DRAFT

Structure, Magnitude and Trends of Capital Formation in and for Agriculture in

Dyaa K. Abdou Abdel Rehim I. Taha Ali I. El Shahat

Department of Agricultural Economics Faculty of Agriculture University Zagazig, Egypt

Zagazig, Egypt October 2010

i Structure, Magnitude and Trends of Capital Formation in and for Agriculture in Egypt

Table of Contents Page Acronyms and Measures Used…………………………………………………………………. iii Acknowledgment……………………………………………………………………………….. iv Summary ………………………………………………………………………………………... 1-14

I. Introduction …………………………………………………………………………… 1 II. Agriculture in the National Economy ……………………………………………..…. 3 III. Analytical Framework ………………………………………………………………….. 29 IV. Agricultural Investment Trend and Composition ……………………………………. 36 V. Efficiency of Agricultural Investment ………………………………………………….. 54 VI. Determinants of Agricultural Investment at the National and Farm Levels ………. 64

VII. Overall Impacts of Agricultural Investment based on Strategy 2030……………….. 78

V111. Conclusion and Recommendations …………………………………………………. 81

IX. Suggestions for Further Analysis ……………………………………………………. 92

References

Annexes:

1. Statistical Tables

2. Questionnaire Form for Farm Survey

3. Capital Formation at the Farm Level: Socio-economic Characteristics of the Selected Sample

ii Acronyms and Measures Used

AIR Agricultural Investment Rate

CAPMAS Central Agency for Public Mobilization and Statistics

CBE Central Bank of Egypt

CIFA Capital Intensification Factor (per Area)

CICW Capital Intensification Factor (per Worker)

COE Coefficient of Endemism

COR Capital/Output Ratio

EHDR Egypt Human Development Report

ENCC Egyptian National Competitiveness Council

FAO Food and Agriculture Organization of the United Nations

FDI Foreign Direct Investment

FY Fiscal Year

GAFI General Authority for Investment and Free Zones

GDP Gross Domestic Product

GOE Government of Egypt

GOI Government of India

IDSC Information and Decision Support Center for the Cabinet

IM Investment Multiplier

M&E Monitoring and Evaluation

MALR Ministry of Agriculture and Land Reclamation

MDG Millennium Development Goals

MOI Ministry of Investment

MOP Ministry of Planning

MOSED Ministry of State for Economic Development

iii MOSS Ministry of Social Solidarity

MPC Monetary Policy Committee

MWRI Ministry of Water Resources and Irrigation

NPI National Planning Institute

PRAI Productivity Rate of Agricultural Investment

RAI Return to Agricultural Investment

SARD Sustainable Agriculture and Rural Development

SEDO Small Enterprise Development Organization

SNA System of National Accounts of the United Nations

SSR Self Sufficiency Ratio

UNDP United Nations Development Programme

WB World Bank

Measures Used

1 US Dollar = 5.69 Egyptian Pound (LE) – August 2010

1 Feddan = 24 Kerates = 0.42 Hectar

iv Acknowledgment

The Authors wish to extend their thanks and appreciation to Professor Hassan I. Seleha, Dean of the Agriculture College, Zagazig University and Professor M. Moselhi, Head of the Department of Agricultural Economics, Agriculture College, Zagazig University for their technical support and administrative guidance. Thanks and appreciations are also extending to Mr. Aiman M. Akrash, Ibrahim A. Omar, Mr. Hazem M. Abu-Yehia, Mr. Ali T. Hasaneen, and Mr. Ahmed R. Ibrahim for their support in conducting the field survey and data entry. The contributions of Professor Abdel Wahab Shehata, Senior Researcher, Agricultural Economics Research Institute, Ministry of Agriculture and Land Reclamation (MALR) are highly appreciated. Finally, thanks and appreciations are extended to Dr. Saifullah Syed, Senior Economist, TCA, FAO, Rome, and Dr. Nasredin Elamin, Senior Policy Officer, FAO Regional Office for the Near East, , for their guidance and support.

v Structure, Magnitude and Trends of Capital Formation in and for Agriculture in Egypt August 2010

Dyaa K. Abdou1 Abdel Rehim I. Taha Ali I. El Shahat Executive Summary

The FAO Policy Assistance Division (TCA) has recently initiated Country Case Studies to investigate the structure, magnitude and trends of capital formation in and for agriculture. The current report deals with the case study for Egypt. The report is prepared by a team from the Department of Agricultural Economics, Faculty of Agriculture, Zagazig University, Zagazig, Egypt in close collaboration with the FAO Regional Office for the Near East, Cairo, Egypt.

The overall goals of the proposed case study for Egypt are: (1) To investigate the structure, magnitude and trends of capital formation in agriculture; (2) Analyze major determinants of agricultural investment and capital formation; and (3) Provide policy options for promoting appropriate agricultural investment and capital formation for stimulating sustainable food production.

Assessment of agricultural investment/capital formation in/for agriculture is highly needed for Egypt

Capital formation is well studied in several parts of the world. Great number of references on the conceptual framework and empirical analysis of capital formation were identified and reviewed (Bisaliah, 2008). Meanwhile, only few documents are available on the subject of capital formation in the Egyptian literature. There are two challenges to the current analysis for Egypt, namely (1) the conceptual dilemmas and practical difficulties in adopting a broader definition of capital formation in and for agriculture; and (2) the availability and development of data for capital formation in agriculture and for agriculture. There are several problems with the available time serious data concerning investment and fixed capital formation at the national level in and for agriculture in Egypt. Although the definition of the capital formation within the framework of the Egyptian National Accounts System is based on the System of National Accounts (SNA) of the United Nations, there are still several conceptual and estimation difficulties specially with the capital formation for agriculture and the details on the composition of capital formation in agriculture. In addition there are the regular data problems of developing countries including multiple values for the same variable based on the number of sources; and difference in reporting periods, e.g. available investment data and other proxy variables are reported by financial years while others are using calendar years. The conceptual problem of how far can we stretch to develop data on capital formation with biological capital, knowledge capital, inputs, impact of subsidies, etc. is adding to the difficulties. The inclusion of all investment items brings the definition of investment in economics as “creation of capital or goods capable of producing other goods or services”2. As implied by this definition and other definitions,

1 Dr. Dyaa K. Abdou, Professor Emeritus; Dr. Abdel Rehim I. Taha, Professor; and Dr. Ali I. El Shahat, Professor, Department of Agricultural Economics, Faculty of Agriculture, Zagazig University, Zagazig, Egypt.

2 http://www.businessdictionary.com/definition/investment.html#ixzz10jfSNt5r expenditure on education and health is recognized as an investment in human capital, and research and development in intellectual capital, etc. The current analysis benefited from all previous efforts on the subject, and attempts are made to utilize limited available information to achieve the objectives of the case study.

Agriculture is instrumental for economic growth, sustainable development and poverty alleviation. In Egypt, agriculture is not recognized only as a way of life and crucial for national socio-economic development, but also, if received the due attention, as an engine for growth. The contribution of the agriculture sector in Egypt exceeds 13% of the Gross Domestic Product (GDP) and over 30% of employment opportunities. Meanwhile, about%57 of the total population in Egypt live in rural areas, where poverty prevails and where agriculture is the main source of income and livelihood. About 70% of the poor and very poor live in rural areas and of the 25% of the population living in , about 66% are extreme poor, 51% poor and 31% near poor. Within these realities of the Egyptian economy, enhancing sustainable agricultural and rural development as a means to reduce poverty and food insecurity within the expected climate changes is a prerequisite for sustainable social and economic development and hence should be considered as a social and political priority for Egypt.

The link between Macroeconomic policies and sectoral development is critical The link between macroeconomic policies, sustainable agricultural and rural development (SARD), enhancing food security, reducing poverty, and agricultural investment is a central link for achieving economic and social development in Egypt. This conceptual relationship has been recognized globally by the World Bank (WB, 2008), the World Summit on Food Security (FAO, 2009), as well as at the national level by the Egyptian Government Strategy for Sustainable Agricultural Development to 2030 (MALR, 2009), the Economic and Social Development Plan 2007-2012 (MOSED, 2007) and the ruling Egyptian National Democratic Party (NDP, 2008).

The GOE has very recently published an ambitious and forward-looking strategic objectives document dated December 2009 (GOE, 2009).

Growth rates sped up from 4 percent in FY 2003/2004 to over 7 percent in FY2007/08. Net FDI inflows increased from $509 million in FY 2000/01 to $6.1 billion in FY 2005/06, $11.1 billion in FY 2006/07, $13.2 billion in FY 2007/08 and $8.1 billion in FY 2008/09. As to private domestic investment, more than 33,000 companies have been established between FY 2004/05 and FY 2008/09 with estimated investments of LE 134 billion in 2007/08 and LE 113.5 billion in 2008/09, up from only LE 46.4 billion in 2004/05. Currently, FDI more than halved and no longer fully finances the current account deficit. The current account balance turned from a surplus to a deficit of 2.4 percent of GDP as receipts and remittances declined.

Government expenditure programme has little share for productive investment The present composition of public spending undermines the scope for fiscal policy to achieve the sustainability and inclusive aspects of growth. The expenditure program is heavily weighted (75 of total public spending) towards debt service, wages, subsidies and other transfers, with a small role for productive investments; hence there is little positive impact on competitiveness and the long-term growth of the economy. A large share of government spending consists of inefficient and costly energy subsidies. Successive piecemeal increases in domestic prices have not brought domestic prices anywhere close to international prices, and some prices remain well below international prices and prices in neighboring countries. During 2009, domestic fuel prices were 30 to 75 percent below international prices, with LE 75 percent below international prices. The Sixth Five Year Plan economic development goals include raising investment from 20% to 24% of GDP, and FDI inflows from $7 Billion to $14 Billion in 2007.

Monetary policy has sizable impacts on investment decisions and options The GOE has taken several steps towards Reforming Egypt's Monetary Policy Framework, (Al- Mashat, 2007). The Central Bank of Egypt (CBE) has taken many important steps to upgrade Egypt’s monetary policy with a view to adopting inflation targeting (IT) as a monetary policy framework once the prerequisites are fulfilled. The CBE has been granted more independence under the new banking law number 88 and an explicit institutional framework was set up for interest rate determination. In addition, the CBE launched a comprehensive and far-reaching banking sector reform program in 2004.

Discrepancies between agriculture contribution and its allocated investment There are clear discrepancies between sectors contribution and allocated investment. While the agriculture contribution to GDP in 2006/2007 (before the economic crises) was about 14.1%, the allocated investment to the sector represented only 5% of the total allocated investment. The contribution to GDP has decreased slightly during the world economic crises to 14.1% in 2007/08 and to 13.2 in 2008/09, while the percentage of investment allocated to agriculture from total national investment was reduced to 4% in 2007/o8 and to 3.67% in 2008/09. Meanwhile, the return of 1 LE of investment in agriculture and irrigation brings a return of about LE 12.83, the returns in other sector are much lower, e.g. LE 3.51 for Petroleum and Gas; and LE 3.2 for industry.

Agriculture performance has been improving but with still several inefficiencies and challenges Agricultural sector growth rates have widely differed from one period to another due to the effect of the general economic conditions on the one hand, and in response to development and investment efforts on the other hand. The 1981/1982 – 1986/1987 period was the period where a higher growth rate was achieved, estimated at an annual rate of 3%, while the growth rates during the 1987/1988 – 1991/1992 period were at the lower edge, at an average annual rate of 2%. During the following periods, there has been some improvement of the growth rates, reaching 3.3% in 2006/2007, (MALR, 2010).

Major agricultural products by quantity are sugar cane, tomatoes, wheat, rice and maize. While value wise, tomatoes, rice, buffalo milk, wheat and grapes head the list. Agriculture contributes to about 15% of national GDP. Egypt has become a net importer of agricultural commodities. Main imports by value include wheat, maize, meat, and tobacco. Main exports are rice, cotton, potatoes, oranges and grapes.

Human resources are the tool and aim of development Inhabitants of rural areas increased from about 22.7m in 1980 to about 41.9m people in 2007, at a rate of 85%. The working force in agriculture increased from 4.15m in 1980 to around 6.89m persons in 2007. This means that agricultural development programmes have lead to capital formation needed to create about 2.74m job opportunities over the last 27 years, at a rate of 100’000 jobs per annum. The numbers of qualified personnel (graduates of the Faculties of Agriculture and Veterinary Science) has greatly increased during this period. However, agriculture and veterinary educational institutions of all levels are unable to prepare graduates and provide them with an adequate level of knowledge and applied skills necessary for the job market, due to the lack of educational means and the limited budgets; increase of the number of graduates who acquired specialized higher degrees (M.Sc. and Ph.D. degrees). Consequently, the cumulative number of holders of Ph.D. and M.Sc. degrees amounted to 10’257 and 2’150 persons, respectively, in 2007; As to secondary agricultural education, there are 185 schools scattered in all governments, with about 302’000 students in the different specializations: animal production, land reclamation, mechanization and agro-industries. Available information indicates that the pyramidal structure of human resources working in the field of agricultural research, extension and education suffers from distortion. The percentage of older staff at the top of the pyramid is high, while the base of the pyramid is shrinking, a fact that means that the coming period would witness a sharp reduction in research and specialised scientific staff, negatively affecting the performance of universities and agricultural research institutions, unless necessary measures are taken to address this situation,

Water resources management is crucial for agricultural development Egypt is currently under the water scarcity limit internationally known as 1000 m 3/capita/year of renewable water resources to adequately cover a country’s domestic, agricultural, industrial, and other basic developmental water needs. With a continuously increasing population since then, the per capita share of renewable water resources in Egypt has been decreasing from 2500 m 3/capita/year in the 1950’s to currently 750 m3/capita/year and it is expected to reach 250 m3/capita/year in 2050. The Ministry of Water Resources and Irrigation (MWRI) developed a National Water Resources Plan for 2017 (MWRI, 2004). The required investment costs for implementing this plan from year 2003 to 2017 reached LE 145 billion, with recurrent costs for operation and maintenance of about LE45 billion. As per the National Water Resources Plan of Egypt, agriculture uses 85% of its renewable water resources, industry uses 9.5%, and domestic uses amounts to 5.5%. The current annual water uses from the different direct and indirect water resources are divided as follows: 55.5 BCM from the Water; 1.0 BCM Rainwater & flash floods; 6.5 BCM Renewable Groundwater; 5 BCM Agriculture Drainage Water Reuse; and 0.7 BCM Treated Wastewater Reuse.

Other challenges that faces the water sector, increasing population densities near the waterways, The continuous urban encroachment; by illegal water intakes, and violations of cultivating. Improving irrigation water efficiency to meet some of the water needs of the agriculture expansion plan of 3.4 million feddans between 1997 and 2017 is one of the challenging pillars of the 2017 national water resources plan. This is expected to reduce, on average, the agriculture water demand from 4850 m3/feddan/year in 1997 to 3900 m3/feddan/year in 2017 (MWRI, 2004). Any agriculture expansion beyond 2017 will reduce the available agriculture water per feddan to unfavorable levels, unless there is more dependence on non-conventional water resources such as treated wastewater.

Low agricultural and rural investment is a serious challenge The number of Egyptians living on less than $1 per day is only 3.4%, the number living on less than $2 per day is 42.8%. The agriculture sector employs 30% of the active population, and there is a strong contrast between the sector’s large workforce and its contribution to the country’s economy. This tends to underline a low level of productivity and income. Large number of rural households depends on agriculture and farming (production) which is the main income contributor in major parts of the country. Meanwhile, agricultural investment is low The major challenges associated with agricultural investment include: (a) Cumbersome process of agricultural investment, particularly in the fields of land reclamation due to the multiplicity of actors and relevant government institutions, poor coordination among these bodies. This may reflect negatively on the investors and agricultural producers; (b) Extension in time great for the period necessary to obtain the contracts have reclaimed land to exceed more than ten years in many cases, than they lose this land sober use in bank guarantees to borrow the medium and long term, which is the primary vehicle for investment in both agricultural activities, direct or economic activities other related or complementary to it; (c) The apparent decrease of public investment in the agricultural sector, particularly in the field of irrigation and drainage projects during the past few years, as this kind of investment is a necessary condition for the entry of private sector investment, and then the reduced necessarily mean downsizing is accompanied to private investments; and (d) Lack of integrated policies, agricultural expansion horizontal, while the pay the government interest in the processing areas of land reclamation of facilities and components of agricultural infrastructure, diminishing the attention of this policy processing with areas of elements and components of agricultural services and non-farm to ensure the establishment of stable societies in the new areas, which resulted in his absence the scarcity of agricultural employment and high wages, which increased the extent of the burden of investment to the horizontal areas of agricultural expansion.

Several other challenges and issues The major issues and challenges facing agricultural development and hence capital formation in Egypt include: (1)Increasing water use efficiency in irrigation; (2) Increased fragmentation and scattering of agricultural holdings; (3) Deteriorating Land Efficiency (Classification of Land Resources); (4) Human Resources and Capacities in Agriculture; (5) Role of the Government and Institutional Capacities to Manage SARD; (6) Agricultural Research, Technology Transfer and Potentials to enhance Productivities; (7) Exploiting Information and Communication Technologies; (8) Competitiveness of Agricultural Products throughout the Value Chain; (9) Preparing the Agricultural Sector for Adapting to Climate Change (Vulnerability and adaptive capacity); (10) Better Utilization of Farm Residues; (11) Fisheries not reaching their potential; and (12) Regional Development based on Comparative Advantages. These are based on analysis of detailed constraints and challenges by agro- ecological zones.

Different agro-ecological zones/regions...Different priorities…Different agricultural investment mapping Poverty, food insecurity, and agriculture investment structure and impacts differ among the different agro-ecological zones of Egypt. To ensure that the recommendations of any assessment of the agricultural sector in the study are pragmatic and practical, the distinctive features of the agricultural regions should be taken into consideration. Egypt has been divided into the following five geographical agro-ecological (or agricultural) regions: 1- Upper Egypt: including , , , and the New Valley governorates; 2- Middle Egypt: including , Bani-Sweif, Al-Fayoum, and Minya governorates; 3- Middle Delta: including Al-Qaliobeya, Al-Menoufeya, Al-Gharbeya, Al-Dakahleya, Kafr-el- Sheikh and Dumyat governorates; 4- Eastern Delta: including Al-Sharkeya, , Ismailia, , Northern Sinai and Southern Sinai governorates; and 5- Western Delta: including Al-Beherah, , Al-Nubareyah, and Matrouh governorates. Government strategic orientation and objectives for sustainable agricultural development (2030) The strategic objectives of the Government for achieving sustainable agricultural development till 2030 represent the Developmental Framework for agricultural investment and capital formation. These major objectives are (MALR, 2009): 1. Sustainable use of natural agricultural resources 2. Developing agricultural productivity per unit of land and water 3. Supporting competitiveness of agricultural products at local and international markets 4. Achieving high levels of food security in strategic commodities 5. Improving agricultural investment environment 6. Improving livelihood of rural inhabitants

Agricultural development priorities The GOE stated major priorities for agricultural development till 2030 as: (A) Efficient Utilization of Natural Resources 1. Rationalization of water resources use 2. Land use and expansion (Horizontal agricultural expansion and settlement policy) 3. Adapting to climate change (Vulnerability and adaptive capacity) (B) Enhancing Productivity and Competitiveness of Agricultural Products 1. Raising the levels of self-reliance and self-sufficiency in strategic food commodities 2. Improving consumption patterns in order to improve nutritional standards and the vital bodily functions 3. Reducing post-harvest food losses 4. Improving food quality and safety 5. Enhancing competitiveness of agricultural products throughout the value chain 6. Fisheries development (C) Institutional-Human Capacity Building and Policy Environment for Managing Agricultural Development 1. Improving the climate for agricultural investment 2. Improving civil societies and cooperatives 3. Improving agricultural policies formulation and analysis and social safety nets 4. Enhance research based technology transfer (agricultural extension system development) 5. Agricultural extension system development policy 6. Activating the role of agricultural communication in the service of agricultural development issues 7. Regional and international cooperation 8. Priority in coordination technical support and foreign aid in environment and agriculture 9. Priority for Capacity Building (D) Poverty Reduction 1. Improving the standard of living of rural inhabitants 2. Off-farm income and utilization of farm residues 3. Reducing regional disparities

Quantitative analysis for agricultural investment, capital formation in and for agriculture is limited by data availability Given the conceptual and data challenges, three sets of data are compiled and used for the case study for Egypt: (1) Secondary regularly published data from different sources such as the Ministry of Agriculture and Land Reclamation (MALR), Ministry of Planning (MOP), and Central Agency for Public Mobilization and Statistics (CAPMAS). These data are based on National Accounting. The compiled secondary data during 1982/83 - 2008/09 period have been used to explain and discuss the trends and development the macroeconomic variable such as resources, utilization, Gross Domestic Product, investment, number of workers, agricultural production and income, cultivated and cropped areas, and agricultural investment. In addition secondary data during 1982/83 - 2008/09 period (when available) have been used to calculate and compute the efficiency indicators. The assessment in the case study for Egypt is divided to two major periods of distinct macro and sectoral economic reform policies and orientation, namely, the first period from 1982/83 to 1991/92 representing the period before economic reform; and the second period from 1992/93 to 2008/09 representing the economic reform period; (2) Data and Information available through National Agricultural Censuses of 1990, 2000, and 2005 (mid-census). Census of Egyptian Agriculture is a comprehensive inventory of the components of the economic structure of agricultural economy for a specific time period, an agricultural season. It includes data statistics on agricultural reclaimed desert land, the major agricultural projects in Upper Egypt and Sinai, in addition to the evolution of modern irrigation and drainage, agricultural machinery and crop and livestock holdings/farms structure; and (3) Primary data at the farm level were collected through a field survey and structured questionnaire. The data were collected at the farm level for two governorates and four districts. A simple random stratified cluster sample has been selected from the targeted farms.

Also, due to the diversity of agro-ecological zones in Egypt, the study adopts the classification of agro-ecological zones used by the sustainable agricultural strategy till 2030 (MALR, 2010).

In addition, the estimates of investment in agriculture have indirectly been derived by the FAO Statistics Division3 using physical data on livestock, tractors, irrigated land and land under permanent crops, etc. and the average prices for the year 1995. These data enabled the derivation of the Capital Stock in Agriculture and the annual change in the latter is taken to reflect Investment in Agriculture. This database in US$ contains estimated data on investments made by both the public and the private sector. The components of capital stock are machinery, land improvements, livestock, and structures. These data are partially used in the current analysis. Given the discrepancies between these figures and published National Accounting data, the FAO detailed time series (1990-2007) was used only to illustrate the composition of capital stocks based on this source.

The farm validation survey Due to time and resources limitations, a limited simple random stratified cluster sample was selected from two different agronomic zones .i.e. Sharkia and Dakahlia governorates, in order to investigate factors affecting capital formation in Egyptian agriculture at the farm level. Two districts (one is far and the second is very close from the capital of the governorate) have been selected from each governorate; El Hosinia district and Zagazig district from Sharkia, El Mansoura district and Elmanzala district from Dakahlia. The two districts El Hosinia and Elmanzala are far from the capitals of the governorate whereas Zagazig and Elmansoura districts are the capitals of the governorate. The main topics covered by the questionnaire were pertaining to all personal, household, labor and capital profiles; land tenure, technical and production aspects of the targeted stockholders. The design of the questionnaire took into consideration the parameters established and related verifiable indicators to be provided by the collected data.

Major determinants, indicators and models used An attempt was made to estimate and examine the following efficiency indicators using the compiled macroeconomic and farm level information: (1) Agricultural Investment Rates (AIR) = Agricultural

3 FAO - http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and-environmental- indicators/capital-stock-of-agriculture/es/ Investment ÷ Agricultural GDP; (2) Return to Agricultural Investment (RAI) = Agricultural GDP ÷ Agricultural Investment; (3) Investment Multipliers (IM) of Agricultural Sector = Changes in GDP ÷ Changes in Agricultural Investment; (4) Capital Intensification Factor (CIFW) = Agricultural Investment ÷ Number of Agricultural Workers; (5) Coefficient of Endemism (COE) = (Agricultural Investment / Total Investment) ÷ (Agricultural GDP / Total GDP); (6) Productivity Rate of Agricultural Investment (PRAI) = Agricultural Income ÷ Agricultural Investment; (7) Capital/Output Ratio (COR) = Value of Agricultural Production ÷ Agricultural Investment; and (8) Agricultural Investments Per Feddan = Capital Intensification Factor Per Area (CIFA) = Agricultural Investment ÷ Cultivated Area.

In addition, the current case study for Egypt attempts to specify and quantify factors affecting agricultural investment and capital formation. In particular an econometric model (Sastry, 2003), was specified to provide quantitative answers to major related macro questions such as: • The potential factors affecting domestic and foreign investment in agriculture • The potential factors affecting public and private investment in agriculture. • The possible impact of public investment in agriculture on encouraging private sector investment in the sector. • The possible impact of public and private investment in agriculture on employment and output in the sector. Agricultural investment trend and determinants Perpetual inventory for capital formation based on 1990, 2000 and 2005 censuses The agricultural census data for the years 1990, 2000 and agricultural mid-census in 2005 are used to assess the changing inventory for major capital items based on the accumulated investments in these areas. Available information from previous censuses includes: (1) Area Under Cultivation and Agricultural Holdings; (2) Holdings Number and Size; (3) Cropped Area; (4) Sources of Irrigation and Drainage; (5) Agricultural Population and Agricultural Labor Capital; (6) Livestock Farms and Holdings/Number; (7) Domestic Poultry Farms and Number; and (8) Agricultural Machinery. Detailed assessment of available data showed increase in all assets and improvement in capital formation in agriculture.

Private investment in agriculture is increasing more rapidly than public investment with clear complementarity National Accounting data indicate that the annual growth rate of private GDP in agriculture reached 15.7 % during the first period compared to 10.7% in the second period. Whereas the private GDP in others sectors increased by 20.5 %annually during the first period compared to 12.4% during the second period. The annual growth rate of public GDP in agriculture was negative (-11.8%) in the second period compared by 14.9% in the first period. The relative importance of the agricultural public GDP compared by the agricultural private GDP during the whole period (1982/83-2008/9) has diminished rapidly, It decreased from 1.3% in 1982/83 to 0.02% in 2008/9. In addition, the relative importance of the agricultural GDP compared by the total GDP during the whole period (1982/83-2008/9) has been diminished gradually. It has been decreased from 19.9% to 13.2%. The share of the public agricultural investment during the whole period has reduced gradually compared by the private agricultural investment

Before reform the GOE was crowding out the private sector in production profit making activities at the farm and processing levels. After reform the GOE tended to invest more in social infrastructure and public goods leading the way to private sector to invest more in commercial productive activities. This lead to significant increase in private sector investment.

The analysis of the 1982-2008 data revealed that there is positive statistically significant relationship between the private and public capital invested in agriculture. The private capital will increase by 1.353 million LE when the current year’s public capital increases by 1 million LE. The increase in public investment seems to bring the most impact on enhancing private investment after two years. The private capital will increase by LE 1.381 million when the public capital (t-2) increases by LE 1 million.

The private sector is offering more jobs The annual growth rate of employment in agriculture sector in the second period (1.13%) was more than their corresponding value in the first period (0.96%). The share of the agricultural employment in public sector during the whole period has been reduced gradually compared by the agricultural employment in the private sector, Annex Table 7. The annual growth rate of public agricultural employment has been decreased from 0.1% during the first period (1982/83 – 1991/92) to -3.6% in the second period (192/93-2008/9).

Capital stocks in agriculture are increasing Based on the above mentioned available data from FAO4 in US$ for the calendar year period of 1990 to 2007, capital stocks in agriculture included four sub-sectors: structure, land, livestock and machinery. This data set was used only to shed light on the growth in the components of the capital stock in agriculture as reported since such details were not depicted in any other source. The average capital in agriculture during this period reached $34.2 billion (ranging from $27.6 billion in 1990 to $37.2 billion in 2007). During this period the structure represented only 0.3% of capital formation, while land, livestock, and machinery represented 77.1%, 19.9% and 2.7%, respectively. The agricultural capital formation in agriculture increased during this period by about %1.7 annually. The annual growth rate for structure, land, livestock, and machinery reached 1.4%, 1.6%, 1.8%, and 2.5%, respectively. The analysis was limited by the unavailability of additional information on these variables within the published data set by FAO.

Gross Fixed Capital Formation (GFCF) in agriculture is increasing Based on National Accounting data in Egypt, GFCF reached about LE 199.5 billion in 2007/2008 from which private sector contribution represented 64% (LE 129.3 billion) and public sector contribution 36% (LE 70.2 billion). Capital depreciation for that year reached LE 56.3 billion, and the rest represented a new additions to the society’s assets. These assests increased by 13.3% (about LE 47.0 billion) over the 2006/2007 level. The agriculture GFCF in 2007/2008 reached LE 5.327 billion. The private sector’s GFCF in agriculture reached LE 5.223 billion or about 98% of the total agriculture GFCF, while public sector’s GFCF reached only LE 103.9 million representing only 2% of the agriculture GFCF in that year. While, the agriculture GFCF represented only 2.6% of total GFCF in Egypt, the private sector’s GFCF in agriculture represented about 4% of private sector’s GFCF at the national level. Also, agriculture GFCF for public sector represented about 14% of the national public sector’s GFCF. This represented a logical dominace of private sector’s contribution to the GFCF in agriculture in Egypt. However, it is noted that depreciation of capital in agriculture represented about 75% of the agriculture GFCF in 2007/2008, while this percntage reached only 26% at the national economy’s level.

