consumer-to-producer transfer and even a producer-to-producer transfer, which accompanies redistribution of incomes among the production sectors within agriculture.