An attempt towards calculating Capital Formation for Agriculture An attempt was made to estimate the contribution of other sectors in capital formation for agriculture. No readily available data are published or previously estimated on the subject. The available national

4 FAO- http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and-environmental- indicators/capital-stock-of-agriculture/es/ accounting data was assessed and Gross Fixed Capital Formation in all sectors was estimated taking into consideration the available data on depreciation and changing stocks. The capital formation for agriculture is increasing during the period 2000-2008, and the private sector contribution in the GFCF for agriculture reaches about 80% of total GCFC for agriculture in 2008/2009. The estimated level of GCFC for agriculture depended entirely of the assumptions used for the proportional contribution of each sector for agriculture. Accordingly, for policy implications, due importance was given at this stage to the trend rather than to the absolute value. The estimates represented examples to demonstrate the importance of the concept and to provide a base for further consideration and research for capital formation for agriculture in Egypt.

Agricultural investment efficiency indicators show improvements in investment return and intensification The “agricultural investment rate” for public agricultural investment is more than one for most years indicating inefficiencies. However, the private and total agricultural investment show efficiencies in most years, and been increasing over time.

The “return to agricultural public and private investment” is the inverse of the investment rate. Accordingly, it has been decreasing during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, While the LE 1.0 invested in agriculture brings a return of about LE 12.8 during in 2006.07, the LE 1.0 investment in other sectors brings in the average a return of about LE 4.2 in the same year. The return to LE 1 invested in agriculture reached LE 9.9 during the first period and about LE 8.5 during the second period.

The “agricultural investment multiplier” for public investment in agriculture is less than one for most years indicating inefficiencies. However, the private and total agricultural investment multiplier indicated efficiency for most years. The investment multipliers of public and private agricultural sector have been fluctuated strongly during the first period 1982/83-1991/92 and the second period 1992/93- 2008/09, Table (15) resulting in negative values in some years.

The “agricultural investment intensification” per worker during the period 1982/2007 reached LE 0.91 which is much lower than the capital intensification for total investment per worker at the national level (LE 2.18) during the same period. The investment per worker in agriculture reached LE 0.3 during the first period and increased to LE 1.32 during the second period. The capital intensification for public investment in agriculture is very high compared to private sector investment and investments in other sectors.

The “coefficient of endemism” for public agricultural sector has been increasing during the first period 1982/83-1991/92 and the second period 1992/93-2008/09. The coefficient of endemism reflects the importance given to agricultural investment compared to its contribution to the GDP. The increase in coefficient of endemism is much lower in agriculture reflecting lower rate of investment allocation compared to the sector contribution in the GDP. f The increase in coefficient of endemism or public agricultural sector is very high during the second period.

The “productivity rate of agricultural investment” has been fluctuated during the first period 1982- 1992 and the second period 1993-2007. The average productivity rates of agricultural investment were estimated at LE 9.99 and LE 9.2 during the first and second period, respectively, with a grand mean of LE 9.59 during the whole period. The annual growth rates of productivity rate in agricultural investment reached 4.1 % during the first period compared to 5.7% in the second period, with grand growth rate of 2.2% during the whole period.

The “capital-output ration” decreased slightly from 13.63 during the first period 1982-1992 to about 12.46 during the second period 1993-2007. The capital/output ration has fluctuated during the first period 1982-/1992 and the second period 1993-2007

The “agricultural investments per feddan” reached about LE 2.17.35 during the first period 1982- 1992 and increased to LE 853.4 for the period 1993-2007. While private investment represented about 48% in the first period it represented about 56% in the second period. The public investment per feddan was almost stagnant (decreased slightly by 0.32%) during the second period 1993-2007, while it was increasing by about 7% annually during the first period 1982-1992. The total, public and private agricultural investments per feddan have been increasing gradually during the first period 1982-1992 and the second period 1993-2007,

Determinants and composition of capital formation at the farm level Based on a limited field survey, the purchasing of new lands, farming animals, new farming machineries, rent new lands in 2005 and 2010 are used as simple indicators for the capital formation invested in the farm. The simple correlation coefficients are investigated and estimated among each of the following variables: farmer occupation, farmer age, farmer experience, farmer’s education status, distance of district to the governorate capital, size of household, family labor working in agriculture, owned land tenure, rental land tenure, and shared land tenure. The interrelationship between each of these variables and proxies for agricultural investment and capital formation was assessed.

Possible impacts for national agricultural investment based on Strategy 2030 The estimated required investment to implement the first phase (2011-2017) of the sustainable agricultural development strategy till 2030 is about LE 107 billion with LE 49 billion from government sources (46%) and LE 58 billion from the private sector (54%). This is based on a regional consultative process in each region and detailed discussions with stakeholders (MALR 2009). The possible overall impacts of envisaged increasing agricultural investment to implement the first phase (2011-2017) of the agricultural strategy till 2030 include the following: 1. Poverty Alleviation and Social Impact: MALR realizes that there is high demand on investments in health, education and infrastructure. However, improvement of the rural social welfare would start with investing in agriculture. About 26.8% of the population lives below the poverty level, with 77% of that figure living in rural areas. As for the absolute poor, about 81% of them are concentrated in rural areas also. Unemployment and underemployment are high in rural areas where lack of services and health infrastructure contributes to low living standards. The range between governorates and regions varies widely in percentages of poor and absolute poor as indicated in Table 6. Therefore, Egyptian policymakers and the society as a whole cannot afford to maintain the status quo as it will get worse with increased population. 2. Economic Impact and Growth: Several investment programmes have high rates of return. For example, early estimates of rates of return calculations for the on-farm irrigation program are about 17% and may be higher in areas where irrigation infrastructure at the mesqa level have been improved and tile drainage is implemented. There will be also an increase in agricultural growth rates from about 3% in 2007 to 4.5% in 2017 (MALR 2009). The Egyptian National Economic and Social Plan combines agriculture and water resources together and more work is needed to assess their roles separately in relation to the Strategy’s implementation. 3. Employment Generation: New agricultural investment needed for the implementation of the strategy 2030, will create new employment opportunities. For example, about 1.05 million feddans are to be reclaimed till 2017. To provide agricultural infrastructure and services for newly reclaimed area, about 1.6 million job opportunities would be created to effect Plan implementation. This will improve livelihood of 8 million rural people (based on the average family size of five). The National Democratic Party, however, declared that the increase in agricultural investment will lead to a clear-cut increase in the capacity of the sector to generate job opportunities (about 910,000 job opportunities in the agricultural production sector plus 830,000 jobs in the fields of agro-processing by 2020 (NDP, 2008). Given the nature of the private sector investment and its operational efficiency, there is positive statistically significant relationship between the private capital invested in agriculture and agricultural work in the the same year. The agricultural work will increase by 153 labors when the private capital increases by LE 1 million. Meanwhile, the agricultural work will increase by less with investment time lag. The agricultural work will increase by 222 labors when the public capital increases by one LE 1 million. The agricultural labor in the current year will increase by only 216 labors when the last year’s public investment in agriculture increases by LE 1 million. 4. Improving Farmers’ Income and Access to Food: Increasing targeted and prioritized agricultural investment will lead to increase yield levels will ultimately lead to increased farmers’ incomes. Investments leading to decreasing production costs, particularly in energy, would also have positive results on farmers’ incomes. Of course, this would depend on streamlining markets and farmers’ obtaining fair prices for their products. It is estimated that by 2017 farmers’ incomes will increase 54% per feddan compared to 2007 prices i.e. from LE 13,200 to LE 20,300 (using constant 2006 prices). With an average land holding of 2.3 feddans, the agricultural income per holding is estimated to increase from LE 30,000 in 2007 to LE 47,000 by 2017. Increasing farmers income tend to directly affect rural household access to food. The analysis of the 1982-2008 data indicated that there is a positive statistically significant relationship between the agricultural output and both current and lagged public and private investment in agriculture. The agricultural output will increase by LE 23.2 million when the public capital increases by 1 million LE. Meanwhile, the agricultural output will increase by LE 24.7 million LE when the public capital (t-2) increases by 1 million. This indicated that it takes sometimes for public agricultural investment to bring more impact on the value agricultural output. The agricultural output will increase by LE 16.99 million when the private capital increases by LE 1 million in the current year. Unlike the public investment, the impact of the lagged private investment is less and reaches only LE 16.87 million when the private capital (t-1) increases by LE 1.0 million. 5. Increased Productivity of Export Crops and Agro-Industries: Increasing the agricultural investment within the strategy to increase cropped areas for fruits (by about 14%), vegetables (by about 13%) and medicinal and ornamentals and cut flowers (by about 55%), as mentioned above, will subsequently lead to increased rates of production ranging between 15 – 50%. Export promotion campaigns and improved quality of Egyptian produce based on high standards should be an integral part of improving farmers’ linkages to domestic and international markets. In this respect, the first phase of the strategy’s implementation includes a Program focused on marketing and agro-industries with two Principal National Projects to improve marketing and competitiveness for agricultural products. 6. Increased Productivity of Water and Land Units: Enhancing agricultural investment with emphasis on sustainability of natural resources particularly water and land will lead to maximizing water and land unit productivity. In this respect, benefits per cubic meter of water are estimated to improve by 68% in 2017, compared to 2007. Production per feddan would also improve by 54% during the Plan implementation period and crop intensity will increase from 177% at present to 200% in 2017. 7. Financial Returns and Possible Cost Recovery: Investment in several agricultural programmes and projects tends to have high rates for financial return. On-farm irrigation and land reclamation Programs and Projects’ financing comprise about 71% of total funding needed for the first phase of the strategy (till 2017). Rates of return are estimated to be 17% which identifies Projects that would attract domestic and international investments.

8. Environmental Impact: Investment in agriculture tends also to improve environmental conditions. Several programmes should be oriented toward maintaining and improving these conditions. Thus, while increasing agricultural investment, the environmental factors and impacts should be considered and the productive capacity of natural resources should not be degraded by increased intensification.

Conclusion and Policy Recommendations Major conclusions and recommendations based of above cited review and assessment were reached. The study discussed these conclusions and recommendations in detail. The following are the major conclusions and recommendations for the case study for Egypt related to the main issues for sustainable agricultural development, poverty alleviation, agricultural investment, and accumulation of capital formation in and for agriculture: 1. Promoting Policy and Institutional Reforms as Crucial Prerequisites for Improving the Mapping of Agricultural Investment 2. Improving National Budget Formulation and Execution 3. Improve the Environment for Agricultural Investment 4. Agricultural Mapping and Investment Allocations should Coincide with Major Strategic Objectives such as: (1)Water Resources Management is the major challenge in Egypt; (2) Human Capital; (3) Enhance Investment in Research and Technology Transfer; (4) One-stop-shop for investments in land reclamation and improvement; (5) Resolving Food Security Challenges not Food Self-Sufficiency; (6) Agribusiness as an engine of growth. 5. Investment Mapping should Target Regional/Agro-ecological Niches 6. Agricultural Investment Plans should include Transparent Procedures for Intended Cost Recovery 7. The Need for a Comprehensive Approach for Planning Agricultural Investment, Poverty Alleviation, Rural Development and Capital Formation: Scaling Up the Case of the 1000 Villages Initiative 8. Agricultural Investment Mapping should include Priorities for Enhancing Efficiency and Innovations at the Whole Value Chain 9. Fostering Market Oriented Risk Management Programme to Support Agricultural Investment.

The need for further assessment and studies The following topics should be investigated further in the Egyptian context: 1. The Market Oriented Risk Management to enhance Private Agricultural Investment. 2. Quantification of Capital Formation Efficiency at the National and Farm Levels. 3. Result-Based Monitoring and Evaluation System for Agricultural Investment. 4. Simulation Modeling for Agricultural Investment under Food Security and Poverty Alleviation Options. 5. Quantification of Impacts of Agricultural Policy Reform and Options on Agricultural Investment and Capital Formation in Egypt. 6. Assessment of Agricultural Foreign Investment on Food Security and Sustainable Agricultural Development in Egypt. 7. Agricultural Capital Formation: Assessing Data Availability and Harmonizing Concepts and Methodology. 8. Level and Cost Effectiveness of Investment in Agricultural Research and Development in Egypt. 9. Modeling the interrelationships between capital formation, agricultural growth, and poverty alleviation in Egyptian agriculture. I. Introduction

The FAO Policy Assistance Division (TCA) has recently initiated Country Case Studies to investigate the structure, magnitude and trends of capital formation in and for agriculture. A letter of agreement was signed between the Regional Office for the Near East of the Food and Agriculture Organization of the United Nations and the Faculty of Agriculture, Zagazig University, the Department of Agricultural Economics, Zagazig, Egypt in 6 July 2010 to prepare a case study to investigate the Structure, Magnitude and Trend of Capital Formation in and for Agriculture in Egypt.

The overall goals of the proposed case study for Egypt are: (4) To investigate the structure, magnitude and trends of capital formation in agriculture; (5) Analyze major determinants of agricultural investment and capital formation; and (6) Provide policy options for promoting appropriate agricultural investment and capital formation for stimulating sustainable food production. This topic of agricultural investment and capital formation is of direct relevance to the sustainable agricultural development for Egypt. About 75% of the total public spending in Egypt is directed towards debt service, wages, subsidies and other transfers, with a small role for productive investments. Hence, there is little positive impact on capital formation, competitiveness and the long- term growth of the economy. Alter the pattern of government spending in favor of productive spending should be a government priority. In particular, increased spending on education, health, infrastructure, business environment, agricultural development, labor flexibility, and research and development can boost factor productivity and long term growth. Although agriculture in Egypt creates in the average more than 13-15% of the GDP, it receives only about 4-5% of the allocated investment. In 2008/2009 total investment reached LE 197 billion while agricultural investment was less than LE 8 billion. In addition, investment in agricultural research and technology advancement represents about 0.01% of the agricultural GDP. In 2006/2007 the national economy has grew by about 7.1%, and agriculture contributed by more than 8% of this rate. With the decreasing public investment, all efforts should be done to attract private investment to the agriculture sector (in value added opportunities) to ensure sustained growth. Accordingly, the current case study for Egypt will attempt to provide an overview of the country’s agricultural development and food security and to develop an analytical framework to examine agricultural investment/capital formation and its impacts on agricultural production and productivity. Also, the case study attempts to examine inventories, trends and shift in composition (types of investment) of agricultural investments by both public and private sectors within the limitation of data on the subject. The determinants of agricultural investment at the national and farm levels for major crops are also reviewed and examined. In addition, the possible impacts of investment/capital formation were discussed. Finally, the case study attempts to recommend means for promoting investment in agriculture and provide policy recommendations for stimulating sustainable food production in the country.

In spite of the importance of the subject, only few related documents and studies are available in the Egyptian literature. There are two challenges to the current analysis for Egypt, namely (1) the conceptual dilemmas and practical difficulties in adopting a broader definition of capital formation in and for agriculture; and (2) the availability and development of data for capital formation in agriculture and for agriculture. Although the definition of the capital formation within the framework of the Egyptian National Accounts System is based on the System of National Accounts (SNA) of the United Nations, there are still several conceptual and estimation difficulties specially with the capital formation for agriculture. The conceptual problem of how far can we stretch to develop data on capital formation with biological capital, knowledge capital, inputs, impact of subsidies, etc. is adding to the difficulties. Three sets of data are compiled and used in this analysis: (1) Secondary regularly published data from different sources such as the Ministry of Agriculture and land reclamation, Ministry of Planning, and CAPMAS covering the periods 1982/83 – 1992/93 and 1994/1995 - 2006/075 period; (2) Data and Information available through National Agricultural Censuses of 1990, 2000, and 2005 (mid-census); and (3) Primary data at the farm level were collected through a field survey and structured questionnaire developed for that purpose. In addition, due to the diversity of agro-ecological zones in Egypt, the study adopts the classification of agro-ecological zones used by the sustainable agricultural strategy till 2030 (MALR, 2010).

The report consists of nine sections and three annexes. Following the introduction, Section 2 deals with Agriculture in the National Economy, while Section 3 is devoted to the Analytical Framework. Sections 4 and 5 are devoted to Agricultural Investment Trend and Composition; and Efficiency of Agricultural Investment, respectively. The Determinants of Agricultural Investment and Capital Formation at the National and Farm Levels are discussed in Section 6. Section 7 is devoted to presenting the Possible Overall Impacts for Increasing Agricultural Investment based on the National Strategy for Agricultural Development till 2030, while Section 8 includes the Conclusion and Recommendations. Few suggestions for further assessment and research are included in Section 9.

5 Data for 2008 and 2009 are not published and are available only for some indicators. They are used, as available. II. Agriculture in the National Economy

The link between macroeconomic policies, sustainable agricultural and rural development (SARD), enhancing food security, reducing poverty, and agricultural investment is a central link for achieving economic and social development in Egypt. The contribution of the agriculture sector in Egypt exceeds 13% of the Gross Domestic Product (GDP) and over 30% of employment opportunities. Meanwhile, about%57 of the total population in Egypt live in rural areas, where poverty prevails and where agriculture is the main source of income and livelihood. About 70% of the poor and very poor live in rural areas and of the 25% of the population living in upper Egypt, about 66% are extreme poor, 51% poor and 31% near poor. Within these realities of the Egyptian economy, enhancing sustainable agricultural and rural development as a means to reduce poverty and food insecurity within the expected climate changes is a prerequisite for sustainable social and economic development and hence should be considered as a social and political priority for Egypt.

In Egypt, agriculture is not recognized only as a way of life and crucial for national socio-economic development, but also, if received the due attention, as an engine for growth. This conceptual relationship has been recognized globally by the World Bank (WB, 2008), the World Summit on Food Security (FAO, 2009), as well as at the national level by the Egyptian Government Strategy for Sustainable Agricultural Development to 2030 (MALR, 2009), the Economic and Social Development Plan 2007-2012 (MOSED, 2007) and the ruling Egyptian National Democratic Party (NDP, 2008).

There is a strong correlation between economic growth and the reduction of hunger. Countries without economic growth or even a decline of GDP per capita were not able to reduce the number of the malnourished in their country and often even faced a considerable increase (WB, 2008). Hence, the economic growth rates of several countries that have low food consumption levels and significant incidence of undernourishment are likely to fall short of what would be required for significant poverty reduction by 2015.

There is also a strong link between poverty and food insecurity. Most of the poor are either under- nourished or food insecure. Lower income households spend a large share of their income to purchase food. They are particularly vulnerable to variations in food prices and food scarcity during periods of conflicts, political disturbances or natural disasters. Under-nourishment is also a constraint to economic growth. As people are not able to work and their body and intellectual capacities are affected by under-nourishment, the overall potential for economic growth is curtailed. Most (about 70%) of the poor or food-insecure live in rural areas and a large share of these people depends very much on agriculture for their food supplies (produced locally) and for generating incomes. Agricultural investment leading to capital formation is a prerequisite for achieving sustainable agricultural and rural development in Egypt. Capital formation leading to economic diversification starts at the farm household, and agricultural and non-agricultural development reinforce each other. Pro-poor investment policies and strategies have to emphasize food security, access to land and water, agriculture and sustainable rural development.

2-1 Macroeconomic Policies and Recent Trend Affecting Expenditure and Investment:

(i) Strategic Objectives for Economic Development in Egypt:

The GOE has very recently published an ambitious and forward-looking strategic objectives document dated December 2009 (GOE, 2009). The GOE has the following Eight Strategic Objectives as the guiding overall objectives for all sectors: 1. Maintaining high rates of growth and employment 2. Achieving high levels of integrated human development 3. Upgrading infrastructure to better service the citizen 4. Raising social equity and fighting poverty 5. Promoting competitiveness in local and international markets 6. Raising political participation and modernizing cultural environment (including media complex) 7. Preserving national security and environment for future generations (including R&D, water and energy) 8. Achieving high standards of administrative efficiency and governance (legislative reform and decentralization)

(ii) Macroeconomic Policies and Budget

The introduction of wide-ranging structural reforms introduced in July 2004 spurred strong economic growth until June 2008, just before the onset of the global financial crisis. Growth rates sped up from 4 percent in FY 2003/2004 to over 7 percent in FY2007/08, fueled by increased productivity, strong external demand, a competitive real exchange rate after the large devaluation in 2003, and sizable foreign direct investment (FDI) inflows. Net FDI inflows increased from $509 million in FY 2000/01 to $6.1 billion in FY 2005/06, $11.1 billion in FY 2006/07, $13.2 billion in FY 2007/08 and $8.1 billion in FY 2008/09. As to private domestic investment, more than 33,000 companies have been established between FY 2004/05 and FY 2008/09 with estimated investments of LE 134 billion in 2007/08 and LE 113.5 billion in 2008/09, up from only LE 46.4 billion in 2004/05. 6

The external position in Egypt remained relatively robust despite a sharp decline in capital inflows (some US$ 14 billion). The recent drop in exports was offset by a larger fall in imports, improving the trade balance. Currently, FDI more than halved and no longer fully finances the current account deficit. The current account balance turned from a surplus to a deficit of 2.4 percent of GDP as receipts and remittances declined.

Egypt’s macroeconomic reforms include the strengthening of the macro-policy environment, investment climate, as well as wide-ranging structural reforms. These changes served to improve the investment climate and bolstered the economy's durability. However, the present composition of public spending undermines the scope for fiscal policy to achieve the sustainability and inclusive aspects of growth. The expenditure program is heavily weighted (75 of total public spending) towards debt service, wages, subsidies and other transfers, with a small role for productive investments; hence there is little positive impact on competitiveness and the long-term growth of the economy. The high share of unproductive spending in total expenditure reflects the impact of wage increases adopted before the crisis and higher post crisis debt service costs. in the budget presented, some 75% of Egypt's public expenditure in 2009/2010 budget is still locked in non-productive spending such as debt service, the wage bill and subsidies. In the 2010/2011 budget which is still not available, spending on subsidies will increase by 21.6 percent, on petroleum subsidies by 19%, and on wages by 11 percent. As a result spending on education will increase by only 6.7 % further lowering its contribution to building competencies and to empowering the labor capital to contribute to long term inclusive growth and competitiveness. The present policy stance of maintaining increasing rates of unproductive expenditures at the expense of productive investments embodies risk for future balanced and sustainable growth specially in agriculture.

A large share of government spending consists of inefficient and costly energy subsidies. Successive

6 Data from Ministry of Investment piecemeal increases in domestic prices have not brought domestic prices anywhere close to international prices, and some prices remain well below international prices and prices in neighboring countries. During 2009, domestic fuel prices were 30 to 75 percent below international prices, with LE 75 percent below international prices. Fuel oil and gasoline, the least subsidized are 30 percent below international prices. In addition to crowding out priority spending on social and infrastructure needs, subsidies are highly regressive. Several studies showed evidence of the disproportionate benefits to higher income households (almost twice as much for low income households) who use subsidized diesel and regular gasoline (Abdou, 2010). In addition to several ad-hoc domestic fuel prices adjustments since 2004, the government launched in late 2007 a plan to bring energy prices close to actual costs by 2010. The plan entailed an immediate increase in the energy prices for energy-intensive industries and a one-year grace period for non-energy intensive industries.

However, increasing future output cannot rely forever on temporary pro-cyclical investments because such spending is costly and has implications for debt sustainability, in addition to its impact on crowding out the private sector. All fiscal stimulus packages have sunset clauses and there is a global agreement that, exit strategies must start. Productivity in Egypt measured by GDP per engaged person, increased in 2007 alone by 4.4 percent compared to 1.5 percent between 1979 and 1997, and 2.6 percent between 1995 and 2008. In 2008 overall productivity improved by 4.5 percent only.

Monetary Policy has sizable impacts on investment decisions and options. The GOE has taken several steps towards Reforming Egypt's Monetary Policy Framework, (Al-Mashat, 2007). The Central Bank of Egypt (CBE) has taken many important steps to upgrade Egypt’s monetary policy with a view to adopting inflation targeting (IT) as a monetary policy framework once the prerequisites are fulfilled. The CBE has been granted more independence under the new banking law number 88 and an explicit institutional framework was set up for interest rate determination. In addition, the CBE launched a comprehensive and far-reaching banking sector reform program in 2004. The CBE restored confidence in the foreign exchange market and replaced quantitative monetary instruments with price instruments. The exchange rate has been abandoned as the nominal anchor, and price stability has been declared the overriding policy objective. The CBE is committed to achieving, over the medium term, low rates of inflation, which it believes are essential for maintaining confidence and for sustaining high rates of investment and economic growth. Egypt made the transition to a unified, flexible exchange rate regime during 2004. The parallel market rate, which had a premium of over 15 percent in late 2003, converged with the banking rate in the second half of 2004 as confidence was restored. Moreover, several institutional and operational changes were initiated under the program to help facilitate monetary policy formulation and assessment. Institutionally, to carry out its better-defined mandate, the CBE established a Monetary Policy Committee (MPC). Operationally, the exchange rate has been abandoned as the nominal anchor, and price stability has been declared the overriding policy objective. On June 2, 2005 the CBE introduced an interest rate corridor with two standing facilities, the overnight lending and a deposit facility. The interest rates on the two standing facilities define the ceiling and floor of the corridor, respectively. By setting the rates on the standing facilities, the MPC determines the corridor within which the overnight inter-bank rate can fluctuate. Effectively, steering the overnight inter-bank rate within this corridor is the operational target of the CBE. In August 2005, the CBE began to issue its own securities for liquidity management through open market operations to differentiate between monetary and fiscal tools. In October 2009, the Central Bank introduced a core inflation index that strips out fruits and vegetables as well as administered prices. The index has helped the Central Bank communicate better how it views underlying inflationary pressures. It has been well-received and will serve as an important tool in an effort to prevent spill-over from food and fuel price volatility. The CBE also launched a specialized monetary policy page on its web site and plans to introduce a periodical Monetary Policy Report in 2010 further improving communication. Egypt’s current Sixth Five Year Plan (2007-2012) emphasizes the priority areas of employment, education, the economy, and various social development targets.7 The conceptual framework of the Plan is based on a set of principles, of which the most important are: • Fostering economic growth and employment by stimulating investment and enhancing economic reforms.

• Community participation is essential for effectuating the development process.

• Preserving natural wealth and rationalizing its usage to achieve sustainable development.

• Raising the competitiveness of the Egyptian economy to speed up integration into the world economy

The Sixth Five Year Plan rests on a group of pillars, namely: the long-term vision (Egypt 2017 and 2022), the Presidential Election Program (2005-2011), the Millennium Development Goals (MDGs 2015), and the New Social Contract (2005-2015) as presented in the EHDR 2005 (UNDP, 2008). The Plan’s economic development goals include raising investment from 20% to 24% of GDP, and FDI inflows from $7 Billion to $14 Billion in 2007. Egypt’s current Sixth Five-Year Plan (2007-2012) was prepared for the first time with the help of the private sector, given the recognition of its increasing role. The Plan continues to encourage the private sector through the creation of a better investment climate and a wider spectrum of investment opportunities. The Plan also aims at reducing population growth rate from 2.04% to 1.9%, controlling inflation to a limit of 6%, reducing the population living under the poverty line from 20% to 15% by 2012 and to 12% by 2015 and illiteracy from 29.3% in 2006 to 20% by 2012. The goals of social and human development also include increasing the female contribution to total labor force from 19% to 25%, establishing 415 thousand housing units for low-income groups, three thousand schools and 800 nursery classes.

7 The previous (Fifth) Five Year Plan’s (2002-2007) vision was missing a focus on individual empowerment – whether on the poor, women or children. The goals of the Plan were in contrast with those in the United Nations Development Assistance Framework (UNDAF) report, which represents donors. Outcomes of democracy, governance, and accountability were not outlined as large priorities in the National Plan as they were in UNDAF. 2-2 The Framework for Sustainable Agricultural Development and Food Security

2-2-1 Development and Growth of the Agricultural Sector

The Institutional structure of the agriculture sector in Egypt includes three kinds of institutions, namely, Ministry of Agriculture and Land Reclamation (MALR) and related institutions; Agricultural Cooperative Organizations; and Civil Society Organizations. Agriculture in Egypt has witnessed significant developments over the last two decades with direct effects on the role of the agricultural sector in national income formation and promoting exports. Such developments have also affected farmers’ delivery as related to the cropping structure, applied technology, levels of income, and farmers’ response to market changes. Agricultural sector growth rates have widely differed from one period to another due to the effect of the general economic conditions on the one hand, and in response to development and investment efforts on the other hand. The 1981/1982 – 1986/1987 period was the period where a higher growth rate was achieved, estimated at an annual rate of 3%, while the growth rates during the 1987/1988 – 1991/1992 period were at the lower edge, at an average annual rate of 2%. During the following periods, there has been some improvement of the growth rates, reaching 3.3% in 2006/2007, (MALR, 2010). It is clear from this that the many structural changes experienced by the agricultural sector during the 1990s have positively affected growth rates during the first decade of the twenty first century. At the beginning of the sixth development plan, 2007/2008 – 1011/1012, the projected rate of growth was estimated at 3.6%. Some of the most important reasons having direct and significant effects of the aforementioned development rates include the developments in the field of agricultural investments, whether on the part of the state or the private sector. Available information, Annex Table 1, and studies indicate a clear linkage between government expenditure and achieved development rates, clearly indicating that pubic investment expenditure for the development of the infrastructure of this sector constitutes the starting point for achieving significant developmental advances (WB, 2008). There are clear discrepancies between sectors contribution and allocated investment. While the agriculture contribution to GDP in 2006/2007 (before the economic crises) was about 13.6%, the allocated investment to the sector represented only 4% of the total allocated investment. Meanwhile, the return of 1 LE of investment in agriculture and irrigation brings a return of about LE 12.83, the returns in other sector are much lower, e.g. LE 3.51 for Petroleum and Gas; and LE 3.2 for industry, tables 1 and 2. The investment in agriculture has been affected by the liberalization of the agricultural sector from government restrictions/distortions: The 1990s witnessed a drastic change of the state responsibilities and roles as regards the agricultural sector. Agricultural production relations have been restructured through enacting a law regulating the relationship between land owners and tenants, the mandatory agricultural rotation has been cancelled, farmers’ marketing decisions have been liberalized, agricultural support has been gradually reduced in return of liberalizing agricultural prices, in addition to other significant developments leading to noticeable shifts in the cropping pattern towards the highest return crops from the point of view of the farmers, and consequently several previously-unknown crops and crop varieties have been introduced (Abdou and Taha, 2008). Table (1): Sector’s Contribution to GDP and Allocation of Investment (2007-2008) Sectors Contribution Investment GDP Investment by Return to one to GDP Allocated to (billion LE) Sector unit of (%) Sector (billion LE) currency (%) Invested (LE)

Agriculture and Land , 13.57 4 116.2 7.98 12.83 Reclamation Irrigation Petroleum and Gas 14.16 17.3 121.25 34.51 3.51

Industries 16.24 21.6 139.06 43.09 3.23

Transportation and 4.2 12.6 35.96 25.14 1.43 Storage

Communication 2.46 7.4 29.63 14.76 2.01

Real State 2.85 6.5 24.4 12.97 1.88

Restaurants and Hotels 4.01 2.8 34.34 5.59 6.14 Education and Health 4.35 5.3 37.25 10.57 3.52 Services Electricity 1.4 5 11.99 9.97 1.2

Water 0.34 3.2 2.91 6.38 0.46

Construction 4.55 1.6 38.96 3.19 12.21 Other Sectors 30.87 12.7 264.35 25.35

Total 100 100 856.3 199.5 4.3 Source: MOSED, NPI, 2009

Table (2): Share of Irrigation and Agriculture from National Investment Period % Period % 13.0 (Implemented 1970/71 – 1975/76 9.9 07/2006 – 03/2002 only 8%)

1977/78 – 1981/82 9.2 Jun-07 4.5

1982/83 – 1986/87 8.7 Jul-08 4

1987/88 – 1991/92 10.6

Source: (1) NPI, Planning and Development Issues, No. 29, Dec. 1994 (2) Social and Economic development Plan 2007/2008-2011/2012. 2-2-2 Agricultural Production and Productivity

Major agricultural products by quantity are sugar cane, tomatoes, wheat, rice and maize. While value wise, tomatoes, rice, buffalo milk, wheat and grapes head the list. Agriculture contributes to about 15% of national GDP. Egypt has become a net importer of agricultural commodities. Main imports by value include wheat, maize, meat, soybeans and tobacco. Main exports are rice, cotton, potatoes, oranges and grapes.

Agricultural development efforts during the 1980s, the 1990s and the first years of the twenty first century had achieved successes in plant production with all its components, as a result of expanding agricultural areas on the one hand, and improving land productivity on the other. Agricultural areas have been increased from around 5.87m feddans in 1980 to around 8.44m feddans in 2007, an increase of 44% during this period. The cropping area has also increased form 11.1m feddans in 1980 to 15.4m feddans in 2007. This period has also witnessed significant changes in the cropping pattern, as indicated in Annex Table (13). In spite of the great increase in the areas planted to field crops from around 9.75m feddans in 1980 to around 12m feddans in 2007, the percentage of areas planted to field crops diminished from around 87.6% to 87.3% of the cropped areas, while the areas planted to fruit trees have steadily increased from 3.1% in 1980 to around 8.5% of the cropped area in 2007. It is also noteworthy that the area planted to wheat has greatly increased during this period, from 11.9% in 1980 to 17.7% of the cropped area in 2007. As to rice, planted areas increased from around one million feddans in 1980, representing 8.7% of the cropped area, to 1.7m feddans in 2007, representing around 11% of the cropped area. The cultivated and cropped areas have been increased significantly during the first period 1981 -92 and the second period 1993-2009, Annex Table (14) and figures (1). The annual growth rate of the cultivated are averaged 1.6% during the first period compared to 1.19% in the second period. While the cropped area has increased by 0.87 %annually during the first period compared to 1.14% annually during the second period. The main reason beyond the reduction of annual growth rate of the total cultivated area is due to the low level of annual growth rate of cultivated area in the old land (0.01%) during the second period compared to the corresponding annual growth rates in the first period (i.e., 1.6%). On the other hand, The main reason beyond the improvement of annual growth rate of the total cropped area is due to that the annual growth rate of cropped area in the new land during the second period have been developed (i.e., 6.3%).

For a long time, agriculture in Egypt has relied on biological technology in increasing the productivity of the main crops, particularly cereal, sugar, fibre, vegetable and fruit crops, through the development of new high-yielding and disease- and pest-resistant varieties. Cereal crops have witnessed the highest increase in land productivity. Wheat productivity has doubled from around 1.36 tonnes/ feddan in 1980 to 2.72 tonnes/ feddan in 2007. Rice productivity rose by around 67% during the period under consideration, from 2.46 tonnes/ feddan in 1980 to 4.11 tonnes/feddan in 2007. New early-maturing rice varieties with short growth duration of 120 days have been developed, thus reducing water consumptive use by 25%. Trihybrid and monohybrid rice varieties have also been developed, leading to increasing productivity by around 90% during 1980 – 2007, Annex Table (15). In spite of the substantial increases achieved in the productivity of many crops, some crops have not achieved increases proportionate to their importance as related to the cultivated areas, and their importance in agricultural exports, such as clover, cotton and oil seed crops. Although occupying some 2m feddans, representing about 25% of the total agricultural land, clover has not enjoyed enough attention. In 2007, clover productivity amounted to 30 tonne/ feddan, compared to 25 tonne/ feddan in 1980, i.e. an increase of only 17% over twenty seven years. As to cotton, which is the primary export crop, productivity has been almost stagnant at 1.1 tonne/ feddan during this period, a situation which has led to: Egypt losing its competitiveness in the world market, farmers reducing the areas planted to cotton, and Egypt importing cotton to meet the needs of local spinners. On the other hand, leguminous crops and oil seed crops have not enjoyed enough attention, and their productivity remained below the standard that competes with alternative crops, in spite of the clear shortage of output and the steady increase of imports (MALR, 2010).

The value of agricultural production and income have been increasing significantly during the first period 1982-92 and the second period 1993-2008, Annex Table (12) and figures (2). The annual growth rate of the value of agricultural production has reached 15.3 % during the first period compared to 10.7% in the second period. While the agricultural income has increased by 16.2 % annually during the first period compared to 10.6% annually during the second period. The annual growth rates of the two major indicators in the second period were less than their corresponding values in the first period. 2-2-3 Capital Formation in Agribusiness Sector as an Engine for Growth

The engines of growth that are spelt out in the GOE Strategy (GOE, 2009), include industrial and agricultural development, tourism, commerce, Information and Communications Technology (ICT) and the Real Estate sector. The GOE strategy identified agribusiness as an engine for growth within the agricultural sector that may benefit from investment and lead to productive capital formation. Agribusiness Gross production in 2007 exceeded EGP 81 billion (price reference period 2006).

Agricultural marketing - including marketing policies, facilities, services, institutions, systems and modalities - continued to enjoy appropriate attention from planners, policy makers and decision makers over the years. However, attention has been primarily concentrated on agricultural production development projects and programmes, neglecting the primary and vital role of marketing systems and the programmes, projects and investments required for their development. Since the 1990s, attention has been given to the modernization and development of some of the marketing services of agricultural and food products. However, in spite of these developmental successes, marketing is still characterized with conventional practices leading to poor levels of marketing performance (MALR, 20009). While the rates of agro-industrialization are still below expectations, the last two decades have witnessed a significant development in this connection. Many agro-industrial units using the latest techniques have been established, meeting world quality standards and capable of accessing several foreign markets. Examples: juices, jams, frozen and dried vegetables. It is noteworthy that processing industry has not been limited to the direct processing of agricultural products but has also been expanded to include several inputs such as packaging material, fertilizers, pesticides, irrigation supplies, as well as other main agricultural inputs. These achievements have led to a significant increase of processed agricultural products. This is a crucial issue for agricultural investment and capital formation.

In spite of the abundance of high quality raw materials, especially fruits and vegetables, Egypt’s value added in the food processing sector does not exceed 20%. This is considered relatively low when compared to benchmark countries (Turkey, Morocco, China and Spain). Comparative advantage is observed in the production of potatoes and tomatoes specifically, as well as olives, yet their processed products are hardly exported.

Yet the fruit and vegetable processing sector, especially frozen and canned, enjoys increasing demand as well as supply. Egypt’s growth in this sector was 118% from 2005 to 2009. Exports reached more than LE 10 billion in 2009. Exports of fruit juices have also been rising mainly of exotic fruits and fortified juices. As for olive production, Egypt’s production has been increasing in the past decade to rank 8th among world olive producers (Abdou, 2010).

About 87% of the enterprises of the food processing sector are small and medium enterprises, which require attention of strategic planning, especially when considering quality, food safety and traceability. It is vital for policy makers to ensure market access, making use of Egypt’s strategic geographic location and developing demand driven products.

2-2-4 Human Resources/Capital Human resources is the most important agricultural resource in Egypt. With their wide experiences gained over long decades of settled agriculture, in addition to dynamism and vitality of these experiences and the new knowledge and techniques acquired over the years, human resources have been able to achieve great strides in agricultural development. Egypt now occupies an advanced position in the production of several crops such as sugar cane and wheat. It might be useful to highlight some of the traits of human resources/capital working in agriculture in the following points (MALR, 2010):

• Inhabitants of rural areas increased from about 22.7m in 1980 to about 41.9m people in 2007, at a rate of 85%. Agriculture and agricultural-related and complementary activities constitute the main source of income for the great majority of rural inhabitants;

• Parallel with this great increase in rural inhabitants during the last two decades, the working force in agriculture increased from 4.15m in 1980 to around 6.89m persons in 2007. This means that agricultural development programmes have lead to capital formation needed to create about 2.74m job opportunities over the last 27 years, at a rate of 100’000 jobs per annum. This has been possible due to the expansion of agricultural areas on the one hand, and the development of many agricultural-related activities and projects on the other;

• The last two decades have witnessed a significant development in the structure of agricultural human resources, as regards knowledge diversification, increased confidence and the application of scientific knowledge in addressing field application problems. This has helped increase the numbers of qualified personnel and the diversification of their knowledge and specializations. Some statistics useful in the evaluating of this specific development of agricultural human resources are:

o The numbers of qualified personnel (graduates of the Faculties of Agriculture and Veterinary Science) has greatly increased during this period. However, agriculture and veterinary educational institutions of all levels are unable to prepare graduates and provide them with an adequate level of knowledge and applied skills necessary for the job market, due to the lack of educational means and the limited budgets;

o The period has witnessed a steady increase of the number of graduates who acquired specialized higher degrees (M.Sc. and Ph.D. degrees). Consequently, the cumulative number of holders of Ph.D. and M.Sc. degrees amounted to 10’257 and 2’150 persons, respectively, in 2007;

o As to secondary agricultural education, there are 185 schools scattered in all governments, with about 302’000 students in the different specializations: animal production, land reclamation, mechanization and agro-industries. Under the Mubarak-Kohl programme, five schools for technical agricultural education have been established. These schools represent a replicable advanced educational system; o The Ministry of Agriculture and Land Reclamation has adopted intensive programmes for the development of human resources in the different technical fields. Thousands of persons have been trained in the different agriculture-related fields, such as protected agriculture, improved irrigation systems, organic agriculture, biological pest control, agricultural mechanization and other technological fields that helped achieve a qualitative improvement of agricultural crops, increase exports of agricultural products and their access to international markets. In spite of this qualitative improvement, human resources working in agriculture still need intensive training programmes for acquiring skills in the relatively new fields and activities; and

o Available information indicates that the pyramidal structure of human resources working in the field of agricultural research, extension and education suffers from distortion. The percentage of older staff at the top of the pyramid is high, while the base of the pyramid is shrinking, a fact that means that the coming period would witness a sharp reduction in research and specialised scientific staff, negatively affecting the performance of universities and agricultural research institutions, unless necessary measures are taken to address this situation,

2-2-5 Water Resources Management

Egypt is currently under the water scarcity limit internationally known as 1000 m 3/capita/year of renewable water resources to adequately cover a country’s domestic, agricultural, industrial, and other basic developmental water needs. Egypt depends mainly on the Nile water with a share of 55.5 billion cubic meters per year as indicated in its Nile Water Agreement with in 1959. With a continuously increasing population since then, the per capita share of renewable water resources in Egypt has been decreasing from 2500 m3/capita/year in the 1950’s to currently 750 m3/capita/year and it is expected to reach 250 m3/capita/year in 2050. The increasing gap between the available renewable water resources for Egypt and the water needs reflected by the need to meet the water scarcity limit has been fulfilled by water reuse, use of non-renewable groundwater, desalination, and imports of virtual water embedded in many food products such as wheat, meat, maize, table oils and others. In what may be considered a model for participatory planning, all water related sectors in Egypt have participated for three years under the umbrella of the Ministry of Water Resources and Irrigation (MWRI) to develop a National Water Resources Plan for 2017 (MWRI, 2004). The required investment costs for implementing this plan from year 2003 to 2017 reached LE 145 billion, with recurrent costs for operation and maintenance of about LE45 billion. As per the National Water Resources Plan of Egypt, agriculture uses 85% of its renewable water resources, industry uses 9.5%, and domestic uses amounts to 5.5%. The current annual water uses from the different direct and indirect water resources are divided as follows: 55.5 BCM from the Nile Water; 1.0 BCM Rainwater & flash floods; 6.5 BCM Renewable Groundwater; 5 BCM Agriculture Drainage Water Reuse; and 0.7 BCM Treated Wastewater Reuse.

The plan for meeting annual water needs in 2017 was set to develop the different conventional and non-conventional water resources in the amounts as follows: • 57.5 BCM from the Nile Water (If Phase 1 of Jongli Canal in Sudan is jointly implemented) • 1.5 BCM Rainwater & flash floods (If flash flood Dams are constructed) • 8 BCM Renewable Groundwater • 8.5 BCM Agriculture Drainage Water Reuse • 2 BCM Treated Wastewater Reuse (If corresponding wastewater treatment plants are constructed) • 3 BCM (if adjustment to cropping pattern and reduction of high water consumption crops is implemented) • 4 BCM Savings from Irrigation Improvement Projects

In addition to meeting future water demands in Egypt, there are several other challenges that faces the water sector, being the limiting factor for the development of Egypt in the future. These challenges affect the potential investment in agriculture. These challenges include the increasing population densities near the waterways, which eventually affects the available cross sections for water flows, and the quality of water due to potential wastewater disposal in these waterways. The continuous urban encroachment on existing agriculture lands indirectly affects the water sector due to the lost investment in the existing irrigation and drainage infrastructure, which includes several barrages, pump stations, and about 100,000 km of canals and drains.

To compensate for the lost agriculture lands and associated irrigation and drainage infrastructure by an alternative system for agriculture in the desert lands in the future is going to require huge infrastructure, operation and maintenance investments to deliver and pump the Nile waters for irrigation away from the Nile main course. Nevertheless, the above mentioned direct effect of urban encroachment on the old fertile agriculture lands is devastating and cannot be easily compensated by desert lands to reach its agriculture productivity without large investments.

Pollution of waterways and groundwater due to domestic and industrial wastewater and solid wastes disposal is another challenge which reduces the availability of appropriate quality water for use. The competition between development sectors on water and between users of the same sector is growing and is expected to create water conflicts. The number of irrigation water complaints due to water shortages has known to have increased recently. Due to the limited water resources, the irrigation water shortages are exacerbated by illegal water intakes, and violations of cultivating more than the allowable areas of high water consumptive crops such as rice. The 2008-2009 national trade policy to ban the export of rice due to the increasing price of rice in the local market, has fortunately resulted in the decrease of the areas cultivated by rice to about 1.7 million feddans in 2009. The allowable area for cultivating rice is about 1.1 million feddans which is more than enough to meet the local market demand, but it has been reaching over 2.0 million feddans as rice is a profitable crop for farmers especially if it is exported. The recent relief of the ban on exporting rice in Egypt is expected to result once again in the increase of cultivated areas of rice and will eventually result in more water shortages for other users. Striking a balance between the need to increase Egypt’s exports, and the need to reduce the cultivation of high water consumptive crops will remain to be a challenge that requires a strong political will, coordinated sectoral policies, and a clear vision on national priorities.

Improving irrigation water efficiency to meet some of the water needs of the agriculture expansion plan of 3.4 million feddans between 1997 and 2017 is one of the challenging pillars of the 2017 national water resources plan. This is expected to reduce, on average, the agriculture water demand from 4850 m3/feddan/year in 1997 to 3900 m3/feddan/year in 2017 (MWRI, 2004). Any agriculture expansion beyond 2017 will reduce the available agriculture water per feddan to unfavorable levels, unless there is more dependence on non-conventional water resources such as treated wastewater.

The uncertainty of climate change impacts on the water resources of the Nile River poses another challenge on the limited water resources currently available from the Nile for Egypt and hence on investment in agriculture. The current situation of the water sector is also facing other challenges such as the allocation of funds required for flash flood protection and water storage, and the funds needed to increase the current wastewater services coverage while maintaining the current level of domestic water services coverage for the increasing population. The cost to meet the Millennium Development Goals target for sanitation by 2015 in Egypt is estimated at LE 120 billion. That would still leave a population of about 28 million people without improved sanitation services.

Coordination between sectoral policies including trade, agriculture, water management, domestic water supply, and urban development, need to be efficiently implemented making use of incentive systems and economic tools to support water management policies.

Treated wastewater is expected to be the renewable water resource for agriculture expansion in the future, if no additional share of Nile waters is mobilized, and the existing Egyptian code for treated wastewater reuse in agriculture will need to be implemented. Coastal cities will have to opt for sea water desalination for their domestic and industrial uses. Non-renewable groundwater will have to be directed to domestic uses and water bottling. Water conservation measures in all sectors will have to be effectively implemented by new building codes for use of household water savings devices, improved surface and pressurized irrigation systems, and volumetric water services cost recovery mechanisms.

2-2-6 The Niches (Comparative Advantage) for Agro-ecological Zones/Regions as a base for Investment Mapping

Poverty, food insecurity, and agriculture investment structure and impacts differ among the different agro-ecological zones of Egypt. To ensure that the recommendations of any assessment of the agricultural sector in the study are pragmatic and practical, the distinctive features of the agricultural regions should be taken into consideration. Egypt has been divided into the following five geographical agro-ecological (or agricultural) regions: 1- Upper Egypt: including Asyut, Sohag, Qena, Aswan and the New Valley governorates; 2- Middle Egypt: including Giza, Bani-Sweif, Al-Fayoum, and Minya governorates; 3- Middle Delta: including Al-Qaliobeya, Al-Menoufeya, Al-Gharbeya, Al-Dakahleya, Kafr-el- Sheikh and Dumyat governorates; 4- Eastern Delta: including Al-Sharkeya, Port Said, Ismailia, Suez, Northern Sinai and Southern Sinai governorates; and 5- Western Delta: including Al-Beherah, Alexandria, Al-Nubareyah, and Matrouh governorates. The poverty distribution in these regions is depicted in Annex Table (11).

The following are the Socio-economic Characteristics of Egypt’s Regions and Development Indicators that are the base for any investment mapping for these regions:

1. Upper Egypt • Population number of this region is approximately 12 m people, representing around 16.5% of the total population of Egypt of around 72.5 m; • Population density is around 24.2 people/square kilometer, while population density of agricultural areas is around 10.57 persons/feddan; • Population density is at its highest in Souhag and Qena governorates, estimated at around 342 and 316 person/square kilometer respectively, and its lowest in the , estimated at around 0.5 person/square kilometer; • Illiteracy rate in this region is the highest in Egypt, estimated at around 47% of total population, and around 55% among women; • Women’s participation in the working force is the lowest in the country, estimated at around 18.4% of total working force; • Poor families represent around 45.8%, the highest among other regions. • Total area of the region is estimated at 495’000 square kilometres, representing 49% of the total area of Egypt, as the region includes the new valley governorate whose area is estimated at 440’000 square kilometres; • Agricultural areas are estimated at around 1.13 m feddans, representing around 14% of total agricultural area in Egypt; and • The region includes the largest lake behind the High Dam. Huge quantities of ground water are also available in different areas of this region, particularly in east Owainat and the New Valley areas. • Water resources in the region are of high quality, and contamination is the lowest in most of its lands, a situation that enables the expansion of clean agricultural products that can be exported; • Agr0climatic conditions in the region help in reducing the spread of fungal diseases, and the production of early-maturing crops, particularly vegetables that can be produced at times suitable for European markets; • The region is known for the production of dry dates; • There are great potentialities for horizontal expansion in Toshka, east Owainat and the New Valley areas. • There are potentialities for producing high quality products that cannot be produced in other regions, such as the Mahogany and Getrova trees that flourish easily in and ; • There exists a state of stable social texture that allows for the success of the different forms of social work, and ensures higher advantages for small farmers, in light of successful development programmes such as Al-Shams project that links small farmers with exporters, as well as the establishment of an institutional structure capable of providing producers with market information that would enable them produce in accordance with market trends and standards; • This region is characterized with high returns gained by its citizens working in other regions of the country and abroad, therefore capital shortage does not constitute a problem but the problem is how to explore and benefit from available investment opportunities; and • A great part of the old monuments is concentrated in this region, consequently tourist activities, hence the possibility of linking touristic development with agricultural development.

2. Middle Egypt • Population number of this region is approximately 15.3 m people, representing around 21% of the total population in Egypt, while population density of agricultural areas is around 10.2 persons/feddan; • Population density in agricultural areas is at its highest in (21.2 persons/feddan), as it is an urban governorate and part of the region, while it is at its lowest level in Al-Fayoum governorate (5.84 persons/feddan); • Illiteracy rate in the governorates of this region ranges between 48% and 52%, with the exception of Giza governorate where it is 28.8%, and Illiteracy rate of women is estimated at 50%; • The percentage of poor families varies between 44% in Bani-Sweif, and between 14% and 15% in Fayoum and Giza governorates, against 38% in ; • Women’s participation in the working force varies between governorates of the region and is estimated at 13-14% in Giza and Fayoum, 28% in Bani-Sweif and around 45% in Minya. • Total area of the region is estimated at 54’000 square kilometres, and Minya governorate is the largest governorate with 23’000 square kilometres, while Fayoum governorate is the smallest with an area of around 6’000 square kilometres; • Agricultural areas are estimated at 1.5 m feddans; • The Nile River is the only source of water for the region; • The region encompasses two depressions used in storing agricultural drainage water, namely Karoon Lake and El-Rayan depression in Al-Fayoum governorate. • Water resources of the region are of high quality with a low contamination level; • The region is dominated by varying climatic regimes, with a continental climate in Minya and Fayoum governorates. While Minya governorate is subject to frosty weather during winter, both Giza and Bani-Sweif governorates enjoy a relatively moderate weather with low humidity level, hence the diversity of its production; • Climatic conditions help the region to specialize in the production of tomatoes between seasons; • Most of the areas of the region (with the exception of Fayoum) are of the first and second grades; • Garlic production in concentrated in this region, where areas planted to garlic is estimated at 73% of the total garlic growing areas in the country; • The region is highly specialized if the production of medicinal and aromatic plants, with such areas representing 84% of medicinal and aromatic plants growing areas in the country; • The region enjoys wide experiences in processing medicinal and aromatic plants, and there are specialized industries with high a technical standard; • The region is close to the Greater Cairo region which is the greatest consumer market, with highways connecting the governorates of the region and the Greater Cairo region; • Agricultural intensification is high in the region compared to the general average in the country; it ranges between 200% in Giza and Bani-Sweif, 180% in Fayoum and 170% in Minya; and • The region has received the greatest number of externally-financed agricultural and rural development projects through which several modalities of pooling local resources and upgrading human resources’ capabilities through technology transfer have been applied, leading to the accumulation of technical and organizational skills that can be used in supporting development programmes in the region.

3. Eastern Delta • Population number of this region is approximately 8 m people, representing around 10.9% of the total population of Egypt; • Population density is low, estimated at around 100 persons/square kilometre, and greatly varies between the different governorates of the region, with around 1093 persons/square kilometre in Al-Sharkeya governorate and no more than 5 persons/ square kilometre in South Sinai; • Population density is estimated at around 6.5 person/square kilometre, and reaches its highest level (52 persons/feddan) in , and its lowest (2 persons/feddan) in North Sinai; • Illiteracy rate in this region is the lowest in Egypt, estimated at around 33%, and reaches its lowest level (16.7%) in , and its highest level (37.6%) in Al-Sharkeya governorate. Illiteracy rate among women is estimated at 43%, i.e. around its level in Middle Delta and Western Delta; • Women’s participation in the working force is estimated at around 29% of total working force in the region. It reaches its highest level in Port Said governorate (32.6%), and its lowest level (18%) in South Sinai; • Poor families are estimated at 23.5% of the total population of the region. This percentage reaches its highest level (29%) in Al-Sharkeya governorate, and is estimated to be around 8% in Port Said and Suez governorates. • Total area of the region is estimated at 79’000 square kilometres, while agricultural land are estimated at around 1.2 m feddan, representing 15% of the total area of agricultural land, around 63% of which are in Sharkeya governorate; • Wealth resources cover both agricultural land and mining; and • There are great potentialities for horizontal expansion in the region, both in north and middle Sinai. Over 400’000 feddans are expected to be added to agricultural areas, irrigated from Al-Salaam Canal. • Climatic conditions vary in respect to rainfall and relative humidity, leading to diverse production patterns; • The land area is spacious, allowing for diverse cropping patterns. Field crops are grown in Sharkeya governorate, while vegetable and fruit crops dominate north Sinai and ; • There are great potentialities for horizontal expansion both in the west and east of the Suez Canal. Reclaimed areas are estimated at 220’000 feddans, and 200’000 feddans in the west and east of the Suez Canal, respectively; • There is a possibility of reclaiming over 250’000 feddans in middle Sinai; • There is a variety of economic activities in the region: agriculture in El-Sharkeya governorate, north Sinai and Ismailia governorate, industrial and services activities in Port Said and Suez governorates, and promising tourist activities in south Sinai, mining activities in south and middle Sinai, in addition to activities related to the Suez Canal. • An average agricultural holding differs greatly between the different governorates of the region: less than 2 feddans in El-Sharkeya, around 5 feddans in Ismailia, and over 10 feddans in north Sinai. There are great numbers of large holdings that allow for introducing modern technologies and expanding the use of agricultural mechanization; • Historically, the region is characterized with the production of certain kinds of high-quality crops: mango, strawberry, green beans in Ismailia, and peach, olives and cantaloupe in north Sinai. As a result, the region has specialized in exporting certain agricultural products: mango, citrus, green beans, cantaloupe and strawberry; • There are pioneering examples of the use of modern techniques in large agricultural companies: protected cultivation, organic farming, and products for processing and exportation; • There are some large companies specializing in collecting and grading horticultural crops for exportation, in addition to companies specialized in agro-industries in the Tenth-of- Ramadan, Al-, and Ismailia; • There are vast sea water bodies along the northern coast of the region and two lakes: Bardaweel and Manzalah lakes; and • The region has all infrastructure facilities necessary for agricultural development: roads, electricity and water, in addition to the different services: health and education.

4. Western Delta • Population number of this region is approximately 12 m people, representing around 16.5% of the total population in Egypt of around 72.5 m; • Population density is one of the lowest densities, estimated at 51.2 persons/square kilometre, with wide disparity between governorates. Population density is estimated at 1’800 persons/square kilometre, around 1.7 persons/square kilometre in , and 479 persons/square kilometre in Al-Beherah governorate that includes Al- Nubareyah zone; • Population density is at its highest in Souhag and Qena governorates, estimated at around 342 and 316 person/square kilometre respectively, and its lowest in the New Valley governorate, estimated at around 0.5 person/square kilometre; • Women’s participation in the working force is estimated at 27.5%. This percentage reaches around 41% in Al-Beherah governorate and goes down to 12% in . This reflects the role of women in agricultural production, due to the fact that Al-Beherah is a rural governorate while Alexandria in an urban governorate; and • Poor families represent around 15.6% of the population of the region and are estimated at 9.5% in Alexandria, 15% in Matrouh and 21% in Al-Beherah. • Total area of the region is estimated at 179’000 square kilometers, representing 17.7% of the total area of Egypt. Agricultural areas are estimated at around 1’758 thousand feddans, representing around 22% of total agricultural area in Egypt. Agricultural areas in Al- Beherah governorate represent more than two thirds of total agricultural areas in the region; • There are great potentialities for horizontal expansion in the region, particularly parallel to the North West coast extending from Hammam Township to Marsa Matrouh. Due to the availability of wide rangelands, around 20% of the sheep and goat population are concentrated in this region; • The region has diverse water sources: Nile water, ground water and rainfall particularly in the northern areas where rainfall is enough for agricultural production. • Climatic conditions are relatively mild in respect temperature, allowing for diversified agricultural products; • Rainfall in both Matrouh and Alexandria governorates during the period from October to February is enough for agricultural activities; • Ground water is of high quality and at low depth, thus provide for supplementary irrigation; • Economic activities in the region are diversified (agriculture, industry, trade and services), ensuring great possibilities for integration between economic activities; • The region has the greatest concentration of tourist resorts on the north west coast which has witnessed an unprecedented increase in the number of summer tourists, a situation that underlines the importance of developing agricultural marketing services for meeting the needs of this category of consumers capable of paying higher prices for quality products; • The region has good naval and air transport facilities, thanks to the presence of Alexandria port and two airports in Nozha and Burg-el-Arab, a situation that would facilitate the transportation of fresh products to export ports and reduce internal transportation costs; • There exist in the region a large number of specialized agricultural marketing units (sorting, grading and packaging). There exist in Al-Beherah governorate and Al-Nubareyah zone around 158 specialized units in preparing and processing agricultural products. Agro- industrial units also exist in Burg-el-Arab and Al-Nubareyah townships and in Alexandria; • The region is geographically close to densely populated zones in Al-Beherah governorate and middle Delta governorates that constitute markets for its products on the one hand, and provide working hands for carrying out agricultural activities on the other; • This region is one the region that applies modern agricultural techniques in the fields of farm management, irrigation systems and the use of excellent plant varieties and animal breeds. Areas under modern irrigation systems are estimated at 415’000 feddans in Al- Nubareyah, and 100’000 feddans in Al-Beherah governorate; • This region incorporates the most important experiences in the fields of horizontal agricultural expansion and the establishment of settlements, as it includes projects for establishing settlements for small farmers, young graduates, different types of management for small, medium and large farms, as well as individual farms, family farms and large companies farms; • The region is distinguished for high-quality sheep; • The region incorporates vast water bodies: Idco Lake, Mariot Lake and in-shore north west coast of the Mediterranean, allowing for fisheries development, particularly sea fish farming; • The region contributes to agricultural exports of traditional field crops (cotton and rice) and non-traditional crops (potatoes, citrus and grapes); and • The region is historically known for certain field crops on top of which is long stable cotton (Giza-30) and rice, in addition to the production of date palm seedlings, as well as some other non-traditional crops such as artichoke, green peas, asparagus, and other vegetable crops.

5. Middle Delta • Population number of this region is approximately 20.2 m people, representing around 27.8% of the total population of Egypt; • Population density is at its highest among Egypt’s agricultural areas, estimated at around 1’450 person/square kilometre. Al-Qaliobeya is the most densely populated governorate due to its proximity to Cairo and the presence of so many industrial units, while Kafr-el- Sheikh has the lowest density, estimated at 700 person/square kilometer; • Population density in agricultural areas is estimated at 8.7 person/square kilometer, and reaches its lowest level in Kafr-el-Sheikh (4.3 person/feddan) and its highest level in Al- Qaliobeya governorate (22 person/feddan); • Illiteracy rate in this region is estimated at around 32% of total population, and reaches its lowest level (11.8%) in Domyat governorate and its highest level in Kafr-el-Sheikh governorate (43%); • Illiteracy rate among women is estimated at 42%, with its lowest level (16%) in Domyat governorate, and its highest level in Kafr-el-Sheikh governorate (52%); • Women’s participation in the working force is estimated at 24.5%, with its highest level (28%) in Al-Menoufeya governorate and its lowest level in Domyat governorate; • Poor families represent around 8.7%, the lowest in the country, with the lowest level (4.4% in Domyat governorate, and its highest level (15%) in Al-Menoufeya governorate. • Total area of the region is estimated at 139’000 square kilometres, representing 1.4% of the total area of Egypt; • Agricultural areas are estimated at 2.3 m feddans, representing 28.7% of the total area of Egypt. Kafr-el-Sheikh and Al-Daqahleya governorates are two of the largest governorates in Egypt, with around 609’000 feddans and 636’000 feddans, respectively. Agricultural areas are the lowest in Domyat governorate, estimated at 105’000 feddans; • The region has vast sea resources due to Al-Manzalah and Al-brollus lakes; and • The region totally depends on the Nile River as the only source of irrigation • water. Rainfall is limited on the northern stretches of the governorate during winter. • Moderate climatic condition in all the governorates of the region, with limited rainfall during the period from November to February, hence the diversity of production patterns; • Most of the lands are of high quality: first and second grade lands constitute around 50% of the total area of the region; • The region includes the rice, sugar beet, long-staple cotton, as well as the milk producing belts; • The region specialized in producing the seedlings of fruit and ligneous trees’, as well as ornamental plants, particularly in Al-Menoufeya governorate; • Production of flax concentrates in this region, particularly in Al-Gharbeya governorate; • Both Al-Qaliobeya and Al-Menoufeya governorates are two of the main citrus producing governorates; • Fifty percent of fattening broiler production and 40% of table eggs are produced in this region; • The region has great potentialities for developing fisheries production in Al-Manzalah and Al-brollus lakes. Fish farming flourishes in Kafr-el-Sheikh, Domyat and Al-Daqahleya governorates; • Many agro-industries and agricultural-related industries exist in the region: spinning and weaving in Al-Mahallah Al-Kubra, rice milling in Al-Daqahleya, Al-Gharbeya and Domyat governorates, fishing boats and fishing gear in Domyat governorate, agricultural machinery and equipment in Al-Gharbeya and Al-Daqahleya governorates, and the extraction of sugar from sugar beet in Kafr-el-Sheikh governorate; • There is a variety of economic activities including industrial, trade and services activities, allowing for complimentarily between these activities and agricultural activities; • There are several stations active in the fields of vegetable and fruit sorting, grading and packaging, as well as canning and freezing vegetables and the production of juices, jams, and dairy products. The region has the largest agricultural research stations, in Sakha, Mahlat-Mousa, and Al-Gemmeza. It also has five agricultural faculties and three veterinary Science faculties; and • The region has all infrastructure facilities necessary for agricultural development: roads, electricity and services. This is reflected in the high index of human development in the governorates of the region and the low percentage of poor families.

2-2-7 Major Issues and Challenges facing Capital Formation for Agricultural Development

The following are the major issues and challenges facing agricultural development and hence capital formation in Egypt (Abdou, 2010). These are based on analysis of detailed constraints and challenges by agro-ecological zones:

(1) Low agricultural and rural investment The number of Egyptians living on less than $1 per day is only 3.4%, the number living on less than $2 per day is 42.8%. The agriculture sector employs 30% of the active population, and there is a strong contrast between the sector’s large workforce and its contribution to the country’s economy. This tends to underline a low level of productivity and income. Large number of rural households depends on agriculture and farming (production) which is the main income contributor in major parts of the country. Meanwhile, agricultural investment is low as shown in tables 1 and 2. In addition, several factors are contributing to limiting the benefits of the recent reform in investment legislation and laws. The major challenges associated with agricultural investment include: (a) Cumbersome process of agricultural investment, particularly in the fields of land reclamation due to the multiplicity of actors and relevant government institutions, poor coordination among these bodies. This may reflect negatively on the investors and agricultural producers; (b) Extension in time great for the period necessary to obtain the contracts have reclaimed land to exceed more than ten years in many cases, than they lose this land sober use in bank guarantees to borrow the medium and long term, which is the primary vehicle for investment in both agricultural activities, direct or economic activities other related or complementary to it; (c) The apparent decrease of public investment in the agricultural sector, particularly in the field of irrigation and drainage projects during the past few years, as this kind of investment is a necessary condition for the entry of private sector investment, and then the reduced necessarily mean downsizing is accompanied to private investments; and (d) Lack of integrated policies, agricultural expansion horizontal, while the pay the government interest in the processing areas of land reclamation of facilities and components of agricultural infrastructure, diminishing the attention of this policy processing with areas of elements and components of agricultural services and non-farm to ensure the establishment of stable societies in the new areas, which resulted in his absence the scarcity of agricultural employment and high wages, which increased the extent of the burden of investment to the horizontal areas of agricultural expansion.

As shown in table 3, the allocation of investment by agroecological zones need to be in harmony with poverty incidents in these regions. Total expected investment for the implementation of the first phase (2011-2017) of the national agricultural strategy for agricultural development till 2030 has little correlation with the poverty incidents as reflected by available indicators. However, allocated investment (excluding the operational cost) in higher in the poor Upper Egypt region (89.3%) than other regions and the national average (84.6%).

(2) Increasing water use efficiency in irrigation Total renewable water resources available amount to 58.3 billion m3, out of which 56.5 is external renewable water (Nile); and 1.8 is internal renewable Average precipitation per year is 51 mm – rains are concentrated in the north Coastal area (surface and ground water). The renewable water resources represent 85.4% of the total water use (68.3 billion m3). Agriculture absorbs 86.4% of water uses (MALR, 2010). Water demand management and relatively low efficiency of farm irrigation practices constitute a serious challenge to agricultural development and a serious constraint limiting aggregate supply response to improved market conditions and market signals. Capital formation leading to improved water use efficiency is crucial for Egypt.

(3) Increased fragmentation and scattering of agricultural holdings The last two decades have witnessed increased fragmentation and scattering of agricultural holdings. The percentage of holdings of less than 3 feddans has increased from about 2.29m feddans in 1980 to about 3m feddans in 2000, according to the latest agricultural census. Also, the average area of the holding decreased from 6.3 feddans in 1950 to 2.1 feddans. The percentage of dwarfish holdings (less than one feddan) increased to 43% of total agricultural holdings in 2000, from 21.4% in 1950. Because of this fragmentation, an estimated area of 12% of the most fertile agricultural lands is lost as boundaries and partitions between holdings, a situation that weakens the ability of capital formation to modernize agricultural activities and increase productivity.

(4) Deteriorating Land Efficiency (Classification of Land Resources) Total Agricultural land increased from 5.87 m feddans in 1980 to approximately 8.44 m feddans in 2007, and cropped area increased from some 11.1 m feddans in 1980 to 15.18 m feddans in 2007. Areas of the first grade lands in 2001–2005 have declined to less than one third of what it was in 1996- 2000, while the percentage of the second grade lands has increased from about 33.6%, to 41.8% during this period. The third and fourth grade lands have also increased from 1.455 m feddans to 2.936 m feddans (MALR, 2010). This phenomena underlines the importance of reviewing government policies in the field of land maintenance and putting investment in land improvement programmes and projects as a top priority in the coming years. Table (3): Planned Investment and Poverty Indices by Agro-ecological Zones Agro- Government Private Sector Total Regions’ Allocated % Poor % ecological (Mill LE) (Mill LE) (Mill LE) Shares for Population Extremely Zone/Region from Investment Poor National (Excluding Population Investment Operational (%) Costs) from Total Investment (%)

Investment Operational Sub-Total Investment Operational Sub-Total West Delta 8984.5 744.2 9733.2 9018.8 2889.8 11908.6 21641.8 22.1 83.1 11.4 0.7 Middle Delta 6080.9 815.8 6909 10625.3 2639.8 13265 20174 20.6 82.2 22.0 2.3

East Delta 4049.9 448.7 4504.5 5874.6 1962.4 7837 12341.5 12.6 80.4 14.7 2.1 Middle 8345.7 670.6 9020.6 8233.2 2314.4 10547.6 19568.2 20.1 84.7 28.0 6.2 Egypt Upper Egypt 12732.5 673.3 13405.9 8723.6 1897.1 10620.7 24026.6 24.6 89.3 43.1 12.2

Grand Total 40193.5 3352.6 43573.2 42475.5 11703.5 54178.9 97752.1 100.0 84.6* 23.8* 4.7* * National Average Sources: (1) MALR, 2009 (2) UNDP, 2008 (5) Human Resources and Capacities in Agriculture Human capital is the most important resource in Egypt. Inhabitants of rural areas increased from about 22.7m in 1980 to about 41.9m people in 2007, an increase of 85%. In Egypt, agriculture and agricultural-related and complementary activities constitute the main source of income for the great majority of rural inhabitants. Parallel with this great increase in rural inhabitants during the last two decades, the working force in agriculture increased from 4.15m in 1980 to around 6.89m persons in 2007. Agricultural development programmes have been able to create about 2.74m job opportunities over the last 27 years, at a rate of 100’000 jobs per annum. Agricultural and Veterinary Science Education increased number with lower skills. As to secondary agricultural education, there are 185 schools scattered in all governments, with about 302’000 students in the different specializations. Enhancing the efficiency of human resources/capital needs to be a top priority for agricultural growth and development.

(6) Role of the Government and Institutional Capacities to Manage SARD There is imbalance between the responsibilities of government agencies, represented by the Ministry of Agriculture and Land Reclamation and its institutions and the actual practices. While the participation of Civil Society Organizations in rural development has been increasing, the reform of agricultural institutions has been slow.

(7) Agricultural Research, Technology Transfer and Potentials to enhance Productivities Although productivity in the Egyptian agriculture is increasing, there is a need to match agricultural investment with potential and high water saving crops. Wheat, maize, and rice production has more than doubled since 1990. This overall increase has been primarily driven by increase in crop areas. Yield improvement rate was significant in the 80’s– however, from 1990 to 2000, yields grew at just above 1% per year for maize and rice and around 0.5% for wheat; wheat and maize yields have reached a plateau in 2000. Cereal supply has been a major issue for Egypt - per capita wheat consumption is around 180 kilos per year (MALR, 2009). Though domestic production has grown substantially over the last two decades, it covers only 55% of the country’s requirements. Over the recent period, Egypt imported 6.5% of the wheat traded worldwide - or around 7.15 million tons annually. Based on present and planned research programmes contained in the strategy till 2030, as well as the wide potentials of using bio-technology, the projected land productivity by 2030 is expected to increase (Cereal Crops: 3.6 tonnes for wheat, 5.2 tonnes for rice and 5 tonnes for maize; Sugar Crops: 65.4 tonnes for sugar cane and 35 tonnes for sugar beet; Fibre Crops: 1.8 tonnes for cotton; Fodder Crops: 50 tonnes for perennial clover; Fruit Crops: 15 tonnes for citrus crops, 4 tonnes for grape and 10 tonnes for mango; and Vegetable Crops: 30 tonnes for tomatoes and 14 tonnes for potatoes).

Meanwhile, all indications emphasize that the utilization rate of the research and technology transfer institutes in Egypt incompatible with their potentialities. This is due to reducing their annual budgets which are barely enough to cover wages and salaries, leaving negligible appropriations for research programmes and activities. The budgets of research and extension barely exceed 0.01% of the share of agricultural in national income. Such budgets cannot be compared to the budgets of research and extension institutions in the developed countries, or even in some developing countries, ranging between 2.5 – 3.0% of the annual share of agriculture in the national income. However, in spite of the limited financial resources allocated to research and development, such resources are grossly misused. Research topics are repeated, and are poorly related to development problems and issues that need to be addressed. There is also lack of coordination between the roles played by the different research institutions due to the lack of a national research plan according to which all agricultural research institutions collaborate and exchange experiences for the general good. Investment in enhancing capacities in agricultural research and technology transfer is certainly inadequate. (8) Exploiting Information and Communication Technologies Utilization of Information technology has increased but not enough. Data bases and expert systems have been introduced under the Rural and Agriculture development Communication Network (RADCON) and other Platforms/Supporting Networks. However, investment shares devoted to these areas are not matching their increasing importance.

(9) Competitiveness of Agricultural Products throughout the Value Chain Any endeavor to develop and improve the competitiveness of Egyptian agricultural products in local and international markets would require enhancing capital formation at the different levels: the national level, the agricultural sector, as well as at the level of all productive institutions. On its part, the government endeavors to strengthen competitiveness at the national level, through economic reforms and the improvement of investment environment, financial and monetary macro-policies, and external trade policies.

(10) Preparing the Agricultural Sector for Adapting to Climate Change (Vulnerability and adaptive capacity) The link among Climate Change, SARD, Poverty and allocation of agricultural investment and capital formation should be recognized and highlighted. Impacts on agriculture production is mainly through reducing productivity of crops, livestock and fisheries as well as area reduction leading to reduction in on-farm income generating activities, (income to sustain the payment for maintaining social services). This should be a critical issue for planning agricultural investment and capital formation in Egypt. Climate risks to development (depending on available assumptions) includes: (1) Drought (Although flooding needs to be considered, it is not expected due the presence of the High Dams); (2) Temperature stress (Higher and more variable affecting Productivity and Seasonal pattern); (3) Water stress (precipitation patterns - increased evaporation and water consumption); and (4) Coastal flooding (Affecting Delta Region and the Northern Lakes of Egypt). The Potential direct impacts (scale of risk from climate change varies with assumptions about future development) includes poverty, reduced GDP (high vulnerability consequence on low levels of income – economic losses due to changes in production and trade); and Food insecurity (availability- Stability; Access; Utilization). The Potential Indirect Impacts include Social Services/Sectors such as deterioration of health and reduced education opportunities, while poverty leads to reduce capacities to sustain these services in the long run.

(11) Better Utilization of Farm Residues In recent years, the annual average production from agricultural residues was estimated to be about 59.0 million tons. Meanwhile, the food processing wastes which are generated through preparing and packing vegetables and fruits were estimated to be around 1 million tons per year. The average production of crop residues ranged between 1.13 – 3.05 tons/ feddan for straw, while it ranged between 1.18 and 2.30 tons / fed for stalks. The greenhouse residues were estimated by 14.0 tons/fed, while the vegetable straw generated in the field were evaluated by 3.0 tons/fed. The traditional utilization of agricultural residues in rural Egypt includes animal feed, compost production, farm-yard manure –FYM- and direct fuel. The amount utilized as dried animal feed were estimated to be 10 million tons/year equivalent to 30% of total crop residues. The agricultural residues which are converted to organic fertilizer, compost and/or farmyard manure were estimated to be 9.4 million tons/year equal to 28% of total crop residues. The rest of 14 million tons/year equivalent to 42% of total crop residues were utilized as direct fuel in primitive stoves and/or direct burning in open area. Enhancing agricultural investment and capital formation to improve the utilization of farm residues will have health, environmental (black cloud), income, employment and gender implications.

(12) Fisheries not reaching their potential Egypt has several sources for fish production, with total areas of 14m feddans of water bodies. Fish production in Egypt is much lower than its potential level. Fish production in Egypt depends on capture fisheries (seas, lakes, the river Nile and its branches) as well as on aquaculture. Fish production has greatly increased from approximately 243’000 tones in 1980 to some 970’000 tones in 2007. Investment in developing the fisheries sector will have direct impact on capital formation and hence sustainable development of this important sector and national food security.

(13) Regional Development based on Comparative Advantages In case of planning for displacement of the Delta population due to raising sea level, and to achieve balanced rural development, there is a great need to consider the niches and comparative advantages of the different geographical agro-ecological zones in Egypt. Five geographical regions should be considered, taking into consideration the distinctive features of the agricultural regions. They are: Higher Egypt (Asyut, Sohag, Qena, Aswan and the New Valley governorates); Middle Egypt (Giza, Bani-Sweif, Al-Fayoum, and Minya governorates); Middle Delta (Al-Qaliobeya, Al-Menoufeya, Al- Gharbeya, Al-Dakahleya, Kafr-el-Sheikh and Dumyat governorates); Eastern Delta (Al-Sharkeya, Port Said, Ismailia, Suez, Northern Sinai and Southern Sinai governorates); and Western Delta (Al- Beherah, Alexandria, Al-Nubareyah, and Matrouh governorates).

2-2-7 Government Strategic Orientation and Objectives (2030)

The strategic objectives of the Government for achieving sustainable agricultural development till 2030 represent the Developmental Framework for agricultural investment and capital formation. These major objectives are (MALR, 2009): 1. Sustainable use of natural agricultural resources 2. Developing agricultural productivity per unit of land and water 3. Supporting competitiveness of agricultural products at local and international markets 4. Achieving high levels of food security in strategic commodities 5. Improving agricultural investment environment 6. Improving livelihood of rural inhabitants

Constraints and obstacles include those related to: Agricultural policies, such as limited agricultural investments, inflexibility of credit policies, and capacity to formulate, analyze and monitor policies; agricultural institutions and coordination; the imbalance between the development of production and the improvement of marketing services and food quality/safety; poor information system; and discrepancies between Export agriculture and small scale farming.

The GOE stated major priorities for agricultural development till 2030 as: (A) Efficient Utilization of Natural Resources 4. Rationalization of water resources use 5. Land use and expansion (Horizontal agricultural expansion and settlement policy) 6. Adapting to climate change (Vulnerability and adaptive capacity) (B) Enhancing Productivity and Competitiveness of Agricultural Products 7. Raising the levels of self-reliance and self-sufficiency in strategic food commodities 8. Improving consumption patterns in order to improve nutritional standards and the vital bodily functions 9. Reducing post-harvest food losses 10. Improving food quality and safety 11. Enhancing competitiveness of agricultural products throughout the value chain 12. Fisheries development (C) Institutional-Human Capacity Building and Policy Environment for Managing Agricultural Development 10. Improving the climate for agricultural investment 11. Improving civil societies and cooperatives 12. Improving agricultural policies formulation and analysis and social safety nets 13. Enhance research based technology transfer (agricultural extension system development) 14. Agricultural extension system development policy 15. Activating the role of agricultural communication in the service of agricultural development issues 16. Regional and international cooperation 17. Priority in coordination technical support and foreign aid in environment and agriculture 18. Priority for Capacity Building (D) Poverty Reduction 4. Improving the standard of living of rural inhabitants 5. Off-farm income and utilization of farm residues 6. Reducing regional disparities III. Analytical Framework

The overall goals of the case study for Egypt are: (1) To investigate the structure, magnitude and trends of capital formation in agriculture; (2) Analyze major determinants of agricultural investment and capital formation; and (3) Provide policy options for promoting appropriate agricultural investment and capital formation for stimulating sustainable food production. The following are the basic elements of the analytical framework applied in conducting the case study for Egypt and achieving these goals. 3-1 Review of Literature on Capital Formation in Egypt: More than hundred references on the conceptual framework of capital formation were identified and reviewed. Only few documents are available on the subject in the Egyptian literature. The references concerning the Egyptian case were identified, reviewed and assessed to gain better understanding about the development of macroeconomic and agriculture sector policies in Egypt with particular emphasis on agricultural investment and capital formation. The following includes an abstract of some of the reviewed related documents and articles on the Capital Formation in Egypt’s Agriculture: Literature of the capital formation in Egyptian agricultural sector includes potential impact of public and/or private agricultural investment on the economic performance of farm sector in terms of labor productivity and the potential progress in yield per planted area of major farm crops. The literature also examined the impacts on agricultural share in GDP and farmer’s incomes, which considered a major source for poverty alleviation in rural areas in Egypt. Selim (2009) has estimated Klien’s model in studying economic factors affecting both domestic and foreign agricultural investment. She used time series data during 1995-2008. She finds that most important factors affecting domestic agricultural investment in Egypt’s farm sector are: • Ratio of agricultural income to national income. • Loan’s interest rate. • Average annual wage rate in agriculture. • Balance of trade deficit. • Farm wholesale price index. Meanwhile, factors affecting foreign investment in Egyptian agriculture were: • Ratio of agricultural income to national income. • Balance of trade deficit. • Unemployment rate. • Average annual wage rate in agriculture. • Exchange rate. • Agricultural labour productivity. Selim (2009) concluded that ratio of agricultural income to national income and farm wholesale price index was significantly affecting domestic agricultural investment in Egypt’s farm sector. While ratio of agricultural income to national income, unemployment rate, and agricultural labour productivity, were the most important factors affecting foreign investment in Egypt’s farm sector. Shehata, et al (2009), estimated Klien’s model to measure both national and agricultural investment efficiency. They applied the two stage least squares (2 SLS) by using Seemingly Unrelated Regression (SUR) to estimate the proposed model. Results indicate that major factors affecting agricultural investment at the national level are: o Agricultural revenues at the same year (t). o Lagged agricultural revenues (t-1). o Lagged public investment (t-1). o Exchange rate. Whereas, factors affecting agricultural investment at the farm sector level are: o Current agricultural revenue at the same year (t). o Lagged agricultural revenues (t-1). o Lagged public investment (t-1). o Exchange rate. Projections for public investment and agricultural investment indicate that: (i) Public investment was estimated to reach about LE 444.05 billions at 2015, increased by 186% relative to 2007 figure. (ii) Agricultural investment was estimated to reach about LE 10.46 billions at 2015, increased by 34.3% relative to 2007 figure. While, results of the analysis indicate that Measures of economic criteria for capital formation efficiency in agriculture, such as: Rate of Investment (ROI), Return on Investment (ROI), Investment Multiplier (IM), Coefficient of Endemism (COE), and Capital Intensification Coefficient (CIC) indicate that investment in agriculture is economically efficient. El-Saady, et al (2009) has investigated major determinants of both public and private agricultural investment and its related potential efficiency during 1981/82-2006/07. Major conclusions of the study indicate that: 1. Private agricultural investment was increasing during the studied period. Meanwhile, public agricultural investment was declining. 2. Estimation results indicate that most important factors that positively affected both public and private agricultural investment in Egyptian agriculture are: agricultural income; agricultural savings; farm loans. Whereas, domestic liquidity; net agricultural trade balance; discount rate; and exchange rate have had negative effect on both public and private agricultural investment during the study period, 1981/82-2006/07. 3. Major indicators of agricultural investment efficiency such as: Rate of Investment (ROI), Return on Investment (ROI), Investment Multiplier (IM), Coefficient of Endemism (COE), and Capital Intensification Coefficient (CIC); Share of agricultural labour; average ratio of domestic source’s coverage of agricultural investment indicate that investment in agriculture is economically efficient. Selim (2008) estimated Klein’s model to investigate major factors affecting public agricultural investment in Egypt during, (1990-2006). Results of estimation indicate that: 1. Factors affecting agricultural investment are lagged agricultural revenue; lagged agricultural investment; and current agricultural revenue. 2. The study recommended an expansionary monetary policy to promote agricultural investment and/or taxes cut policy to encourage agricultural investment. Ragab and Royiany (2007) studied the potential effects of both domestic and foreign agricultural investment on agricultural development during (1987/88-2005/06). Estimates of factors affecting domestic agricultural investment were: deflated value of agricultural output; net agricultural trade balance; weighted average of exchange rate; and weighted average of interest rate on farm loans. Meanwhile, estimates of factors affecting foreign agricultural investment were: deflated value of agricultural output and weighted average of exchange rate. Results of the study indicate that foreign investment in agricultural sector creates more jobs and encourage technology transfer to Egyptian economy. Mohamed (2008) , studied investment efficiency in Egypt’s agricultural sector during (1995-2006). She estimated major investment efficiency criteria such as: Rate of Investment (ROI), Return on Investment (ROI), Investment Multiplier (IM), Coefficient of Endemism (COE), Capital Intensification Coefficient (CIC), and Capital/Labor Ratio. The study concluded that major constraints facing agricultural investment were: 1. Sharp decline in public investment in the farm sector. 2. Transfer of farm surplus to non-farm sectors. 3. Obstacles facing agricultural horizontal extension projects especially lack of infrastructure. 4. Lack of skilled farm labor 5. Dramatic increase in farm input’s prices, and consequently, the costs of agricultural production. 3-2 Data Used and Sources (i) Types of Data Used: Capital formation is well studied in several parts of the world. Great number of references on the conceptual framework and empirical analysis of capital formation were identified and reviewed (Bisaliah, 2008). Meanwhile, only few documents are available on the subject of capital formation in the Egyptian literature. There are two challenges to the current analysis for Egypt, namely (1) the conceptual dilemmas and practical difficulties in adopting a broader definition of capital formation in and for agriculture; and (2) the availability and development of data for capital formation in agriculture and for agriculture. There are several problems with the available time serious data concerning investment and fixed capital formation at the national level in and for agriculture in Egypt. Although the definition of the capital formation within the framework of the Egyptian National Accounts System is based on the System of National Accounts (SNA) of the United Nations, there are still several conceptual and estimation difficulties specially with the capital formation for agriculture. In addition there are the regular agricultural data problems of developing countries including multiple values for the same variable based on the number of sources; and difference in reporting periods, e.g. available investment data and other proxy variables are reported by financial years while others are using calendar years. The conceptual problem of how far can we stretch to develop data on capital formation with biological capital, knowledge capital, human capital, inputs, impact of subsidies, etc. is adding to the difficulties. The inclusion of all investment items brings the definition of investment in economics as “creation of capital or goods capable of producing other goods or services”8. Under this definition, expenditure on education and health is recognized as an investment in human capital, and research and development in intellectual capital, etc. The current analysis benefited from all previous efforts on the subject, and attempts are made to utilize limited available information to achieve the objectives of the case study.

For the case study for Egypt, three sets of data are compiled and used: (1) Secondary regularly published data from different sources such as the Ministry of Agriculture and land reclamation (MALR), Ministry of Planning (MOP), and Central Agency for Public Mobilization and Statistics (CAPMAS). These data are based on National Accounting. The compiled secondary data during 1982/83 - 2008/09 period have been used to explain and discuss the trends and development the

8 http://www.businessdictionary.com/definition/investment.html#ixzz10jfSNt5r macroeconomic variable such as resources, utilization, Gross Domestic Product, investment, number of workers, agricultural production and income, cultivated and cropped areas, and agricultural investment. In addition secondary data during 1982/83 - 2008/09 period (when available) have been used to calculate and compute the efficiency indicators. The assessment in the case study for Egypt is divided to two major periods of distinct macro and sectoral economic reform policies and orientation, namely, the first period from 1982/83 to 1991/92 representing the period before economic reform; and the second period from 1992/93 to 2008/09 representing the economic reform period; (2) Data and Information available through National Agricultural Censuses of 1990, 2000, and 2005 (mid- census). Census of Egyptian Agriculture is a comprehensive inventory of the components of the economic structure of agricultural economy for a specific time period, an agricultural season. It includes data statistics on agricultural reclaimed desert land, the major agricultural projects in Upper Egypt and Sinai, in addition to the evolution of modern irrigation and drainage, agricultural machinery and crop and livestock holdings/farms structure; and (3) Primary data at the farm level were collected through a field survey and structured questionnaire. The data were collected at the farm level for two governorates and four districts. A simple random stratified cluster sample has been selected from the targeted farms (see next section 3-ii below).

Due to the diversity of agro-ecological zones in Egypt, the study adopts the classification of agro- ecological zones used by the sustainable agricultural strategy till 2030 (MALR, 2010). The poverty, cropping pattern and comparative advantages differ significantly among these regions, and hence affecting the investment composition and the capital formation trend and composition. Detailed data are not available on these zones, but an attempt is made to follow such classification to better appreciate the need for specific recommendation regarding capital formation in each region.

In addition, the estimates of investment in agriculture have indirectly been derived by the FAO Statistics Division9 using physical data on livestock, tractors, irrigated land and land under permanent crops, etc. and the average prices for the year 1995. These data enabled the derivation of the Capital Stock in Agriculture and the annual change in the latter is taken to reflect Investment in Agriculture. This database in US$ contains estimated data on investments made by both the public and the private sector. The components of capital stock are machinery, land improvements, livestock, and structures. These data are partially used in the current analysis. Given the discrepancies between these figures and published National Accounting data, the FAO detailed time series (1990-2007) was used only to illustrate the composition of capital stocks based on this source.

(ii) The Farm Validation Survey A simple random stratified cluster sample was selected from two different agronomic zones .i.e. Sharkia and Dakahlia governorates, in order to investigate factors affecting capital formation in Egyptian agriculture at the farm level. Two districts (one is far and the second is very close from the capital of the governorate) have been selected from each governorate; El Hosinia district and Zagazig district from Sharkia, El Mansoura district and Elmanzala district from Dakahlia. The two districts El Hosinia and Elmanzala are far from the capitals of the governorate whereas Zagazig and Elmansoura districts are the capitals of the governorate. The very close districts from the capital have; (i) access for the varies agricultural input and output markets, (ii) high demand levels on agricultural product because consumers have high incomes and (iii) good agricultural infrastructure. On the other hand, the far districts from the capital have; (i) limited agricultural input and output markets, (ii) low demand levels on agricultural products, (iii) poorer agricultural infrastructure and (iv) lack of agricultural information. Two villages (one is far and the second is very close from the capital of the district) have

9 FAO - http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and-environmental- indicators/capital-stock-of-agriculture/es/ been selected, figure (3). A 200 farms from the two governorates, i.e., 25 farms from each village have been selected. The farms selected on the base of 5 large scale farms (more than 5 feddans), 10 moderate farms (2- 5 feddans) and 10 small farms (less than 2 feddans). In the light of the objectives of this case study, the primary field data based on limited field survey was found suitable specially under the time constraint for implementing the study, and the limitations in the technical - production and economic published secondary data. The primary data will be more suitable to assess the indicators on investment efficiency and impacts, such as: (i) Human labor productivity according to capital intensification; (ii) Measure of capital formation efficiency (i.e., Capital/Output Ratio, Capital/Land Ratio and Capital/Productivity Ratio) by crops; and (iii) Estimate factors affecting capital formation at farm level. The primary source of information and data were of two types, formal questionnaire and basic/key informants. Various sets of questionnaires were used to collect information from three groups of stockholders (i.e., small, medium and large) in each district. In addition, the primary field data concerning the main crop budgets in each district also have been collected. The primary data and personal observations used in this study are analyzed and presented in an integrated manner. The results are incorporated into various relevant sections of the study. The questionnaire covers several issues. The questionnaire is considered as the main tool for collecting all qualitative and quantitative primary data needed to establish the database and baseline in the targeted groups. The main topics covered by the questionnaire were pertaining to all personal, household, labor and capital profiles; land tenure, technical and production aspects of the targeted stockholders. The design of the questionnaire took into consideration the parameters established and related verifiable indicators to be provided by the collected data. The stockholder questionnaire provides the following main sets of information: 1- Personal and structural information including name of farm owner, farm location, farm production scale, owner age and experience in agriculture, educational status, household size…etc. 2- Capital and land tenure data comprising; (i) development of the value and area of agricultural land tenure; (ii) development of the value and numbers of livestock and agricultural machineries; (iii) development of the value of private investment in the farm; and (iv) the values, sources and purposes of farming loans 3- Human labor profile of the major cultivated crops in the farm including man-day per feddan and by farm operations. 4- Value and quantities of inputs and outputs of the major cultivated crops in the farm. 5- Factors affecting capital formation in the farm during the last five years. Copy of the farm questionnaire sheet is attached in Annex 2. Figure (3) Sample framewark of seclected farms

Sample Size: 200 farms

Sharkia Governorate: Daqahlia Governorate: 100 farms 100 farms

El Hosinia District: Zagazig District: El Mansoura District: El Materia District: 50 farms 50 farms 50 farms 50 farms

Village 1: Village 2: Village 1: Village 2: Village 1: Village 2: Village 1: Village 2: 25 farms 25 farms 25 farms 25 farms 25 farms 25 farms 25 farms 25 farms 3-3 Major Determinants, Indicators and Models Used

An attempt was made to estimate and examine the following efficiency indicators using the compiled macroeconomic and farm level information: 1) Agricultural Investment Rates ((AIR) = Agricultural Investment ÷ Agricultural GDP 2) Return to Agricultural Investment (RAI) = Agricultural GDP ÷ Agricultural Investment 3) Investment Multipliers (IM) of Agricultural Sector = Changes in GDP ÷ Changes in Agricultural Investment 4) Capital Intensification Factor (CIFW) = Agricultural Investment ÷ Number of Agricultural Workers 5) Coefficient of Endemism (COE) = (Agricultural Investment / Total Investment) ÷ (Agricultural GDP / Total GDP) 6) Productivity Rate of Agricultural Investment (PRAI) = Agricultural Income ÷ Agricultural Investment 7) Capital/Output Ratio (COR) = Value of Agricultural Production ÷ Agricultural Investment 8) Agricultural Investments Per Feddan = Capital Intensification Factor Per Area (CIFA) = Agricultural Investment ÷ Cultivated Area.

In addition, the current case study for Egypt attempts to specify and quantify factors affecting agricultural investment and capital formation. In particular an econometric model (Sastry, 2003), was specified to provide quantitative answers to major related macro questions such as:

• The potential factors affecting domestic and foreign investment in agriculture • The potential factors affecting public and private investment in agriculture. • The possible impact of public investment in agriculture on encouraging private sector investment in the sector. • The possible impact of public and private investment in agriculture on employment and output in the sector.

The differences and variability among regions are better explained through farm-level survey in two different governorates of rural Egypt, as explained later.

35 IV. Agricultural Investment Trend and Determinants

4-1 Perpetual Inventory for Capital Formation during 1990-2005 Censuses

The agricultural census data for the years 1990, 2000 and agricultural mid-census in 2005 are used to assess the changing inventory for major capital items based on the accumulated investments in these areas. Available information from previous censuses includes: 1- Area Under Cultivation and Agricultural Holdings 2- Holdings Number and Size 3- Cropped Area 4- Sources of Irrigation and Drainage 5- Agricultural Population and Agricultural Labor Capital 6- Livestock Farms and Holdings 7- Domestic Poultry and Poultry Farms 8- Agricultural Machinery

4-1-1 Area Under Cultivation and Agricultural Holdings Data from Table (4) indicate an increasing trend in the cultivated area of about 7.8 million acres in 1999 to nearly 8.9 million acres in 2000, with an average annual increase of about 1.4%, and then to approximately 9 million acres in 2005 with an annual rate of about 0.2 % during the period 2000-2005.

The area cultivated in the provinces of Lower Egypt, the overwhelming proportion rate of about 60% of the total cultivated area in 2005 while the proportion of cultivated area in Upper Egypt about 33% and 7% in agricultural areas outside the valley.

Data also indicate the trend to increase the number of holdings during the first period of about 2.5 million holdings in 1999 amounted to some 2.4 million holdings in 2000 an average annual increase of about 2.9% and then to about 4.9 million holdings in 2005 an annual increase of about 0.9% during the second period 2000 - 2005.

The number of agricultural holders in Lower Egypt, represents about 53% and about 45% in Upper Egypt, and in agricultural areas outside the valley about 2% in 2005. During the same year, the numbers of holders who own agricultural land, represent about 82% of the total number of holders.

36 Table (4) The Changing Inventory of the Cultivated Area and Agricultural Land Holdings, 1990-2005

Total Cultivated Area Governorates Total Number of Holdings Number of Land Holdings Feddans 1990 2000 2005 1990 2000 2005 1990 2000 2005 Cairo 3,680 4,653 3,870 3,214 4,407 3,821 6,092 20,080 21,311 Alexandria 17,755 34,723 37,371 15,784 29,007 31,008 160,183 173,361 173,627 Port Saied 3,760 7,282 8,006 2,638 6,223 6,817 40,903 77,832 78,812 Suez 4,722 5,681 6,334 3,657 4,689 5,513 21,565 25,476 27,618 40,003 59,241 65,871 34,260 47,590 50,756 118,677 138,130 152,351 Dakahlia 303,951 416,704 454,940 271,194 346,820 383,626 670,931 748,609 754,303 Sharkia 355,262 490,365 519,729 314,865 414,717 439,079 865,002 919,875 922,581 Qalyoubia 150,054 176,228 183,585 133,677 151,785 159,981 202,323 192,998 190,482 171,319 253,714 280,573 149,837 204,104 224,072 525,993 617,900 619,174 Gharbia 235,268 277,983 288,124 216,122 255,036 264,143 405,970 404,213 404,096 Menoufia 229,419 284,334 296,704 214,148 266,505 277,875 316,836 412,175 413,078 Behairah 303,276 386,223 420,995 263,921 339,003 369,025 1,308,667 1,411,669 1,422,403 Ismailia 35,908 53,494 56,482 29,315 44,671 46,408 191,702 204,983 208,825 Total Lower Egypt 1,854,377 2,450,625 2,622,584 1,652,632 2,114,557 2,262,124 4,834,844 5,347,299 5,388,659 Giza 132,145 171,129 188,079 115,676 139,077 150,080 257,414 402,429 410,896 172,439 216,079 230,505 136,566 173,315 183,273 277,099 303,365 304,965 Fayoum 153,512 221,386 237,844 134,262 176,613 188,427 367,882 395,513 397,722 Menia 306,893 382,760 409,792 230,193 279,070 301,940 489,474 503,877 506,268 Assuit 248,793 310,598 330,616 175,265 224,469 239,272 324,607 346,515 348,412 Suhag 267,492 340,921 368,247 210,032 267,566 290,071 328,999 349,733 351,100 Qena,Luxor 220,391 275,194 294,867 161,751 206,757 221,902 375,076 393,042 395,611 Aswan 71,467 104,386 110,725 54,868 80,154 84,923 150,571 210,118 211,355 Total Upper Egypt 1,573,132 2,022,453 2,170,675 1,218,613 1,547,021 1,659,888 2,571,121 2,904,592 2,926,327 Red Sea 1,401 4,511 4,278 76 45 294 511 590 1,211 New Valley 10,874 17,591 21,628 9,638 15,845 18,582 59,394 185,162 194,485 Matruh 17,984 20,907 22,714 15,008 19,661 21,088 187,685 290,389 287,271 North Sinai 14,654 21,224 24,476 13,122 19,594 21,922 184,354 188,792 185,570 South Sinai 3,080 4,573 5,463 1,190 1,268 1,746 11,268 11,709 13,379 Total Out The Valley 47,993 68,806 78,559 39,034 56,413 63,632 443,211 676,642 681,915 Grand Total 3,475,502 4,541,884 4,871,818 2,910,279 3,717,991 3,985,644 7,849,176 8,928,533 8,996,902

4-1-2 Number and Size of Holdings The total number of overall holdings (owned and rented) in 1990 reached 2.9 million, and in the 2000 census increased to nearly 3.7 million holder, the annual rate of increase during the period amounted to about 2.8%. The number of holdings owned represent about 68%, 88% of the total number of holdings during the two periods.

During the same periods increased number of holdings owned by 4.4%, Table (5). The data in the table show that, while the proportion of the number of holders in the categories less than 5 feddans in 2000 reached about 91% of the total number of holders of the holdings owned by the percentage of area owned in those groups of about 49% of the total area owned only, while the proportion of the number of holders in the categories is greater than 5 feddans to only 9% of the total number of owners who possess the percentage of area owned in those groups of about 51% of the total area owned, which indicates the absence of an equitable distribution of ownership of agricultural land owned. Table (5) The Development of Holding Size (feddans) (Owned Holdings (feddans Number of Holdings (Total Area (feddans (Property Holdings (number Category 1990 2000 % 1990 2000 % 1990 2000 % 1990 2000 % less than 1,050,90 1,615,59 1,486,91 1 0 0 43.5 508,145 722,311 8.1 810,387 5 45.7 377,527 658,786 9.0 1- 713,808 881,085 23.7 941,139 1,117,148 12.5 449,934 756,385 23.2 584,132 955,731 13.0 1,137,40 2- 502,061 516,926 13.9 3 1,154,211 12.9 306,786 433,782 13.3 690,977 968,230 13.2 3- 239,057 239,106 6.4 776,601 768,793 8.6 145,457 198,762 6.1 470,803 638,999 8.7 4- 111,165 107,389 2.9 474,349 453,512 5.1 67,725 90,059 2.8 388,782 380,603 5.2 5- 139,584 169,064 4.5 771,244 920,131 10.3 89,501 144,132 4.4 490,221 783,805 10.7 7- 59,342 65,362 1.8 478,795 521,512 5.8 38,477 53,032 1.6 310,888 423,674 5.8 10- 42,808 57,236 1.5 494,898 654,600 7.3 28,384 44,735 1.4 227,993 511,755 7.0 15- 18,124 24,322 0.7 298,810 394,956 4.4 11,504 17,948 0.6 190,709 292,953 4.0 20- 16,786 21,661 0.6 387,145 493,272 5.5 10,750 16,064 0.5 248,421 366,116 5.0 30- 10,502 11,910 0.3 383,258 429,916 4.8 6,259 8,687 0.3 229,470 314,654 4.3 50- 4,520 5,654 0.2 287,585 357,120 4.0 2,382 3,952 0.1 151,173 248,735 3.4 100- 1,622 2,686 0.1 909,803 941,056 10.5 825 1,931 0.1 728,757 781,455 10.7 2,910,27 3,717,99 100. 7,849,17 8,928,53 100. 1,968,37 3,256,38 100. 5,089,85 7,325,49 Total 9 1 0 5 5 0 1 4 0 1 4 100.0 4-1-3 Changing Inventory of Cropped Area Data from agricultural censuses for the years 1990,2000, and 2005 (mid-census) indicate that the area planted to crops and vegetables amounted to about 7.4, 7.1, 7.2 million feddans, respectively, where cultivated area of those crops represents 79.1%, 77.3%, 76.5% of the total cropped area each year, respectively. Areas occupied by the fruits was about 9.1%, 12.6%, 12.7%, while running the afforested area of wood about 0.1%, 0.2%, 0.2% and crop uploaded to 11.7%, 9.9%, 10.6%, respectively. While a slight decrease of 2.2% was noticed in crop areas and vegetables, the fruit area has recorded a remarkable increase of about 40% between the two censuses 1990 and 2005.

Table (6) The Changing Crop Land Inventory (feddans) Area number of trees 1990 2000 2005 1990 2000 2005 Crops and vegetables 7,350,596 7,123,420 7,188,378 uits TreesFr 850,677 1,158,883 1,195,237 198,011,546 218,202,778 Scattered Trees Wooden 2,729,031 9,997,364 Collected Wooden Trees 5,532 16,839 17,132 5,356,529 5,161,174 Wooden Trees 29,385,174 32,841,388 Loaded Crops 1,089,806 907,299 998,553

4-1-4 Changing Inventory of Irrigation and Drainage Capital in Agriculture Data from Table (7), indicate the trend rate of the area fed by the Nile from about 86% of total cultivated area, according to the 1990 census to about 83% in 2005 census with an increase in the percentage of land irrigated by ground water from about 8% to about 11 % irrigated area, as well as wastewater (Drainage reuse) from about 1.8% to 2.3%, according to census data following the first two censuses, and the relative stability of the area depends on rain at the level of 3.8%. Table (7) shows that the irrigated area of wells and springs have increased by as much as about 180% between 1990 and 2005. For the irrigation method indicates a decline in the space that tells the machines domestically of about 207 thousand acres in 1990 census to about 19 thousand acres, according to the 2005 census, and in return increase the area of modern mechanical than 5.5 million acres to 6.6 million acres as well as increase the space that tells the drip from about 145 thousand feddans to 575 thousand acres and on the contrary, indicates a decline in irrigated area sprayed of 276 thousand feddans to 226 thousand feddans between the two censuses. As indicated in the table a decline in cultivated area still use the exchange open drainage of the estimated 2.2 million feddans, according to the census of 1990 to the slot of 1.5 million acres in the 2005 census with an increase in the area that use the tiled drainage from about 3 million acres to about 4.6 million feddans in previous censuses.

Table (7): Impact of Changing Inventory for Irrigation and Drainage Capital in Agriculture (faddans) 1990-2000-2005 Indicator 1990 2000 2005 Source Total Cropped Area 7,325,691 8,307,208 8,410,330 o i

Nile Irrigated Area 6,309,909 6,854,806 6,960,614ا t f a o

g

i Underground Irrigated Area 613,545 903,667 900,187 r r I Drianage Irrigated area 134,370 193,664 185,965 Rainful Irrigated Area 261,591 326,161 323,249 n Other Sources Irrigated Area 6,276 28,910 40,316 Wells and springs Irrigated Area 396,488 959,285 1,098,914 Wells and Number of wells 39,443 61,324 60,201 Springs Number of Springs 245 214 211 Traditional Irrigated Area 911,896 912,230 834,298 Method Domestic Machines Irrigated of Area 206,948 25,182 19,146 Mechanized Irrigated Area 5,519,072 6,325,990 6,419,400 Irrigatio Spraying Irrigated Area 275,803 204,892 226,012 n Sprinkle Irrigated Area 145,102 508,756 575,325 Open Drianage With with small chanels 2,193,735 1,524,552 1,451,461 Open Drianage With with Method small chanels 318,933 263,709 268,797 of Covered Drianage 2,950,722 4,366,513 4,561,574 Drinage No Drainage Facility 1,862,301 2,152,433 2,128,496

4-1-5 Changing Inventory of Agricultural Human Capital As shown in table (8) a decrease in the number of agricultural population in total population of about 43.1% in 1990 to about 34.6% in 2000 and then to about 31.4% in 2005. The number of agricultural employment during the same periods has been decreasing to reach 39.6%, 31.4%, 28.3%, respectively.

Table (8): The Changing Inventory of Agricultural Human Capital (Thousand) 1990 2000 2005 Total population 57,785 70,174 77,154 Agric. Population 24,915 24,315 24,200 Total Labor 16,690 20,935 24,160 Agric. Labor 6,605 6,577 6,839

4-1-6 Changing Biological Inventory of Livestock Numbers of cattle have increased between the two censuses 1990 and 2005 from about 3.3 million heads to about 4.3 million heads, up 31%, as increased numbers of buffalo between the two censuses from an estimated 3.5 million heads to 4.1 million head by 16% and the sheep of about 5.9 million heads to about 7.6 million heads by 29% and goats from about 4.4 million head to about 5.6 million head by 28% and the horses of some 41 thousand heads, to about 49 thousand heads of 21% and mules from about 8.4 thousand head to about 16 thousand heads by 90% while decreasing the numbers of each carrier of about 127 thousand heads, to about 120 thousand heads by 5%, and donkeys from an estimated 3.5 million head to about 3 million head by 15% during the same period. Table (9) Changing Inventory of Live Animals 1990- 2005 1990 2000 2005 Cattle 3,292,347 4,207,733 4,309,279 Buffalo 3,540,073 4,052,205 4,102,946 Sheep 5,895,011 7,640,235 7,601,032 Goat 4,407,496 5,653,201 5,642,793 Camels 127,337 162,730 120,480 Horses 40,668 48,507 49,087 Donkeys 3,556,464 2,991,159 3,028,140 Mules 8,441 16,436 16,105

4-1-7 Household/Domestic Poultry and Poultry Farms Data from Table (10) indicate a steady increase in the number of holdings for all types of poultry during the enumeration 1990 -2005 rates ranging between 9% for the holders of rabbits and about 151% for holders of turkey and a consequent increase in the number of all types of poultry at various rates ranging from 8.2% for rabbits and 159.1% for the number of turkeys between the two censuses. As experienced, the period between the two censuses 2005 and 1990 has shown a significant increase in chicken meat and eggs, and the maternal. Table (11) shows that an increase in the number of farms for the chicken meat, eggs and maternal amounted to about 172%, 69%, 22% each, respectively, and increased inter hatcheries in hatcheries during the two censuses increased by 133%, while inter hatcheries in the domestic by 3.3%.

Table (10) Development of Domestic Poultry Holdings/Farms 1990-2005 1990 2000 2005 Chicken 2,866,671 3,765,009 3,829,769 Turkey 283,626 692,210 712,500 Geese and Ducks 2,130,410 3,274,828 3,307,355 Home

No.s of m Pigons 1,251,535 1,766,708 1,783,901 r a

F Rabbits 1,090,306 1,221,070 1,193,337 Chicken 43,785,299 62,040,389 68,452,380 Turkey 1,567,170 3,998,845 4,060,600 Geese and Ducks 19,377,664 35,963,399 36,061,809 Home

No.s of d Pigons 11,957,031 17,879,455 17,291,498 r i

B Rabbits 8,502,480 9,349,663 9,201,350 Table (11) the Development of Capital for Parents Stocks, Chicken Meat and Eggs Farms 1990-2005

Type of Farm Indicator 1990 2000 2005 Chicken meat Number of holdings 5,026 13,274 15,188 Maximum capacity in the (session (hen 47,949,076 85,622,338 114,147,750 Number of Farms 9,790 23,235 26,705 Chicken eggs Number of Acquisitions 561 1,113 1,152 Maximum capacity in the (session (hen 10,552,080 10,559,033 12,134,476 Number of Farms 1,760 2,747 2,975 Parents Stocks Number of Acquisitions 111 232 268 Maximum capacity in the (session (hen 3,761,662 4,677,580 5,021,000 Number of Farms 987 1,146 1,203 Domestic Hatcheries Number of Acquisitions 236 373 693 Maximum capacity in the (session (hen 23,889,610 7,176,850 21,209,700 Hatcheries 5,242 2,409 5,069 Modern Hatcheries Number of Holdings 66 89 173 Maximum capacity in the (session (hen 10,526,185 15,176,585 22,938,025 Hatcheries 466 462 1,088

4-1-8 Changing Inventory of Agricultural Machinery

Data from the last three censuses, indicate the increasing use of agricultural machinery as shown in table (12), an increase in the number of tractors with different capacities during the enumeration 1990 and 2005, the increasing rates ranging between 12% of the tractor (25-75 hp), 91% of the tractor less than 25 hp, also shows data in the table increase in the machines to moveable through censuses by 61% and increased the numbers of each machine threshing and winnowing, and Motor spraying and Motor fumigation ranging from 28% for the hoes, 307% for spraying engines, noting the decline in the number of the fixed irrigation machines, between the two censuses by 55%.

Table (12) the Changing Inventory of Agricultural Machinery 1990-2005 Machinery 1990 2000 2005 Tractors Less than 25 hp 4,574 8,093 8,752 From 25 to Less 87,720 97,539 98,355 than 75 hp More than 75 hp 22,269 30,100 32,342 221,05 102,94 Fixed 7 8 99,679 Irrigation 598,55 952,96 Machines Portable 6 0 960,523 Threshing and Winnowing Machine 31,868 63,567 63,525 Motor Spray 33,692 118,402 137,226 Motor Fumigation 2,744 4,424 5,205 Hoes 17,241 22,769 22,078 Other Types 7,181 13,300 18,799

4-2 Composition and Trend of Agricultural Investment

All macroeconomic indicators related to resources (i.e. GDP valued at production factor costs, GDP valued at market prices, imports and total resources) and utilization (i.e., final private and governmental consumption, total final consumption, investment expenditure, exports and total utilization) have increased significantly during the first period 1982/83- 1991/92 and the second period 1992/93-2008/09, Annex Table (1) and figures (4-6). The annual growth rate of GDP reached 18 % during the first period compared to 13.5% in the second period, while, investment expenditure increased by only 18.2 %annually during the first period compared to 13.3% during the second period. The annual growth rates of the major indicators in the second period were less than their corresponding values in the first period. The annual growth rates of GDP valued at production factor costs, GDP valued at market prices, imports, total resources, final private consumption, investment expenditure, exports and total utilization in the second period were less than their corresponding annual growth rates in the first period. Only the final government consumption and total expenditure on investment in the second period have been increasing by a higher rate than their corresponding annual growth rates in the first period.

4-2-1 Development of Agricultural Gross Domestic Products (GDP)

All macroeconomic variables related to private gross domestic products in agriculture or other sectors have increased significantly during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, Annex Table (2). In contrast, the public gross domestic product in agriculture has been decreased during the second period 1992/93-2008/09. The annual growth rate of private GDP in agriculture reached 15.7 % during the first period compared to 10.7% in the second period. Whereas the private GDP in others sectors increased by 20.5 %annually during the first period compared to 12.4% during the second period. The annual growth rates of the major indicators in the second period were less than their corresponding values in the first period. The annual growth rate of public GDP in agriculture was negative (-11.8%) in the second period compared by 14.9% in the first period, Figure (4).

The relative importance of the agricultural public GDP compared by the agricultural private GDP during the whole period (1982/83-2008/9) has diminished rapidly, Annex Table (3). It decreased from 1.3% in 1982/83 to 0.02% in 2008/9. In addition, the relative importance of the agricultural GDP compared by the total GDP during the whole period (1982/83-2008/9) has been diminished gradually. It has been decreased from 19.9% to 13.2%.

4-2-2 Complementarity and Growth in Public and Private Agricultural Investment

All investment variables related to agriculture or other sectors have been increased significantly during both the first period 1982/83-1991/92 and the second period 1992/93- 2008/09, Annex Table (5) and figures (7-10). The annual growth rate of private agriculture investment reached 27.1 % during the first period compared to 14.3% in the second period. Whereas the private agricultural investment increased by 16.5 % annually during the first period compared to 3% during the second period. The annual growth rates of the major indicators in the second period were less than their corresponding values in the first period, except the annual growth rates of the private investment in the other sectors.

The share of the public agricultural investment during the whole period has reduced gradually compared by the private agricultural investment, Annex Table 5. The annual growth rate of public agricultural investment has decreased from -3.7% during the first period (1982/83 – 1991/92) to -5.1% in the second period (192/93-2008/9).

Before reform the GOE was crowding out the private sector in production profit making activities at the farm and processing levels. After reform the GOE tended to invest more in social infrastructure and public goods leading the way to private sector to invest more in commercial productive activities. This lead to significant increase in private sector investment.

The analysis of the 1982-2008 data revealed that there is positive statistically significant relationship between the private and public capital invested in agriculture. The private capital will increase by 1.353 million LE when the current year’s public capital increases by 1 million LE. The increase in public investment seems to bring the most impact on enhancing private investment after two years. The private capital will increase by LE 1.381 million when the public capital (t-2) increases by LE 1 million. The following equations depict the above mentioned relationships:

210 Private Investment t = -278.7 + 1.353 Public Investment t ; R = 0.73; F-ratio = 67.1 (8.19) 11

2 Private Investment t = -63.9 + 1.382 Public Investment t-2 ; R = 0.85; F-ratio = 134.8 (11.6)

4-2-3 Development of Agricultural Human Capital

Although all employment indicators related to agricultural or others sectors have been increased slightly during the first period 1982/83-1991/92 and the second period 1992/93- 2008/09, the number of public agricultural workers have been reduced in the second period, Annex Table (9). The annual growth rate of private agricultural workers achieved 0.95 % during the first period compared to 1.2% in the second period. Whereas, the number of public agricultural workers have been increased by 1.06 %annually during the first period compared to -2.5% during the second period. The annual growth rate of employment in agriculture sector in the second period (1.13%) was more than their corresponding value in the first period (0.96%). The annual growth rates of public and private employment in other sectors in the second period were less than their corresponding annual growth rates in the first period, Annex Table (10).

The share of the agricultural employment in public sector during the whole period has been reduced gradually compared by the agricultural employment in the private sector, Annex Table 9. The annual growth rate of public agricultural employment has been decreased from 0.1% during the first period (1982/83 – 1991/92) to -3.6% in the second period (192/93- 2008/9). In addition, the share of the agricultural employment during the whole period has been reduced gradually compared by the agricultural employment in the other sectors, Annex Table 9. The annual growth rate of agricultural employment has been decreased from -1.47% during the first period (1982/83 – 1991/92) to -1.19% in the second period (192/93-2008/9).

4-2-4 Development of Capital Stocks by Sub-sector/Activities

Based on the above mentioned available data from FAO12 in US$ for the period 1990-2007, capital stocks in agriculture included four sub-sectors: structure, land, livestock and machinery. This data set was used only to shed light on the growth in the components of the capital stock in agriculture since such details were not depicted in any other source. The average capital in agriculture during this period reached $34.2 billion (ranging from $27.6 billion in 1990 to $37.2 billion in 2007). During this period the structure represented only 0.3% of capital formation, while land, livestock, and machinery represented 77.1%, 19.9% 10 Coefficient of Multiple Determination 11 For all reported equations representing T-Test value, and all reported values are statistically significant at 0.01 level of significance 12 FAO- http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and-environmental- indicators/capital-stock-of-agriculture/es/ and 2.7%, respectively. The agricultural capital formation in agriculture increased during this period by about %1.7 annually. The annual growth rate for structure, land, livestocks, and machinery reached 1.4%, 1.6%, 1.8%, and 2.5%, respectively, Annex Tables 7 and 8, and Figure 11.

Source: FAO

4-3 Gross Fixed Capital Formation (GFCF) in Agriculture and for Agriculture

4-3-1 Development of Gross Fixed Capital Formation (GFCF) in Agriculture

Based on National Accounting Data in Egypt, GFCF reached about LE 199.5 billion in 2007/2008 from which private sector contribution represented 64% (LE 129.3 billion) and public sector contribution 36% (LE 70.2 billion). Capital depreciation for that year reached LE 56.3 billion, and the rest represented a new additions to the society’s assets. These assests increased by 13.3% (about LE 47.0 billion) over the 2006/2007 level. The agriculture GFCF in 2007/2008 reached LE 5.327 billion. The private sector’s GFCF in agriculture reached LE 5.223 billion or about 98% of the total agriculture GFCF, while public sector’s GFCF reached only LE 103.9 million representing only 2% of the agriculture GFCF in that year. While, the agriculture GFCF represented only 2.6% of total GFCF in Egypt, the private sector’s GFCF in agriculture represented about 4% of private sector’s GFCF at the national level. Also, agriculture GFCF for public sector represented about 14% of the national public sector’s GFCF. This represented a logical dominace of private sector’s contribution to the GFCF in agriculture in Egypt. However, it is noted that depreciation of capital in agriculture represented about 75% of the agriculture GFCF in 2007/2008, while this percntage reached only 26% at the national economy’s level.

4-3-2 An Attempt for a Closer Look to Capital Formation for Agriculture An attempt was made to estimate the contribution of other sectors in capital formation for agriculture. No readily available data are published or previously estimated on the subject. The available national accounting data was assessed and Gross Fixed Capital Formation in all sectors was estimated taking into consideration the available data on depreciation and changing stocks. Table (13) shows the data on sectors’ contribution to capital formation for agriculture. The estimated and reported figures depend on the assumptions used for the proportion of the sector’s GFCF that could be for agriculture. A consultation was made with the hypothetical percentages assumed for India, (GOI, 2003). An adjustment was made based on the Egyptian experience. The resulting figures are just for illustration and could be used at this stage for policy implications. Further analysis and assessment are needed in this area. The current estimated figures constitute a base to further assessment for capital formation for agriculture. Detailed data for private and public GFCF in other sectors are available for 2006/2007 and 2007/2008, Table (14). Private sector contribution in the GFCF for agriculture reaches about 80% of total GCFC for agriculture in 2008/2009. Figure (12) shows the contribution of sectors in capital formation for agriculture using the assumed percentages.

Figure (12): Projected/Hypothetical Contribution of other Sectors in Capital Formation for Agriculture in 2007/2008 Table (13): Gross Fixed Capital Formation for Agriculture

Year 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 GFCF by GFCF for GFCF by GFCF for GFCF by GFCF for GFCF by GFCF for GFCF by GFCF for GFCF by GFCF for GFCF by GFCF for GFCF by GFCF Sector (Mill.$) Agriculture Sector Agriculture Sector Agriculture Sector Agriculture( Sector Agricultur Sector Agricultur Sector Agriculture( Sector for Proportion (1) ( Mill.$)(2) (Mill.$) (1) ( Mill.$)(2) (Mill.$) (1) ( Mill.$)(2) (Mill.$) (1) Mill.$)(2) (Mill.$) (1) e( (Mill.$) (1) e( (Mill.$) (1) Mill.$)(2) (Mill.$) (1) Agricultu of GFCF Mill.$)(2) Mill.$)(2) re( for Mill.$)(2) Sector agriculture Agriculture 1.000 261.5 261.5 446.1 446.1 -31.5 -31.5 2,331.4 2,331.4 14.3 14.3 4.6 4.6 1,690.0 1,690.0 1,322.9 1,322.9 Manufacturing 0.050 3,063.8 153.2 3,571.9 178.6 3,253.3 162.7 5,099.9 255.0 2,436.8 121.8 5,081.0 254.1 24,107.9 1,205.4 26,800.1 1,340.0 Gas & Petroleum 0.050 4,020.5 201.0 3,348.2 167.4 -1,244.4 -62.2 8,789.4 439.5 13,333.6 666.7 24,970.0 1,248.5 23,791.7 1,189.6 35,181.8 1,759.1 Electricity &Gas and water 0.050 3,078.8 153.9 1,665.6 83.3 18,154.6 907.7 6,440.9 322.0 3,098.1 154.9 4,339.0 217.0 23,457.5 1,172.9 8,036.0 401.8 Construction&Building 0.050 745.4 37.3 1,332.1 66.6 -344.6 -17.2 -367.1 -18.4 1,288.5 64.4 2,938.0 146.9 12,920.4 646.0 2,016.2 100.8 Business Services 0.100 1,255.3 125.5 1,832.1 183.2 1,644.7 164.5 -34.5 -3.5 6,457.2 645.7 1,433.4 143.3 3,431.3 343.1 2,590.3 259.0 Internal Trade 0.100 -529.6 -53.0 -578.7 -57.9 -442.0 -44.2 572.1 57.2 20.9 2.1 1,472.0 147.2 1,898.0 189.8 4,173.6 417.4 Transportation&Storage 346.6 669.0 and communication 0.050 817.1 40.9 555.2 27.8 3,237.2 161.9 -3,210.5 -160.5 3,077.6 153.9 3,982.1 199.1 6,932.4 13,379.8 Social Services 0.100 311.6 31.2 368.5 36.9 142.4 14.2 -2,672.9 -267.3 995.5 99.6 712.6 71.3 3,474.3 347.4 3,283.7 328.4 Total 13,024.4 951.5 12,541.0 1,095.1 24,369.7 1,255.8 16,948.7 2,955.5 30,722.5 1,923.4 44,932.7 2,431.9 101,703.5 7,130.9 96,784.4 6,598.4 (1) GFCF-Consumption of fixed capital-changes in inventories (2) GFCF by Sector x Proportion of GFCF for Agriculture Table (14): GFCF for Agriculture by Private and Public Sectors

Year 2006/2007 2007/2008 Sector Public Private Total Public Private Total Agriculture 83.8 1,606.2 1,690.0 103.1 1,219.8 1,322.9 Manufacturing 36.9 1,168.5 1,205.4 142.7 1,197.3 1,340.0 Gas & Petroleum 504.1 685.4 1,189.6 312.6 1,446.5 1,759.1 Electricity &Gas and water 4.5 1,168.4 1,172.9 425.3 -23.5 401.8 Construction&Building 20.0 626.0 646.0 18.2 82.6 100.8 Business Services 152.7 190.4 343.1 -21.9 280.9 259.0 Internal Trade 28.0 161.8 189.8 11.5 405.9 417.4 Transportation&Storage and communication 114.3 232.4 346.6 276.9 392.1 669.0 Social Services 11.2 336.2 347.4 40.8 287.6 328.4 Total 955.5 6,175.3 7,130.9 1,309.1 5,289.3 6,598.4 (2) GFCF by sector * Proportion of GFCF for Agriculture Source: Ministry of Economic Development , National Accounts data : http://www.mop.gov.eg/English/national%20%20%20E.html V. Efficiency of Agricultural Investment

The following major efficiency indicators have been calculated from available data:

5-1 The Agricultural Investment Rates (AIR)13

The “investment rate” for public agricultural investment is more than one for most years indicating inefficiencies. However, the private and total agricultural investment show efficiencies in most years. The public, private and total agricultural investment rates have been increasing during the first period 1982/83-1991/92 and the second period 1992/93- 2008/09, table (15). The annual growth rate of private agriculture investment rate jumped from 2.11% during the first period to 20.8% in the second period. The annual growth rate of private agricultural investment rates has decreased from 9.9% during the first period to 3.96% during the second period. The annual growth rate of total agricultural investment rates has decreased rapidly from 4.6% annually during the first period to -1.3% during the second period. Meanwhile, investment rates of the public and private sectors have been reduced during the first and second period.

5-2 The Return to Agricultural Investment (RAI)14

The return to public and private agricultural investment is the inverse of the investment rate. Accordingly, it has been decreasing during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, Table (16). While the LE 1.0 invested in agriculture brings a return of about LE 12.8 during in 2006.07, the LE 1.0 investment in other sectors brings in the average a return of about LE 4.2 in the same year. The return to LE 1 invested in agriculture reached LE 9.9 during the first period and about LE 8.5 during the second period. The annual growth rate of return to the public agriculture investment decreased rapidly from -2.07% during the first period to -17.22% in the second period. Also, the annual growth rate of the return to private agricultural investment reached -9%, annually during the first period compared to -3.8% during the second period. In contrast, the annual growth rate of the return to total agricultural investment has been changed from -4.4% annually during the first period to 1.3% during the second period. On the other hand, returns to investment in the public and private other sectors have been fluctuating during the first and second period, Table (16).

13 Investment Coefficient (Rate) = (less than 1 → Efficient)

14 Return to Investment = (→ Greater than 1 → Efficient) Table (15): Investment Rate for Private and Public Sectors, 1982/83 -2006/7 Agriculture Others Total Years Public Private Total Public Private Total Public Private Total 1982/83 3.91 0.03 0.08 0.42 0.35 0.39 0.45 0.24 0.33 1983/84 3.95 0.02 0.09 0.39 0.32 0.36 0.42 0.22 0.31 1984/85 3.08 0.04 0.09 0.40 0.28 0.35 0.42 0.21 0.30 1985/86 4.59 0.03 0.11 0.46 0.27 0.36 0.49 0.20 0.32 1986/87 3.60 0.02 0.07 0.48 0.25 0.36 0.51 0.18 0.30 1987/88 3.88 0.07 0.13 0.59 0.26 0.41 0.61 0.20 0.36 1988/89 3.55 0.10 0.15 0.43 0.33 0.37 0.46 0.26 0.33 1980/90 3.80 0.05 0.10 0.44 0.26 0.33 0.46 0.20 0.29 1990/91 4.43 0.05 0.11 0.45 0.19 0.31 0.47 0.15 0.28 1991/92 4.82 0.07 0.12 0.39 0.18 0.27 0.41 0.15 0.25 Average- 3.96 0.05 0.11 0.44 0.27 0.35 0.47 0.20 0.30 Period Growth Rate 2.11% 9.90% 4.55% -0.96% -6.77% -3.59% -0.88% -4.75% -2.83% 93/1992 7.60 0.03 0.09 0.37 0.15 0.25 0.40 0.12 0.22 94/1993 15.30 0.03 0.12 0.44 0.14 0.27 0.48 0.11 0.25 95/1994 10.90 0.05 0.11 0.41 0.16 0.27 0.44 0.13 0.24 96/1995 10.57 0.07 0.12 0.44 0.18 0.28 0.46 0.15 0.26 97/1996 13.13 0.07 0.12 0.45 0.21 0.31 0.48 0.17 0.28 98/1997 22.31 0.08 0.18 0.43 0.12 0.24 0.48 0.11 0.23 99/1998 19.38 0.09 0.17 0.35 0.18 0.24 0.39 0.15 0.23 2000/1999 15.39 0.09 0.15 0.31 0.16 0.21 0.35 0.14 0.20 2001/2000 13.38 0.10 0.15 0.28 0.15 0.20 0.30 0.14 0.19 2002/2001 67.81 0.10 0.16 0.26 0.15 0.20 0.29 0.14 0.19 2003/2002 62.65 0.05 0.10 0.22 0.17 0.19 0.24 0.14 0.17 2004/2003 67.79 0.06 0.11 0.23 0.15 0.19 0.25 0.13 0.17 2005/2004 59.14 0.06 0.10 0.24 0.18 0.21 0.26 0.15 0.19 2006/2005 207.39 0.06 0.10 0.20 0.23 0.22 0.21 0.19 0.20 2007/2006 129.45 0.05 0.08 0.21 0.27 0.24 0.22 0.22 0.22 Average- 48.15 0.07 0.12 0.32 0.17 0.23 0.35 0.15 0.22 Period Growth Rate- Period 20.80% 3.96% -1.25% -3.77% 4.01% -0.22% -3.95% 4.30% -0.16% Overall 30.47 0.06 0.12 0.37 0.21 0.28 0.40 0.17 0.25 Average Overall Growth Rate 15.03% 3.03% 0.02% -2.80% -1.10% -1.92% -2.83% -0.31% -1.63% Table (16): Return to Investment for Private and Public sectors, 1982/83 -2006/7 (LE) Agriculture others Total Years Public Private Total Public Private Total Public Private Total 1982/83 0.26 39.35 12.90 2.36 2.83 2.55 2.24 4.21 3.03 1983/84 0.25 47.22 10.89 2.56 3.11 2.79 2.39 4.52 3.25 1984/85 0.32 27.56 10.53 2.48 3.52 2.89 2.36 4.82 3.32 1985/86 0.22 30.14 8.92 2.20 3.68 2.75 2.05 5.04 3.16 1986/87 0.28 42.07 13.64 2.07 3.95 2.81 1.97 5.53 3.35 1987/88 0.26 14.02 7.50 1.70 3.82 2.43 1.63 4.88 2.79 1988/89 0.28 10.43 6.89 2.32 3.03 2.68 2.19 3.84 3.05 1980/90 0.26 20.27 10.32 2.28 3.92 3.02 2.16 5.10 3.50 1990/91 0.23 19.67 9.35 2.22 5.17 3.20 2.11 6.51 3.61 1991/92 0.21 15.32 8.27 2.59 5.71 3.67 2.45 6.86 4.04 Average- 0.26 26.61 9.92 2.28 3.87 2.88 2.16 5.13 3.31 Period Growth Rate -2.07% -9.01% -4.35% 0.97% 7.27% 3.72% 0.89% 4.99% 2.92% 93/1992 0.13 33.41 10.63 2.69 6.74 4.00 2.51 8.57 4.47 94/1993 0.07 32.06 8.65 2.25 7.31 3.68 2.08 9.19 4.07 95/1994 0.09 21.00 9.48 2.42 6.23 3.73 2.28 7.62 4.15 96/1995 0.09 15.25 8.24 2.30 5.65 3.52 2.16 6.77 3.90 97/1996 0.08 15.31 8.07 2.22 4.76 3.24 2.09 5.78 3.61 98/1997 0.04 11.94 5.60 2.31 8.14 4.16 2.06 8.84 4.35 99/1998 0.05 10.77 5.81 2.89 5.70 4.20 2.56 6.46 4.41 2000/1999 0.06 10.70 6.50 3.19 6.40 4.67 2.89 7.08 4.90 2001/2000 0.07 10.33 6.72 3.63 6.47 5.01 3.31 7.10 5.23 2002/2001 0.01 9.89 6.08 3.80 6.73 5.11 3.41 7.32 5.25 2003/2002 0.02 20.03 9.97 4.60 6.01 5.30 4.17 7.34 5.74 2004/2003 0.01 17.30 9.16 4.43 6.49 5.38 4.06 7.66 5.74 2005/2004 0.02 17.70 10.15 4.14 5.63 4.84 3.88 6.73 5.25 2006/2005 0.00 15.59 10.17 4.95 4.40 4.64 4.67 5.28 5.02 2007/2006 0.01 18.65 12.83 4.80 3.74 4.14 4.60 4.56 4.57 Average- 0.05 17.33 8.54 3.37 6.03 4.37 3.11 7.09 4.71 Period Growth Rate- Period -17.22% -3.81% 1.26% 3.92% -3.85% 0.23% 4.11% -4.12% 0.16% Overall 0.13 21.04 9.09 2.94 5.17 3.78 2.73 6.30 4.15 Average Overall Growth Rate -13.06% -2.94% -0.02% 2.89% 1.12% 1.96% 2.91% 0.31% 1.65% 5-3 The Investment Multipliers of Agricultural Sector (IM)15 The private and total agricultural investment multiplier indicated is more than 1.0 for most years indicating efficiency. While, the investment multiplier for public investment in agriculture is less than 1.0 for most years indicating inefficiencies. The investment multipliers of public and private agricultural sector have been fluctuated strongly during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, Table (17) resulting in negative values in some years. The varied annual increase rates in the public, private agricultural GDP and investment were the main reason beyond these fluctuation levels and the negative values of the previous investment multipliers in some years. In addition, the strong fluctuation and negative values of the investment multipliers in the public and private other sectors is due to the same reasons, i.e., the changed annual growth rates in the public, private others sectors GDP and investment from year to other.

5-4 The Capital Intensification Factor (per Worker) (CIFW)16

The agricultural investment intensification per worker during the period 1982/2007 reached 0.91 which is much lower than the capital intensification for total investment per worker at the national level (2.18) during the same period. The investment per worker in agriculture reached 0.3 during the first period and increased to 1.32 during the second period. This indicates that the agriculture sector became more capital intensive during the last few years. The capital intensification for public investment in agriculture is very high compared to private sector investment and investments in other sectors. All indicators related to capital intensification factor for Private and Public sectors in agriculture, other sector and national level have been increasing during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, Table (18) and figure (13). The increase in capital intensification factor of public agricultural sector is apparent. The annual growth rates of capital intensification factor in private and public agricultural sectors reached 25.9% and 15.3 % during the first period compared to 13% and 5.4% in the second period, respectively. The annual growth rates of the major capital intensification factor in the second period were less than their corresponding values in the first period.

15 Investment Multiplier = (→ Greater than 1 → Efficient) 16 Capital Intensification Factor = Investment / Labor ; (= Investment / Land) Table (17): Investment Multiplier for Private and Public Sectors, 1982/83 -2006/7 Agriculture others Total years Public Private Total Public Private Total Public Private Total 1982/83 1983/84 0.25 -77.63 4.95 5.30 5.44 5.37 3.88 7.18 5.31 1984/85 -0.72 5.91 8.19 2.09 7.72 3.49 2.17 7.29 3.75 1985/86 0.04 55.61 5.06 1.02 4.66 2.12 0.89 6.42 2.43 1986/87 -0.07 -187.31 -20.52 0.99 5.40 3.17 1.14 8.38 4.93 1987/88 0.21 1.78 1.36 0.97 3.28 1.49 0.94 2.83 1.48 1988/89 0.89 5.61 5.40 -1.51 1.84 4.75 -1.54 2.28 4.89 1980/90 0.16 -6.69 -9.02 2.13 -82.46 5.95 2.04 -20.85 8.52 1990/91 0.09 14.26 4.23 2.07 -3.49 4.31 1.99 -4.61 4.30 1991/92 0.06 5.82 4.44 16.57 11.59 13.43 13.04 9.65 10.77 Average- 0.10 -20.29 0.45 3.29 -5.11 4.90 2.73 2.06 5.15 Period Growth rate -12.57% -1.07% 12.07% 7.86% 9.60% 12.90% 2.99% 7.33% 93/1992 0.13 33.42 10.63 2.69 6.74 4.00 2.51 8.57 4.47 94/1993 -0.07 24.44 3.49 0.71 17.79 2.14 0.62 19.07 2.31 95/1994 -0.04 6.81 22.38 5.33 3.58 4.05 7.61 4.02 4.67 96/1995 0.12 5.47 4.46 1.43 3.38 2.35 1.37 3.79 2.61 97/1996 -0.02 15.83 6.94 1.76 2.49 2.17 1.64 3.04 2.42 98/1997 0.00 3.47 1.27 0.03 -1.86 -1.58 -0.11 -2.63 -2.77 99/1998 -0.01 4.56 12.54 -0.33 1.15 5.19 -0.31 1.40 5.91 2000/1999 -0.01 9.83 -13.69 17.02 225.37 41.07 -197.90 46.73 77.87 2001/2000 -0.02 5.70 34.80 -3.74 8.47 -15.75 -3.19 7.65 -19.47 2002/2001 -0.20 5.88 2.37 5.16 -0.75 7.39 4.15 -11.45 5.60 2003/2002 0.01 -2.01 -1.71 -30.09 1.89 8.09 -18.25 7.78 60.95 2004/2003 0.00 6.65 4.70 3.74 11.99 5.85 3.58 10.73 5.74 2005/2004 0.00 24.14 -43.51 2.71 2.48 2.59 2.85 3.06 2.97 2006/2005 0.11 6.55 10.38 -145.80 1.65 3.65 -59.12 1.90 3.87 2007/2006 -0.01 160.33 -72.00 4.00 2.43 2.79 4.18 3.01 3.26 Average- 0.00 20.74 1.13- 9.02- 19.12 4.93 16.69- 7.11 10.69 Period Growth Rate- Period 11.02% 2.68% -6.57% -2.38% 3.44% -6.74% -2.07% Overall 0.04 5.35 0.54- 4.41- 10.03 4.92 9.41- 5.22 8.62 Average Overall Growth Rate -1.11% -3.17% -2.59% 0.30% -3.42% -1.93% Table (18): Capital Intensification Factor for Private and Public Sectors, 1982/83 -2006/7 (000 LE/Worker) Agriculture others Total Years Public Private Total Public Private Total Public Private Total 1982/83 2.33 0.03 0.10 1.15 1.40 1.24 1.19 0.53 0.80 1983/84 3.55 0.03 0.13 1.22 1.46 1.31 1.29 0.57 0.86 1984/85 3.29 0.06 0.14 1.45 1.50 1.47 1.50 0.62 0.97 1985/86 5.28 0.06 0.20 1.77 1.63 1.72 1.86 0.70 1.15 1986/87 4.35 0.06 0.17 1.95 1.81 1.89 2.01 0.79 1.26 1987/88 6.03 0.19 0.34 2.87 2.10 2.55 2.95 1.01 1.75 1988/89 6.18 0.32 0.48 2.35 3.30 2.75 2.45 1.64 1.95 1980/90 7.15 0.20 0.39 2.85 3.11 2.96 2.96 1.51 2.06 1990/91 8.97 0.22 0.46 3.81 2.64 3.32 3.93 1.31 2.34 1991/92 9.71 0.32 0.58 3.89 2.67 3.36 4.03 1.42 2.42 Average- 5.68 0.15 0.30 2.33 2.16 2.26 2.42 1.01 1.56 Period Growth Rate 15.33% 25.90% 19.75% 12.92% 6.66% 10.46% 13.02% 10.28% 11.77% 93/1992 15.28 0.16 0.50 3.90 2.37 3.23 4.12 1.22 2.34 94/1993 25.27 0.19 0.69 4.91 2.34 3.75 5.25 1.25 2.77 95/1994 21.54 0.33 0.73 5.10 3.09 4.17 5.35 1.74 3.09 96/1995 25.59 0.52 0.96 5.70 3.65 4.73 5.98 2.15 3.58 97/1996 29.75 0.58 1.09 6.68 4.71 5.71 7.01 2.80 4.33 98/1997 51.80 0.81 1.70 6.37 2.99 4.69 7.03 2.00 3.80 99/1998 45.82 0.95 1.73 5.15 4.36 4.75 5.74 2.84 3.86 2000/1999 36.93 1.02 1.65 5.19 4.17 4.66 5.65 2.79 3.79 2001/2000 32.45 1.09 1.65 4.89 4.11 4.48 5.30 2.82 3.67 2002/2001 46.78 1.19 1.91 5.43 3.84 4.58 5.97 2.72 3.82 2003/2002 40.76 0.64 1.28 5.30 4.50 4.88 5.77 2.87 3.85 2004/2003 46.22 0.80 1.49 6.57 4.68 5.54 7.08 3.07 4.40 2005/2004 41.71 0.84 1.44 7.85 5.71 6.67 8.27 3.73 5.21 2006/2005 37.83 1.01 1.53 7.77 7.87 7.83 8.14 5.13 6.09 2007/2006 33.80 1.02 1.46 9.25 11.22 10.39 9.54 7.23 7.95 Average- 35.44 0.74 1.32 6.00 4.64 5.34 6.41 2.96 4.17 Period Growth Rate- Period 5.44% 13.04% 7.38% 5.93% 10.92% 8.11% 5.76% 12.57% 8.51% Overall 23.54 0.51 0.91 4.53 3.65 4.10 4.82 2.18 3.12 Average Overall Growth Rate 11.29% 14.86% 11.51% 8.68% 8.67% 8.86% 8.70% 10.99% 9.64%

5-5 The Coefficient of Endemism for Agricultural Sector17 (CE)

The coefficient of endemism for public agricultural sector has been more than 1.0 and increasing during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, table (19), while private and total agricultural investment are less than 1.0 during the two periods. Total coefficient of Endemism for agriculture investment averaged 0.35 during the first period and 0.58 during the second period reflecting efficiency of investment in agriculture. The value of the coefficient of Endemism of more than 1.0 represents inefficiency since it implies that the agriculture sector is getting more investment than its contribution to the GDP. The increase in coefficient of endemism is much lower in agriculture reflecting lower rate of investment allocation compared to the sector contribution in the GDP. f The increase in coefficient of endemism or public agricultural sector is very high during the second period. The coefficient of endemism for private agricultural sector has been fluctuated during the first period 1982/83-1991/92 and the second period 1992/93-2008/09, table (19). The varied annual increase rates in the private agricultural GDP and investment were the main

17 Coefficient of Endemism = (→ Less than 1 → Efficient) reason beyond these fluctuation levels. The annual growth rates of coefficient of endemism for in private and public agricultural sectors reached 15.4% and 3 % during the first period compared to -0.32% and 5.4% in the second period, respectively. The annual growth rates of the major coefficient of endemism in the second period were less than their corresponding values in the first period.

Table (19): Coefficient of Endemism for Private and Public Investment, 1982/83 -2006/7 Agriculture others years Public Private Total Public Private Total 1982/83 8.77 0.11 0.24 0.95 1.49 1.19 1983/84 9.44 0.10 0.30 0.93 1.45 1.16 1984/85 7.26 0.17 0.32 0.95 1.37 1.15 1985/86 9.41 0.17 0.35 0.93 1.37 1.15 1986/87 7.11 0.13 0.25 0.95 1.40 1.19 1987/88 6.31 0.35 0.37 0.96 1.28 1.15 1988/89 7.78 0.37 0.44 0.94 1.27 1.14 1980/90 8.21 0.25 0.34 0.95 1.30 1.16 1990/91 9.35 0.33 0.39 0.95 1.26 1.13 1991/92 11.82 0.45 0.49 0.95 1.20 1.10 Average- 8.55 0.24 0.35 0.95 1.34 1.15 Period Growth Rate 3.02% 15.38% 7.60% -0.08% -2.12% -0.78% 93/1992 19.10 0.26 0.42 0.93 1.27 1.12 94/1993 31.78 0.29 0.47 0.92 1.26 1.11 95/1994 24.84 0.36 0.44 0.94 1.22 1.11 96/1995 22.89 0.44 0.47 0.94 1.20 1.11 97/1996 27.39 0.38 0.45 0.94 1.21 1.11 98/1997 46.06 0.74 0.78 0.90 1.09 1.05 99/1998 49.68 0.60 0.76 0.89 1.13 1.05 2000/1999 44.42 0.66 0.75 0.91 1.11 1.05 2001/2000 44.26 0.69 0.78 0.91 1.10 1.04 2002/2001 231.16 0.74 0.86 0.90 1.09 1.03 2003/2002 261.16 0.37 0.58 0.91 1.22 1.08 2004/2003 275.09 0.44 0.63 0.92 1.18 1.07 2005/2004 229.20 0.38 0.52 0.94 1.20 1.08 2006/2005 968.54 0.34 0.49 0.94 1.20 1.08 2007/2006 595.05 0.24 0.36 0.96 1.22 1.11 Average- 191.37 0.46 0.58 0.92 1.18 1.08 Period Growth Rate- Period 25.77% -0.32% -1.09% 0.18% -0.28% -0.07% Overall 118.24 0.37 0.49 0.93 1.24 1.11 Average Overall Growth Rate 18.37% 3.36% 1.68% 0.02% -0.79% -0.30% 5-6 The Productivity Rate of Agricultural Investment (PRAI)18

The productivity rate of agricultural investment has been fluctuated during the first period 1982-1992 and the second period 1993-2007, Table (19) and Figure (14). The average productivity rates of agricultural investment were estimated at LE 9.99 and LE 9.2 during the first and second period, respectively, with a grand mean of LE 9.59 during the whole period. The annual growth rates of productivity rate in agricultural investment reached 4.1 % during the first period compared to 5.7% in the second period, with grand growth rate of 2.2% during the whole period.

5-7 The Capital/Output Ratio in Agriculture Sector (COR)19

The Capital-Output Ration decreased slightly from 13.63 during the first period 1982-1992 to about 12.46 during the second period 1993-2007. The capital/output ration has fluctuated during the first period 1982-/1992 and the second period 1993-2007, Table (19) and Figure (14). The annual growth rates of capital/output rates achieved 3.4 % during the first period compared to 5.8% in the second period, with grand growth rate of 1.9% during the whole period.

5-8 The Agricultural Investments per feddan – Capital Intensification Factor (per Area) (CIFA)20

The agricultural investments per feddan reached about LE 2.17.35 during the first period 1982-1992 and increased to LE 853.4 for the period 1993-2007. While private investment represented about 48% in the first period it represented about 56% in the second peiod. The public investment per feddan was almost stagnant (decreased slightly by 0.32%) during the second period 1993-2007, while it was increasing by about 7% annually during the first period 1982-1992. The total, public and private agricultural investments per feddan have been increasing gradually during the first period 1982-1992 and the second period 1993-2007, Table (20). The average public and private agricultural investments per feddan were estimated at LE 111.8 and LE 105.6 during the first period 1982-1992 compared with LE 375.5 and LE 477.8 during the second period 1993-2007, Figure (15). The average shares of fadden from public and private agricultural investments were estimated at LE 261.4 and LE 317.1 during

18 Productivity Rate of Agricultural Investment = Ag Income /Ag Investment 19 The Capital/Output Ratio in Agriculture Sector = Ag Production Value/Ag Investment

20 Agricultural Investments (per feddan) =Agricultural Intensification Factor (per Area) = Ag Investment/Cultivated Area. the first and second periods, respectively. The annual growth rates of agricultural investment per feddan achieved 6.9% and 13.6% during the first period, respectively, compared to -0.32% and 8.2% during the second period. Table (20): Productivity Rate of Agricultural Investment; Capital/Output Rate; and Agricultural Investment per Feddan, 1982-2007 Productivity Agricultural Investment per feddan Rate of Agricultural Capital/Output Years Investment Ratio Total Public Private 1982 11.28 16.46 67.33 45.56 21.77 1983 10.36 14.77 89.87 69.51 20.35 1984 10.34 14.85 103.89 64.96 38.94 1985 8.97 12.69 143.87 102.06 41.81 1986 12.32 17.20 123.45 83.98 39.47 1987 7.71 10.44 247.96 117.44 130.52 1988 6.16 8.06 337.84 117.86 219.97 1989 9.30 11.94 274.06 136.26 137.80 1990 9.35 12.16 295.44 156.81 138.63 1991 7.81 10.54 373.38 174.18 199.20 1992 17.59 23.67 183.70 94.92 88.79 Average 9.99 13.63 217.35 111.80 105.55 Growth Rate 4.12% 3.36% 9.55% 6.90% 13.63% 1993 8.61 11.49 442.71 323.89 118.82 1994 9.40 12.29 471.42 259.79 211.63 1995 8.40 11.15 573.99 265.26 308.73 1996 8.08 10.82 686.48 326.46 360.02 1997 5.77 7.51 1055.83 563.21 492.63 1998 5.70 7.56 1084.78 501.87 582.90 1999 6.20 8.47 1036.40 409.35 627.05 2000 6.18 8.74 1046.55 368.75 677.80 2001 5.59 7.79 1207.40 465.10 742.30 2002 9.45 13.16 785.91 395.22 390.68 2003 9.07 12.81 931.69 438.67 493.02 2004 11.08 15.03 896.31 382.92 513.38 2005 11.55 15.78 959.33 333.90 625.43 2006 13.14 17.64 926.31 289.35 636.96 2007 19.86 26.63 695.30 308.71 386.59 Average 9.20 12.46 853.36 375.50 477.86 Growth Rate 5.73% 5.76% 3.06% -0.32% 8.18% Grand Mean 9.59 13.06 578.51 261.38 317.12 Growth Rate 2.20% 1.87% 9.40% 7.64% 11.70%

Source: MALR VI. Determinants of Agricultural Investment at the National and Farm Levels

6-1 Determinants of Agricultural Investment at the National Level

In this section an attempt will be made to identify and quantify the impact of major factors affecting Investment and Capital Formation at the national level.

6-1-1 Methodology

Public capital expenditure adds to real capital formation, which in turn affects the level of real output via increase in worker’s productivity. An attempt is made to verify and quantify some relationships within the agricultural investment and capital formation framework. Using available data for the 1981/82 to 2008/09, the following analysis were considered:

1. Identify and quantify factors affecting domestic investment (both public and private) and capital formation in the Egyptian agriculture sector. 2. Identify and quantify factors affecting foreign investment in the Egyptian agriculture sector.

The following variables identified and used in several attempts to reach the best fit and economic logic of the estimated parameters. Some of them were not retained in the final estimated relationships: 1. The Share of Agriculture in National Income (Ag. GDP). The increase in this factor/variable would have positive effect in both domestic and foreign investment in Egyptian agriculture, (%). 2. Interest Rate on Farm Loans (IRL) The increase in this factor/variable would have negative potential effect on investment in agriculture, (%). 1. Average Real Farm Wage Rate (AWR) that would have negative potential effect on investment in agriculture, (LE/Worker). 2. Index Number for Agricultural Commodities (INA), that variable would have potential positive effect on both domestic and foreign investment. 3. Deficit of Trade Balance (DTB), that variable reflects the quality of Egyptian exports in world markets. That variable would have a potential negative effect on foreign investment. 4. National Budget Deficit (NBD), that variable would have a potential negative effect on foreign investment. As the GOE would cut down public expenditure in agriculture in case of budget deficit. 5. Agricultural Unemployment Ratio (UER), that variable would have a potential positive effect on foreign investment. As the government would offer more incentives to foreign investment, in order, to cure unemployment, (%). 6. The Exchange Rate for Egyptian Pound (EXR), that variable would have a potential negative effect on foreign investment. As Egyptian exports would be more expensive at world market, (LE/US$). 7. Agricultural Worker Productivity (AWP), that variable equals the ratio of aggregate agricultural output divided by total number of workers in agriculture, (Kg/Worker)

As data allows, most of the variables used in the specified equations are in real form (constant 1990-91 prices) to avoid inflationary effects.

The choice of the final presented equations was guided by the logic of expected sign associated with the estimated parameter as well as the statistical significance for the coefficients and high goodness-of-fit for the equation, including absence of serial correlation for residuals.

6-1-2 Results of Estimation

As for the Factors Affecting Domestic Public Agricultural Investment/Capital Formation, the following equation was specified and statistically estimated:

Domestic Public Investimet t = 860.47 - 35.831 %AG/NI t - 59.4837 %UER t - 47.0426 (1.25) (0.98) (0.299) EXR t -0.27772 AWR t + 170.4128 AWP t; (1.67) (2.14)

R2 = 0.42; F-Ratio= 3.704314

Where: AG/NI= % of Agricultural Income UER= % of Unemployment Rate in Agricultural Sector EXR= the Exchange Rate (LE/US$) AWR= Annual Agricultural Worker Wage rate (LE/Worker) AWP= Agricultural Worker Productivity (Kg/Worker)

The estimated relationship indicates that the increase in productivity per worker will tend to increase the demand for agricultural labour, implying the generation of more incomes in the farm sector. This might encourage domestic agricultural investment and capital formation. However, the low adjusted R2 (0.55), could mean that important variables could be missing from the current specification (Omitted Variables).

Another run for the estimated equation was obtained as shown below, which indicates that the interest rate has had negative effect on domestic agricultural investment and capital formation.

Domestic Private Investment t = 8.568261 - 0.9911 AG/NI t - 0.79298 %UER t – (1.83) (1.35) 0.14199 EXR t + 0.142583 AWR t + 0.782646 AWP t; (0.165) ((0.299) (0.305)

R2 = 0.55 ; F-Ratio= 5.684

As shown from the estimated equation, the ratio of agricultural investment to total public domestic investment has had a significant negative potential effect on domestic agricultural investment and capital formation. Again the low R2 indicates the need to include more variables (when data become available).

As for the Factors Affecting Foreign Investment and Capital Formation in Egyptian Agriculture, the following equation was specified and statistically estimated:

Foreign Agricultural Investment t = 53872.21 -777.318 AG/NI t -2337.61 IR t – (5.029) (4.555) 0.07975 AWP t ; (90.305)

R2 = 0.583903 ; F-Ratio= 9.887459

Where: IR = the Interest Rate (%) The estimated equation indicates that agricultural unemployment rate had negative potential effect on foreign investment and capital formation in Egyptian agriculture during the studied period, 1982-2008. It is also indicated that agricultural wage rate had negative potential effect on foreign investment and capital formation in Egyptian agriculture during the studied period, 1982-2008. Meanwhile, the agricultural worker's productivity had a significant positive potential effect on foreign investment and capital formation in Egyptian agriculture during the studied period, 1982-2008. The results of estimation indicate that agricultural wage rate has potential negative effect on foreign investment and capital formation.

6-2 Determinants of Agricultural Investment at the Farm Level

The Socio-economic characteristics of the selected farms and basic analytical tables are presented in Annex 3. The following represents the major findings based on the collected data at the farm level as discussed in section 3 above.

(i) Human Labor Profile (man-day per feddan)

Human labor profile per crop and per farming operations measures the Labor Intensity Factor for the studied crops. Labor intensive factor for specific crop is measured in terms of numbers of man-days per farming operation per feddan. The human labor profile per farming operations and per major crops and per studied districts are presented in tables 21- 47, Annex 3. The following are the major features for the human capital by crops and farming system in each district.

Zagazig District

The human labor profiles by farming operation per feddan for rice, maize, wheat and cotton crops in Zagazig district is presented in tables 21 – 25 (annex 3), respectively. The main findings can be summarized as follows: 1- The average labor units used for rice is estimated at 53 man-day/feddan; 34% for irrigation, 19% for planting, 17% for weeding and 13% for harvesting. The total value of human labor is estimated at 2257 LE/feddan. In addition, the average wage rate of man-day is estimated at 42.7 LE/man-day, Table 21 in annex 3.

2- The average labor units used for maize are estimated at 47 man-day/feddan; 26% for irrigation, 20% for planting, 18% for harvesting and 15% for weeding. The total value of human labor is estimated at 2024 LE/feddan. As well, the average wage rate of man-day used in maize is estimated at 43.3 LE/man-day, table 22 in annex 3.

3- The average labor units used for wheat production areestimated at 45 man-day/feddan; 34% for harvesting, 16% for land preparation, 11% for planting and 11% for irrigation. The total value of human labor is estimated at 2035 LE/feddan. As well, the average wage rate of man-day used in maize is estimated at 45.59 LE/man-day, table 23 in annex 3.

4- The average labor units used for cotton production are estimated at 91 man-day/feddan; 49% for harvesting, 15% for weeding and 13% for irrigation. The total value of human labor is estimated at 4005.7 LE/feddan. As well, the average wage rate of man-day used in cotton is estimated at 44 LE/man-day, table 24 in annex 3.

5- The average labor units used for berseem production are estimated at 42 man-day/feddan; 48% for harvesting, 29% for irrigation and 10% for land preparation. The total value of human labor is estimated at 1782 LE/feddan. As well, the average wage rate of man-day used in berseem is estimated at 42.4 LE/man-day, table (25 in annex 3) Hosonia District

The human labor profiles by farming operation per feddan for the main cultivated crops in Hosonia district is presented in tables 26 – 39 (in annex 3.). The main findings can be summarized as follows: 1. The average labor units used for rice are estimated at 66 man-day/feddan; 27% for irrigation, 21% for harvesting, 18% for weeding and 15% for land preparation. The total value of human labor is estimated at 2133 LE/feddan. In addition, the average wage rate of man-day is estimated at 32.3 LE/man-day, table (26 in annex 3). 2. The average labor units used for maize production are estimated at 70 man-day/feddan; 26% for irrigation, 23% for harvesting, 17% for weeding and 16% for land preparation. The total value of human labor is estimated at 2035 LE/feddan. In addition, the average wage rate of man-day is estimated at 29 LE/man-day, table 27 in annex3. 3. The average labor units used for wheat production are estimated at 54 man-day/feddan; 48% for harvesting, 20% for irrigation and 11% for land preparation. The total value of human labor is estimated at 1930 LE/feddan. As well, the average wage rate of man- day used in wheat is estimated at 36 LE/man-day, table 28 in annex 3. 4. The average labor units used for cotton production are estimated at 108 man- day/feddan; 50% for harvesting, 17% for irrigation and 14% for weeding. The total value of human labor is estimated at 2562 LE/feddan. As well, the average wage rate of man-day used in cotton is estimated at 23.7 LE/man-day, table 29 in annex 3. 5. The average labor units used for berseem production are estimated at 56 man- day/feddan; 50% for harvesting, 32% for irrigation and 7% for transportation. The total value of human labor is estimated at 1347 LE/feddan. As well, the average wage rate of man-day used in berseem is estimated at 24 LE/man-day, table 30 in annex 3. 6. The average labor units used for melon seeds production are estimated at 43 man- day/feddan; 30% for harvesting, 21% for land preparation and 19% for irrigation. The total value of human labor is estimated at 1247 LE/feddan. As well, the average wage rate of man-day used in berseem is estimated at 29 LE/man-day, table 31 in annex 3. 7. The average labor units used for broad bean production are estimated at 48 man- day/feddan; 31% for harvesting, 25% for irrigation and 17% for land preparation. The total value of human labor is estimated at 1495 LE/feddan. As well, the average wage rate of man-day used in broad bean is estimated at 31.2 LE/man-day, table 32 in annex 3. 8. The average labor units used for sesame production are estimated at 37 man- day/feddan; 32% for irrigation, 24% for harvesting and 14% for weeding. The total value of human labor is estimated at 1480 LE/feddan. As well, the average wage rate of man-day used in sesame is estimated at 40 LE/man-day, table 33 in annex 3. 9. The average labor units used for sugar beet production are estimated at 55 man- day/feddan; 40% for harvesting, 16% for land preparation and 15% for irrigation. The total value of human labor is estimated at 1800 LE/feddan. As well, the average wage rate of man-day used in sugar beet is estimated at 32.7 LE/man-day, table 34 in annex 3. 10. The average labor units used for squash production areestimated at 58 man-day/feddan; 52% for harvesting, 19% for irrigation and 12% for land preparation. The total value of human labor is estimated at 1743 LE/feddan. As well, the average wage rate of man- day used in squash is estimated at 30 LE/man-day, table 35 in annex 3. 11. The average labor units used for cabbage production are estimated at 54 man- day/feddan; 35% for harvesting, 20% for irrigation and 22% for land preparation. The total value of human labor is estimated at 1490 LE/feddan. As well, the average wage rate of man-day used in cabbage is estimated at 28 LE/man-day, table 36 in annex 3. 12. The average labor units used for tomato production are estimated at 95 man- day/feddan; 47% for harvesting, 15% for irrigation and 14% for land preparation. The total value of human labor is estimated at 2617 LE/feddan. As well, the average wage rate of man-day used in tomato is estimated at 28 LE/man-day, table 37 in annex 3. 13. The average labor units used for pepper production are estimated at 81 man- day/feddan; 56% for harvesting, 19% for irrigation and 10% for land preparation. The total value of human labor is estimated at 2652 LE/feddan. As well, the average wage rate of man-day used in pepper is estimated at 32.7 LE/man-day, table 38 in annex 3. 14. The average labor units used for cantaloupe production are estimated at 69 man- day/feddan; 51% for harvesting, 16% for irrigation and 12% for land preparation. The total value of human labor is estimated at 2639 LE/feddan. As well, the average wage rate of man-day used in cantaloupe is estimated at 38 LE/man-day, table 39 in annex 3.

El Mansoura District

The human labor profiles by farming operation per feddan for the main cultivated crops in El Mansoura district is presented in tables 40 – 43 (in annex ). The main findings can be summarized as follows: 1. The average labor units used for rice are estimated at 68 man-day/feddan; 29% for irrigation, 28% for harvesting and 18% for land preparation. The total value of human labor is estimated at 2230 LE/feddan. In addition, the average wage rate of man-day is estimated at 32.8 LE/man-day, table (40 in annex 3). 2. The average labor units used for maize are estimated at 52 man-day/feddan; 25% for irrigation, 25% for harvesting and 19% for land preparation. The total value of human labor is estimated at 1813 LE/feddan. In addition, the average wage rate of man-day is estimated at 34.9 LE/man-day, table (41 in annex 3). 3. The average labor units used for wheat production are estimated at 54 man-day/feddan; 56% for harvesting, 11% for land preparation and 9% for irrigation. The total value of human labor is estimated at 1945 LE/feddan. As well, the average wage rate of man-day used in wheat is estimated at 36 LE/man-day, table 42 in annex 3. 4. The average labor units used for wheat production are estimated at 61 man-day/feddan; 49% for harvesting, 8% for land preparation and 26% for irrigation. The total value of human labor is estimated at 1744 LE/feddan. As well, the average wage rate of man-day used in berseem is estimated at 28.6 LE/man-day, table 43 in annex 3.

El Mataria District

The human labor profiles by farming operation per feddan for the main cultivated crops in El Mansoura district is presented in tables 40 – 43 (in annex 3). The main findings can be summarized as follows: 1. The average labor units used for rice are estimated at 75 man-day/feddan; 21% for irrigation, 39% for harvesting and 16% for land preparation. The total value of human labor is estimated at 2355 LE/feddan. In addition, the average wage rate of man-day is estimated at 31.4 LE/man-day, table (44 in annex 3). 2. The average labor units used for rice are estimated at 61.5 man-day/feddan; 35% for harvesting, 20% for land preparation and 16% for weeding. The total value of human labor is estimated at 1931 LE/feddan. In addition, the average wage rate of man-day is estimated at 31.4 LE/man-day, table (45 in annex 3). 3. The average labor units used for rice are estimated at 63 man-day/feddan; 56% for harvesting, 16% for land preparation and 13% for irrigation. The total value of human labor is estimated at 2095 LE/feddan. In addition, the average wage rate of man-day is estimated at 33.3 LE/man-day, table (46 in annex 3). 4. The average labor units used for rice are estimated at 55 man-day/feddan; 45% for harvesting, 9% for land preparation and 22% for irrigation. The total value of human labor is estimated at 1785 LE/feddan. In addition, the average wage rate of man-day is estimated at 32.5 LE/man-day, table (47 in annex 3).

(ii) Capital Formation Profile (Capital used per feddan) The value of production inputs used in the agricultural operation for given crop can be estimated from the invested capital profile per crop and per feddan. The invested capital per feddan for specific crop is a proxy variable for the capital Intensive Factor for the studied crops. The value of inputs used per feddan for the major crops and by studied districts are presented in table 48 - 69 in annex 3.

The averages, minimum and maximum invested total capital during the last five years in the selected farms in the chosen villages and districts are showed in table (1). In Sharkia governorate, the amounts of invested capital in the farm during the last five years are estimated at 12.2 LE thousands/feddan, 10.9 LE thousands/feddan, 19.6 LE thousands/feddan and 92.4 LE thousands/feddan in Enshas El Basel, Bani Amer, Semakin El Sharek and Baher El Baker villages, respectively, with an average of 33.8 LE thousands/feddan. In , the amounts of invested capital in the farm during the last five years are estimated at 45LE thousands/feddan, 65.9 LE thousands/feddan, 34.4 LE thousands/feddan and 30.8 LE thousands/feddan in El Baramoun, Tanah, Al Asafra and Ewlad Sabour villages, respectively, with an average of 44.1 LE thousands/feddan. Table (1): Average Farm Invested Total Capital per feddan during Last Five Years Mean (LE/Feddan District Village ) Minimum Maximum Enshas El Basel 12240 0 40000 Zagazig Bani Amer 10960 2000 70000 Semakin El Sharek 19680 0 100000 El Hosonia Baher El Baker 92440 8000 500000 Average two districts 33830 El Baramoun 45360 10000 150000 El Mansoura Tanah 65880 10000 600000 El Asafra 34400 10000 100000 El Mataria Ewlad Sabour 30800 10000 80000 Average two districts 44110 Grand Mean 38970 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

The selected farmers had been got their invested capital from seven sources; loans (4.5%), own/self finance (66%), debt (3%), loans and self finance (4%), loans and debt (1%), debt and self finance (12%, and loans, self finance and debt (9.5%), table (2).

The average quantities and values of input used for rice in the selected district in 2009-2010 are presented in tables 48 – 51 (in annex). The main finding can be summarized as follows: (i) the average values of input used for rice are estimated at 1737 LE/feddan in Zagazig, 1858 LE/feddan in El Hosonia, 1758 LE/feddan in El Mansoura and 1765 LE / feddan. (ii) the cost of nitrogen fertilizers is the major cost of inputs used (from 36% to 20%) for rice in the selected districts.

Table (2): Investment Capital Sources for the Selected Farms by District Source of Investment El El El Capital Zagazig Hosonia Mansoura Mataria Total Count 7 1 1 9 Loans % of Total 3.5 0.5 0.5 4.5 Count 44 12 27 49 132 Self Finance % of Total 22 6 13.5 24.5 66 Count 1 4 1 6 Debt % of Total 0.5 2 0.5 3 Count 4 4 8 Loans & Self % of Total 2 2 4 Count 1 1 2 Loans & Debt % of Total 0.5 0.5 1 Count 14 10 24 Self & Debt % of Total 7 5 12 Count 5 8 6 19 Loans & Self & Debt % of Total 2.5 4 3 9.5 Count 50 50 50 50 200 Total % of Total 25 25 25 25 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

The average quantities and values of input used for maize in the selected district in 2009-2010 are presented in tables 52 – 55 (in annex). The main finding can be concluded as follows: (i) the average values of input used for maize are estimated at 1861 LE/feddan in Zagazig, 1879 LE/feddan in El Hosonia, 1989 LE/feddan in El Mansoura and 1793 LE / feddan. (ii) the cost of nitrogen fertilizers ((from 36% to 26%)) and seeds (from 44% to 25%) are the main costs of inputs used for maize in the selected districts. The average quantities and values of input used for wheat in the selected district in 2009-2010 are presented in tables 56 – 59 (in annex). The main finding can be concluded as follows: (i) the average values of input used for wheat are estimated at 1818 LE/feddan in Zagazig, 1627 LE/feddan in El Hosonia, 1481 LE/feddan in El Mansoura and 1431 LE / feddan. (ii) the cost of nitrogen fertilizers ((from 40% to 31%)) and seeds (from 42% to 29%) are the main costs of inputs used for wheat in the selected districts.

The average quantities and values of input used for cotton in Zagazig and Hosonia district in 2009-2010 are presented in tables 60 – 61 (in annex). The main finding can be concluded as follows: (i) the average values of input used for cotton are estimated at 2711 LE/feddan in Zagazig and 2753 LE/feddan in El Hosonia. (ii) The cost of nitrogen fertilizers ((from 22% to 21%)) and chemicals (from 44% to 38%) are the main costs of inputs used for cotton in the selected districts.

The average quantities and values of input used for berseem in the selected district in 2009- 2010 are presented in tables 62 – 65 (in annex). The main finding can be concluded as follows: (i) the average values of input used for berseem are estimated at 1230 LE/feddan in Zagazig, 1229 LE/feddan in El Hosonia, 1468 LE/feddan in El Mansoura and 1496 LE / feddan. (ii) The cost of nitrogen fertilizers (from 45% to 12%) and seeds (from 11% to 55%) are the main costs of inputs used for berseem in the selected districts.

The average quantities and values of input used for melon seeds, broad bean, sugar beet and squash in Hosonia district in 2009-2010 are presented in tables 66 - 69. The main finding can be concluded as follows: (i) the average values of input used for melon seeds, broad bean, sugar beet and squash are estimated at 1250 LE/feddan, 740 LE/feddan, 930 LE/feddan and 809 LE / feddan, respectively. (ii) The cost of nitrogen fertilizers and seeds are the major costs of inputs used for the certain crops.

(iii) Capital / Land Ratio

Data in tables 3- 6 indicate the annual invested capital per feddan for the major cultivated crops in Zagazig, Hosonia, El Mansoura and El Mataria districts, respectively. In Zagazig the annual invested capital is estimated at 3995 LE/Feddan of rice, 3882 LE/Feddan for maize, 3853 LE/Feddan for wheat, 6717 LE/Feddan for cotton and 3012 LE/Feddan for berseem. In Hosonia the annual invested capital is estimated at 3992 LE/Feddan of rice, 3915 LE/Feddan for maize, 3557 LE/Feddan for wheat, 5315 LE/Feddan for cotton and 2576 LE/Feddan for berseem. In El Mansoura the annual invested capital is estimated at 3989 LE/Feddan of rice, 3803 LE/Feddan for maize, 3426 LE/Feddan for wheat and 3212 LE/Feddan for berseem. In El Mataria the annual invested capital is estimated at 4120 LE/Feddan of rice, 3921 LE/Feddan for maize, 3526 LE/Feddan for wheat and 3281 LE/Feddan for berseem.

(iv) Capital / Labor Ratio

The capital / labor ratio per feddan for the major cultivated crops in Zagazig, Hosonia, El Mansoura and El Mataria districts are presented in Tables 3-6, respectively. In Zagazig the capital labor ratio is estimated at 76 LE/man-day for rice, 83 LE/man-day for maize, 86 LE/man-day for wheat, 74 LE/man-day for cotton and 72 LE/man-day for berseem. In Hosonia the capital labor ratio is estimated at 60 LE/man-day for rice, 56 LE/man-day for maize, 66 LE/man-day for wheat, 49 LE/man-day for cotton and 46 LE/man-day for berseem. In El Mansoura the capital labor ratio is estimated at 59 LE/man-day for rice, 73 LE/man-day for maize, 63 LE/man-day for wheat and 53 LE/man-day for berseem. In El Mataria the capital labor ratio is estimated at 55 LE/man-day for rice, 64 LE/man-day for maize, 56 LE/man-day for wheat and 60 LE/man-day for berseem. Table (3) Capital / Land and Capital / Labor Ratios per feddan in Zagazig District C/Land Ratio Total Labor Crop (LE/feddan) (man-day) C/Labor Ratio Rice 3995 53 76 Maize 3882 47 83 Wheat 3853 45 86 Cotton 6717 91 74 Berseem 3012 42 72 grand mean 21458 277 77 Source: compiled and computed from tables 21 – 69 in annex 3

Table (4) Capital / Land and Capital / Labor Ratios per feddan in Hosonia District C/Land Ratio Total Labor Crop (LE/feddan) (man-day) C/Labor Ratio Rice 3992 66 60 Maize 3915 70 56 Wheat 3557 54 66 Cotton 5315 108 49 Berseem 2576 56 46 Grand mean 19354 354 55 Source: compiled and computed from tables 21 – 69 in annex 3

Table (5) Capital / Land and Capital / Labor Ratios per feddan in El Mansoura District C / land Ratio Total Labor Crop (LE/feddan) (man-day) C/Labor Ratio Rice 3989 68 59 Maize 3803 52 73 Wheat 3426 54 63 berseem 3212 61 53 Grand mean 14429 235 61 Source: compiled and computed from tables 21 – 69 in annex 3

Table (6) Capital / Land and Capital / Labor Ratios per feddan in El Mataria District C / Land Ratio Total Labor Crop (LE/feddan) (man-day) C/Labor Ratio Rice 4120 75 55 Maize 3921 61 64 Wheat 3526 63 56 Berseem 3281 55 60 Grand mean 14849 254 58 Source: compiled and computed from tables 21 – 69 in annex 3

(v) Capital / Output Ratio

The capital / output ratio per feddan for the major cultivated crops in Zagazig, Hosonia, El Mansoura and El Mataria districts are presented in Tables 7-10, respectively. In Zagazig the capital / output ratio is estimated at LE 1.47 for rice, LE 1.52 for maize, LE 3.05 for wheat, LE 1.15 for cotton and LE 1.38 for berseem. In Hosonia the capital / output ratio is estimated at LE 2.7 for rice, LE 2.75 for maize, LE 4.84 for wheat, LE 1.27 for cotton and LE 2.51 for berseem. In El Mansoura the capital / output ratio is estimated at LE 1.55 for rice, LE 1.63 for maize, LE 3.38 for wheat and LE 1.04 for berseem. In El Mataria the capital / output ratio is estimated at LE 1.42 for rice, LE 2.19 for maize, LE 4.34for wheat and LE 1.26 for berseem.

Table (7) Capital /Output Ratio per feddan by Crop in Zagazig District Total Return or Output Total Invested Capital (LE/Feddan Capital/Output Crop (LE/Feddan) ) Ratio Rice 3995 5882 1.47 Maize 3882 5882 1.52 Wheat 3853 11733 3.05 Cotton 6717 7729 1.15 Berseem 3012 4152 1.38 Grand mean 4292 7076 1.65 Source: compiled and computed from tables 21 – 69 in annex 3

Table (8) Capital /Output Ratio per feddan by Crop in El Hosonia District Total Return or Output Total Invested Capital (LE/Feddan Capital/Output Crop (LE/Feddan) ) Ratio Rice 3992 10771 2.70 Maize 3915 10771 2.75 Wheat 3557 17226 4.84 Cotton 5315 6746 1.27 Berseem 2576 3133 1.22 Grand mean 3871 9729 2.51 Source: compiled and computed from tables 21 – 69 in annex 3

Table (9) Capital /Output Ratio per feddan by Crop in El Mansoura District Total Return or Output Total Invested Capital (LE/Feddan Capital/Output Crop (LE/Feddan) ) Ratio Rice 3989 6199 1.55 Maize 3803 6199 1.63 Wheat 3426 11578 3.38 Berseem 3212 3340 1.04 Grand mean 3607 6829 1.89 Source: compiled and computed from tables 21 – 69 in annex 3 Table (10) Capital /Output Ratio per feddan by Crop in El Mataria District Total Capital/Output Crop Total Invested Capital Return Ratio Rice 4120 5844 1.42 Maize 3921 8589 2.19 Wheat 3526 15300 4.34 Berseem 3281 4120 1.26 Grand mean 3712 8463 2.28 Source: compiled and computed from tables 21 – 69 in annex 3

(vi) Changes in the Total Capital Formation at the Farm level

Farmers in the studied villages invest their capital in purchase new agricultural lands and/or farming animals and /or farming machineries or rent new lands. The average amounts of invested capital by type of investment and by district are presented in table 7. For purchasing owned land, the changes in invested capital during the last five years (2005 – 2010) are estimated at 60% in Zagazig district, 67% in El Hosonia district, 72% in El Mataria district and -11% in El Mansoura district. For farming animal purchasing, the changes in invested capital during the last five years are estimated at 69% in Zagazig district, 90% in El Mansoura district, 104% in El Mataria district and -37% in El Hosonia district. For farming machineries purchasing, the changes in invested capital during the last five years are estimated at 43% in Zagazig district and 511% in El Hosonia district. For new land rent, the changes in invested capital during the last five years are estimated at 56% in Zagazig district, 41% in El Hosonia district, 43% in El Mansoura district and 40% in El Mataria district.

Table (7): Changes in Total Capital Formation during 2005 - 2010 period Owned Farming Land Animal Farming (LE/feddan (LE/feddan Machineries Rental Land Capital Formation in ) ) (LE/feddan) (LE/feddan) 2005 172035 9516 8244 199000 2010 274420 16092 11788 311050 Zagazig % changes 60% 69% 43% 56% 2005 370300 18069 1500 313333 El 2010 619170 11440 9171 440800 Hosonia % changes 67% -37% 511% 41% 2005 695988 15926 214714 El 2010 621061 30286 15600 308000 Mansoura % changes -11% 90% 43% 2005 814537 29017 240000 2010 1399224 59282 12165 336000 El Mataria % changes 72% 104% 40% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

(vii) The Determinants of Capital Formation in the Selected Sample

The purchasing of new owned lands, farming animals, new farming machineries, rent new lands in 2005 and 2010 are simple indicators for the capital formation invested in the farm. The simple correlation coefficients among the previous indicators and each of the following variables; farmer occupation, farmer age, farmer experience, farmer education status, distance of district to the governorate capital, size of household, family labor working in agriculture, owned land tenure, rental land tenure, shared land tenure are investigated and estimated in table 8. The main results in the table could be summarized as follows: (i) The relationship among the invested capital in purchasing new land area in 2005 and each of farmer experience, size of household, family labor working in agriculture and size of owned land tenure are positive and significant statistically. (ii) The relationship among the invested capital in purchasing new land area in 2010 and each of size of household, family labor working in agriculture and size of owned land tenure are positive and significant statistically. (iii) The relationship between the invested capital in purchasing new farming animals in 2005 and size of owned land tenure are positive and significant statistically, i.e., the large farmers have enough capital formation to invest in new animal purchase operations. In contrast, relationship between the invested capital in purchasing farming animal and farmer age are negative and significant statistically. This is means that the younger farmers prefer to purchase farming animals than older farmers because purchasing new animals needs small amounts of capitals. (iv) The relationship between the invested capital in purchasing new farming animals in 2010 and size of owned land tenure are also positive and significant statistically. But the relationship between the invested capital in purchasing farming animal and farmer occupation are negative and significant statistically, i.e., the farmers working only in agriculture prefer to invest their capital in purchasing farming animal than farmers working in agriculture and other job. (v) The relationship among the invested capital in purchasing new farming machineries in 2005, distance between the district and the governorate capital, and size of rental land tenure are positive and significant statistically, i.e., the farms which very near from the capital and large-scale rental farms desire to invest their capital formation in purchasing new machineries. (vi) The relationship between the invested capital in purchasing new farming machineries in 2010, the distance between the district and the capital, and size of owned land tenure are positive and significant statistically. (vii) The relationship among the invested capital in renting new land area in 2005, and in 2010, and size of owned land tenure are positive and significant statistically, i.e., the large scale farms have enough capital formation to rent new tenure.

(viii) Capital Formation and Crop Productivity

The simple correlation coefficients among the previous indicators (i.e., purchasing of new lands, farming animals, new farming machineries, rent new lands in 2005 and 2010) and the yield of main studied crops (i.e., rice, maize, wheat, cotton and berseem) are investigated and estimated in table 9. the main results in the table could be summarized by the following main points: 1. There are positive and significant statistically relationship among the yield of wheat and each of purchasing owned land area in both 2005 and 2010, farming animals in 2010, renting new tenures in 2005 and in 2010. 2. There are positive and significant statistically relationship among the yield of maize and each of purchasing farming animals in 2010, renting new tenures in 2005 and in 2010. 3. There are positive and significant statistically relationship among the yield of cotton and each of purchasing owned land area in 2010, renting new tenures in 2005 and in 2010. (iv) there are no any relationships among the yield of rice or berseem and the studied capital formation variables in the selected villages. Table (8): Simple Correlation Coefficients among Capital Formation Elements and Studied Socio-economic Variables family How far the village Experience labor Owned Rental Shared Capital formation invested in or district from the Farmer Farmer years of Education Size of working in land land land farm Year capital Occupation age farmer status household agriculture tenure tenure tenure Correlation Coefficient -0.02 0.06 0.12 0.15 0.06 0.19 0.23 0.46 0.07 -0.06 Sig. (1-tailed) 0.39 0.23 0.06 0.03 0.21 0.01 0.00 0.00 0.17 0.23 2005 N 167 167 167 167 167 167 167 167 167 167 To purchasing land Correlation Coefficient 0.03 -0.06 0.09 0.07 -0.03 0.25 0.28 0.8 -0.09 -0.04 Sig. (1-tailed) 0.33 0.22 0.1 0.18 0.35 0.00 0.00 0.00 0.11 0.3 2010 N 186 186 186 186 186 186 186 186 186 186 Correlation Coefficient 0 -0.11 -0.14 -0.13 0.05 0.02 0.05 0.28 -0.08 -0.04 Sig. (1-tailed) 0.5 0.09 0.05 0.06 0.27 0.42 0.28 0.00 0.15 0.31 2005 N 151 151 151 151 151 151 151 151 151 151 To purchasing farming animal Correlation Coefficient 0.09 -0.14 0.02 -0.03 -0.03 0.11 0.11 0.29 -0.07 -0.07 Sig. (1-tailed) 0.14 0.04 0.41 0.36 0.34 0.1 0.1 0.00 0.2 0.2 2010 N 148 148 148 148 148 148 148 148 148 148 Correlation Coefficient 0.54 -0.21 -0.18 -0.13 -0.05 -0.2 -0.14 -0.26 0.64 -0.08 Sig. (1-tailed) 0.0 0.14 0.17 0.25 0.39 0.15 0.24 0.09 0.00 0.34 To purchasing farming 2005 N 29 29 29 29 29 29 29 29 29 29 machineries Correlation Coefficient 0.13 0.07 0.06 0.08 0.08 0.02 0.12 0.2 0.15 0.23 Sig. (1-tailed) 0.05 0.19 0.25 0.15 0.16 0.41 0.07 0.01 0.03 0 2010 N 155 155 155 155 155 155 155 155 155 155 Correlation Coefficient 0.12 0.03 -0.08 0.07 0.16 0.05 0.17 0.06 0.67 0.07 Sig. (1-tailed) 0.28 0.43 0.36 0.37 0.21 0.4 0.2 0.38 0.0 0.37 2005 N 27 27 27 27 27 27 27 27 27 27 To rent new land Correlation Coefficient 0.09 -0.04 -0.07 0 -0.17 0.07 0.25 -0.06 0.96 -0.16 Sig. (1-tailed) 0.3 0.41 0.36 0.49 0.17 0.34 0.08 0.36 0.0 0.18 2010 N 34 34 34 34 34 34 34 34 34 34 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (9): Simple Correlation Coefficients among Capital Formation Elements and Crops Productivity Invested for Capital Formation in Farm year Wheat Rice Maize Cotton Berseem Correlation Coefficient 0.62 0.45 0.21 -0.19 0.03 Sig. (1-tailed) 0.01 0.07 0.19 0.28 0.48 2005 N 13 12 19 12 6 To purchasing land Correlation Coefficient 0.47 0.34 0.09 -0.02 0.11 Sig. (1-tailed) 0.05 0.14 0.35 0.48 0.41 2010 N 14 12 20 13 7 Correlation Coefficient 0.07 0.10 -0.09 -0.20 0.29 Sig. (1-tailed) 0.41 0.39 0.36 0.28 0.27 To purchasing farming 2005 N 13 10 17 11 7 animal Correlation Coefficient 0.81 0.55 0.53 0.31 -0.10 Sig. (1-tailed) 0.00 0.06 0.01 0.15 0.44 2010 N 13 9 20 13 5 Correlation Coefficient -0.16 -0.33 -0.12 0.21 . Sig. (1-tailed) 0.31 0.20 0.34 0.30 . To purchasing farming 2005 N 12 9 15 9 1 machineries Correlation Coefficient 0.13 0.18 0.25 0.45 -0.09 Sig. (1-tailed) 0.32 0.29 0.16 0.08 0.44 2010 N 15 12 18 11 6 Correlation Coefficient 0.86 -0.40 0.88 0.64 . Sig. (1-tailed) 0.01 0.30 0.00 0.02 . 2005 N 7 4 10 10 0 To rent new land Correlation Coefficient 0.58 -0.52 0.54 0.79 . Sig. (1-tailed) 0.05 0.14 0.02 0.00 . 2010 N 9 6 14 14 0 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 VII. Overall Impacts of Agricultural Investment based on Strategy 2030

The estimated required investment to implement the first phase (2011-2017) of the sustainable agricultural development strategy till 2030 is about LE 107 billion with LE 49 billion from government sources (46%) and LE 58 billion from the private sector (54%). This is based on a regional consultative process in each region and detailed discussions with stakeholders (MALR 2009). The possible overall impacts of envisaged increasing agricultural investment to implement the first phase (2011-2017) of the agricultural strategy till 2030 include the following:

1. Poverty Alleviation and Social Impact: The new and well targeted agricultural investment will improve livelihood for a large number or rural population. The Strategy till 2030 and the First Business Plan (till 2017) have primarily focused on the livelihood improvement of rural populations as a central objective to Egypt’s agricultural development agenda. This prioritization has to be adhered to if poverty is to be alleviated or reduced, particularly in Upper Egypt. The programs and projects focus on providing agricultural investments targeting about 55% of the population. The implementation of the strategy will pay special attention to augmenting and fostering the role of women in conducting specialized activities with the view to reduce time in farm operations and drudgery. This will allow women to benefit from literacy and training programs provided by the Plan. Agricultural investments comprise only 4% of total national investments. MALR realizes that there is high demand on investments in health, education and infrastructure. However, improvement of the rural social welfare would start with investing in agriculture. About 26.8% of the population lives below the poverty level, with 77% of that figure living in rural areas. As for the absolute poor, about 81% of them are concentrated in rural areas also. Unemployment and underemployment are high in rural areas where lack of services and health infrastructure contributes to low living standards. The range between governorates and regions varies widely in percentages of poor and absolute poor as indicated in Table 6. Therefore, Egyptian policymakers and the society as a whole cannot afford to maintain the status quo as it will get worse with increased population. MALR is focusing on increasing investment to improve livelihood in rural areas with agriculture development as the engine of growth and poverty reduction. As an example, the On-farm Irrigation Modernization Program will empower 80% of land holders (who hold less than 3 feddans) to improve their incomes and decrease crop production costs, particularly for energy.

2. Economic Impact and Growth: Several investment programmes have high rates of return. For example, early estimates of rates of return calculations for the on-farm irrigation program are about 17% and may be higher in areas where irrigation infrastructure at the mesqa level have been improved and tile drainage is implemented. There will be also an increase in agricultural growth rates from about 3% in 2007 to 4.5% in 2017 (MALR 2009). The Egyptian National Economic and Social Plan combines agriculture and water resources together and more work is needed to assess their roles separately in relation to the Strategy’s implementation.

3. Employment Generation: New agricultural investment needed for the implementation of the strategy 2030, will create new employment opportunities. For example, about 1.05 million feddans are to be reclaimed till 2017. To provide agricultural infrastructure and services for newly reclaimed area, about 1.6 million job opportunities would be created to effect Plan implementation. This will improve livelihood of 8 million rural people (based on the average family size of five). The National Democratic Party, however, declared that the increase in agricultural investment will lead to a clear-cut increase in the capacity of the sector to generate job opportunities (about 910,000 job opportunities in the agricultural production sector plus 830,000 jobs in the fields of agro-processing by 2020 (NDP, 2008). Given the nature of the private sector investment and operational efficiency, there is positive statistically significant relationship between the current private capital invested in agriculture and agricultural work. The agricultural work will increase by 153 labors when the private capital increases by LE 1 million. Meanwhile, the agricultural work will increase by less with investment time lag. Compared to private sector, the agricultural work will increase by 222 labors when the public capital increases by one LE 1 million. The agricultural labor in the current year will increase by only 216 labors when the last year’s public investment in agriculture increases by LE 1 million. The following depict the estimated regression equations:

\2 Ag. Employment t = 4266.4 + 0.153 Private Investment t ; R = 0.83; F-ratio = 115.7 (10.8) 2 Ag Employment t-1 = 4311.8 + 0.151 Private Investment t-1 ; R = 0.82; F-ratio = 109.3 (10.5) 2 Ag. Employment t = 4192.6 + 0.222 Public Investment t ; R = 0.71; F-ratio = 58.6 (7.66) 2 Ag. Employment t = 4182.7 + 0.216 Public Investment t-1 ; R = 0.87; F-ratio = 82.5 (9.1)

4. Improving Farmers’ Income and Access to Food: Increasing targeted and prioritized agricultural investment will lead to increase yield levels will ultimately lead to increased farmers’ incomes. Investments leading to decreasing production costs, particularly in energy, would also have positive results on farmers’ incomes. Of course, this would depend on streamlining markets and farmers’ obtaining fair prices for their products. It is estimated that by 2017 farmers’ incomes will increase 54% per feddan compared to 2007 prices i.e. from LE 13,200 to LE 20,300 (using constant 2006 prices). With an average land holding of 2.3 feddans, the agricultural income per holding is estimated to increase from LE 30,000 in 2007 to LE 47,000 by 2017. The analysis of the 1982-2008 data indicated that there is a positive statistically significant relationship between the agricultural output and both current and lagged public and private invested in agriculture. The agricultural output will increase by LE 23.2 million when the public capital increases by LE 1 million. Meanwhile, the agricultural output will increase by LE 24.7 million LE when the public capital (t-2) increases by 1 million. This indicated that it takes sometimes for public agricultural investment to bring more impact on the value agricultural output. The agricultural output will increase by LE 16.99 million when the private capital increases by LE 1million in the current year. Unlike the public investment, the impact of the lagged private investment is less and reaches only LE 16.87 million when the private capital (t- 1) increases by LE 1.0 million.

The following estimated regression equations depict the above mentioned results.

\2 Value of Ag. Output t= 3962.7 + 23.2 Public Investment t ; R = 0.57 F-ratio = 33.3 (4.01) 2 Value of Ag. Output t= 5847.7 + 24.7 Public Investment t-2 ; R = 0.73 F-ratio = 61.9 (7.8) 2 Value of Ag Output t = 9105.7 + 16.99 Private Investment t ; R = 0.77 F-ratio = 81.8 (9.05) 2 Value of Ag Output t-1= 13275.8 + 16.87 Private Investment (t-1) ; R = 0.73 F-ratio = 63.1 (7.9)

5. Increased Productivity of Export Crops and Agro-Industries: Increasing the agricultural investment within the strategy to increase cropped areas for fruits (by about 14%), vegetables (by about 13%) and medicinal and ornamentals and cut flowers (by about 55%), as mentioned above, will subsequently lead to increased rates of production ranging between 15 – 50%. Export promotion campaigns and improved quality of Egyptian produce based on high standards should be an integral part of improving farmers’ linkages to domestic and international markets. In this respect, the first phase of the strategy’s implementation includes a Program focused on marketing and agro-industries with two Principal National Projects to improve marketing and competitiveness for agricultural products.

6. Increased Productivity of Water and Land Units: Enhancing agricultural investment with emphasis on sustainability of natural resources particularly water and land will lead to maximizing water and land unit productivity. In this respect, benefits per cubic meter of water are estimated to improve by 68% in 2017, compared to 2007. Production per feddan would also improve by 54% during the Plan implementation period and crop intensity will increase from 177% at present to 200% in 2017.

7. Financial Returns and Possible Cost Recovery: Investment in several agricultural programmes and projects tends to have high rates for financial return. On-farm irrigation and land reclamation Programs and Projects’ financing comprise about 71% of total funding needed for the first phase of the strategy (till 2017). Rates of return are estimated to be 17% which identifies Projects that would attract domestic and international investments. In fact, the Egyptian Government has concluded a financial package of about US$ 50 million on loan from IFAD and processing of a US$ 100 million loan from the World Bank is in progress. Additional investments in linking farmers to markets are in the pipeline.

8. Environmental Impact: Investment in agriculture tends also to improve environmental conditions and several programmes should be oriented toward maintaining and improving environmental conditions. Following the construction of the High Dam in the 1960’s and conversion from basin to permanent irrigation, several environmental side effects became apparent. Among these were increased water logging and salinity levels, particularly in the Delta. Hence drainage projects, especially tile drainage, were implemented. This led to a decreasing high water table, which was affecting crop production, particularly deep-rooted horticultural crops e.g. mango, citrus and grapes. Gradual dependence on agro-chemicals e.g. fertilizers, have resulted in increasing production costs and increased levels of chemicals and pesticides in ground water. It is a great challenge to try to halt environmental degradation of land and water resources, and steer it in a positive direction by increasing investment and capital formation for implementing specific Programs and Projects. While increasing agricultural investment, the environmental factors should be considered and the productive capacity of natural resources should not be degraded by increased intensification. VIII. Conclusion and Policy Recommendations

Major conclusions and recommendations based of above cited review and assessment were reached. The following are the major conclusions and recommendations for the case study for Egypt related to the main issues for sustainable agricultural development, poverty alleviation, agricultural investment, and accumulation of capital formation in and for agriculture:

1. Promoting Policy and Institutional Reforms as Crucial Prerequisites for Improving the Mapping of A gricultural Investment

There are few prerequisites to increase and improve agricultural investment including the need for continuing policy reform to enhance sustainable agricultural and rural development. Special attention must be given to articulate needed amendments in Agricultural Reform Policies and Institutions for: 1. The Ministry of Agriculture and Land Reclamation (MALR);

2. Cooperatives and Farmers’ Organizations;

3. On-farm Irrigation Laws and Farmers’ Participation.

In national priority setting, the following recurring and emerging issues for sustainable agricultural development and poverty alleviation must be considered:

• Population pressure and internal immigration demographic transition; • Resource base degradation and water scarcity; • Investment in agriculture, capital formation structural adjustment and impact on the poor; • Modern science and technology and support to research and technology development; and • Rapid urbanization and urbanization of poverty, and deceleration in rural poverty reduction.

The following are specific suggested Prerequisites for Mapping Agricultural Investment Activities: 1. Responding to Regional Needs: The five agro-ecological areas of Egypt are not only characterized by differences in natural resource endowments but also with consequential development challenges e.g. poverty alleviation, human resources skills, available infrastructure and shortage of arable land.

2. Development Focus and Results-Oriented Investment Plan: The implementation priorities are designed to address challenges and constraints facing Egyptian agriculture. As indicated earlier, on- farm irrigation investments are the starting point followed by implementation of technical packages and cultural practices with proven results. Farmers’ acceptance and adoption of the development packages is a sine qua non to the Plan’s successful implementation.

3. Logical Time Sequence of Implementation Process: Some of the investments are dependent on sequential phasing of Plan activities, e.g.:

i. Improvement of on-farm irrigation investments precedes the implementation of National Land Reclamation in new lands as water savings from the first will be used to irrigate the second; and

ii. Revision of irrigation and farmers’ organizational policies should be resolved with necessary legislation obtained in the first two years of the Plan. 4. Progressive Price Policy: A special review for pricing of inputs and outputs is currently undertaken with a future look to gain farmers’ confidence prior to the planting season. Therefore, it is essential to introduce agro-ecological zone differences and costs in the formulation of pricing policies. Improvement in animal husbandry and dairy production should start with genetic build-up to increase their milk production. Fisheries development is dependent on increasing fishermen’s awareness of income gains by introducing and adopting new in-land and marine fisheries investments.

5. Complete the reform of the agricultural land rental relationships. Among the main features of the Agricultural Reform law were determining the rental value of land at seven times the tax assessment, the inheritance of rental contracts, and the complete cancellation of market mechanisms in determining agricultural land rental value and prices. In addition, the government had frozen the tax assessment on agricultural land and consequently its rental value for more than 40 years. The above has led to several distortions and imbalance in the socio-economic relations in the rural areas. Among these are the severe imbalance in land markets; switching land uses to other non-agricultural uses; and dwindling investment flow, and consequently dwindling capital formation in the agricultural sector, a fact that has severely affected the potential of developing agriculture-related and complimentary projects.

6. Investment Programs and Projects: The first phase of the strategy implementation during the period 2011-2017 should encompass programs, national projects as well as policy and institutional reform measures. These should reflect the agreed upon national priorities.

2. Improving National Budget Formulation and Execution

The National expenditure should give more weight to productive investment. The debt reduction trajectory does not depend on mere reductions of the deficit or increasing growth to reduce the deficit. It incorporates the long term competitiveness/growth objective during fiscal adjustment and makes decisions that will influence the link between fiscal policy, competitiveness, growth and welfare outcomes.

Because the range of options available in the short term with regard to revenue and expenditure options is restricted, the principle avenue for fiscal policy to influence competitiveness and growth comes by adopting a longer term perspective. This can only be achieved if there is a strong and supportive budgetary institution that adopts and enforces a medium term policy framework. Such a framework has a number of advantages. First, medium term expenditure frameworks provide a "roadmap" for fiscal consolidation. Second, they enable effective expenditure control by helping link budget decisions to multi-year expenditure ceilings. Third and more important, they help governments articulate competitiveness/growth engaging fiscal scenarios.

Incorporating a long term competitiveness/growth objective during fiscal adjustment facilitates making decisions that influence the link between fiscal policy, competitiveness, growth and welfare outcomes. The long term perspective will guide decisions about whether fiscal consolidation should be based on altering the composition of expenditures, or reducing the budget deficit, or both in order to maximize consequences on competitiveness and growth.

There are three lessons regarding pro-poor fiscal policy that need to be further considered within the Egyptian context. The first is that pro-poor fiscal policies are successful when the expenditure switching alters the pattern of government spending in favor of productive spending. In particular, increased spending on education, health, infrastructure, business environment, labor flexibility, and research and development can boost factor productivity and long term growth. The second lesson is that a sustainable fiscal policy implemented through spending offers better opportunities than the tax side for reducing the budget deficit. A fiscal adjustment that relies on cuts in investment or excessive revenue increases may lower a country's growth trajectory. The third lesson is that a sustainable fiscal policy implemented through spending offers better opportunities than the tax side for redistributing income in both the short and long term. The literature shows a strong link between social spending, especially in education, pensions and health reform, and health insurance in influencing better income distribution and in the formation and distribution of human capital. Social welfare programs that focus on pension and health entitlements are also critical for durable pro-poor growth.

Public spending on wages and subsidies may have to persist for sometime in the absence of alternative social safety nets, however. In this situation, two sources for financing should be available. The first would be to raise the efficiency and effectiveness of public spending by gradually redirecting resources from non-productive spending to productive investments that increase productivity over the longer term such as infrastructure projects and spending on human capital, Research and Development (R&D), innovation and green transformation. The second would be to implement policies that directly target improving the participation of labor in economic growth. This is of particular interest to agriculture in Egypt. 3. Improve the Environment for Agricultural Investment The GOE has devoted attention to investment legislation in general, and agricultural investment in particular during the past ten years. There is a need to complete the reform process more progressively. There should be a focus on completing the review of legislation and investment procedures and simplifying targeted procedures especially those relating to handling foreign trade and the flow of capital and exit accompanied with its returns and also included the organization and development of the banking system and update the working mechanisms and the development of banking services, along with the development of procedures for the capital market to create a climate catalyst for investments. The GOE needs to continue the recent fundamental change in the law of income tax and simplifying procedures for tax collection, and to take effective action in confidence-building between the device and taxation of investors and financiers and entrepreneurs. There is a need as well to speed up and complete the initiated efforts in supporting exporters through reducing the financial burdens of the administrative and fiscal systems that have limited their competitiveness in international markets during the nineties. Naturally Such developments, inter alia, to a significant improvement in the investment climate in general, as the agricultural activities, especially those relating to land reclamation at the forefront of activities exempted tax, and agricultural exports were at the top of the list of goods that have received financial support and contribute to the expenses of marketing the external , and by the reduction in expenses and costs of international shipping, and promotional expenditure in foreign markets. Based on the foregoing, the improvement of agricultural investment climate requires that the Ministry of Agriculture in cooperation with other relevant ministries to reduce impediments to agricultural investment, particularly in the following areas: • Facilitating the procedures for allocating new land the creation of an unified representation from all relevant ministries in order to deal directly with investors and businessmen, along the lines of devices reconstruction new cities, through which were overcome many obstacles investment to the extent that allowed a breakthrough development witnessed by the new industrial cities during the past two decades. • Review legislation and procedures of land allocation and issuance of instruments of ownership, to reduce the length of the implementation of these procedures, or the process of developing alternatives to enable farmers and investors from the agricultural use of land allocated to them can be accepted as collateral for bank loans and long-term average. • Review of credit policies and lending for agriculture and projects with a view to alleviating the burdens and conditions of borrowing, and to facilitate procedures for obtaining them, will be done in the context of credit lines being developed to increase the flow rates of investment in specific areas in line with the strategic objectives of development and most important of which:  The development of field Irrigation systems.  The development of industry, agricultural machinery and irrigation equipment, and farm machinery.  Processing of agricultural products, to the extent that helps complementary agricultural investment between the stages of the value chain, or what might be called vertical integration between episodes of agricultural production and manufacture of its products and marketing. the development of industry,  Production of seeds and seedlings and updated. the development of the pesticide industry and fertilizers.  To encourage the establishment of institutions of collective action to farmers and processing of these institutions need to respond to the necessary to do its part in the service of its members.  Reclamation of agricultural land. • The Ministry of Agriculture preparing an investment map and clear Egyptian agriculture is determined by the elements and the following components: ♦ Areas designated for agricultural expansion and horizontal, which are available all the features necessary for the resettlement of agriculture ♦ Areas designated for the establishment of marketing services and post-harvest factors, such as sorting stations, grading, packing, storage projects, and dryers medicinal and aromatic plants, and other similar projects. ♦ Areas allowed for the establishment of industry projects related to the types of food crops that can be characterized by areas of new land. ♦ Areas allocated for housing and the provision of education services, health care and social development.

4. Agricultural Mapping and Investment Allocations should Coincide with Major Strategic Objectives There is a need to prepare an investment map. The map could be used as promotional investment projects between investors and businessmen, as well as a framework for collective action to farmers through civil society institutions. The following are of crucial importance to the sustainable development of agriculture in Egypt and should represent the highest priorities for agricultural investment planning in Egypt.

1. Water Resources Management is the Major Challenge in Egypt

Water demand management and the relatively low efficiency of farm irrigation practices constitute a serious challenge to agricultural development and a serious constraint limiting aggregate supply response to improved market conditions and market signals. Capital formation leading to improved water use efficiency is crucial for Egypt.

There is a great need for sustainable water and land resources management to face the scarcity and the deteriorating quality of water resources. Modernizing the on-farm irrigation system and rationalizing water use are the primary investment components for the envisaged improvements. Other investments should start at the same time or follow with an overall implementation horizon of seven years. The on-farm irrigation implementation components of the strategy for sustainable agricultural development till 2030 should focus on:

i. Implementing the Principal National Project for modernization of on-farm irrigation in the Delta and Wadi areas;

ii. Formulating necessary policies to rationalize irrigation water and fostering participatory irrigation approaches to accommodate Plan objectives and farmers’ rights and responsibilities; and

iii. Introducing and adopting needed technologies to achieve Plan objectives at regional and national levels.

2. Human Capital Two concluding remarks and recommendations are of great relevance to human capital development and agricultural investment: First: The supply of the working force handling direct field agricultural activities is anticipated to increase by one million persons by 2030, in addition to about 3m persons in the other productive and service activities and projects closely related to agriculture or complementing it. Consequently, one of the main objectives of the strategy is to make available some four million new jobs by the year 2030 (MALR, 2009), through the various agriculture-related or complementary programmes and projects in the different activities. The most important directives for agricultural investment to support the achievement of this goal are: • Reclaiming and developing additional land; • Expanding the non-farm activities related to, and complementing agricultural activities in the fields of production of agricultural inputs, processing agricultural products and the various other service and support activities, while concentrating on small economic units managed by individuals in the rural areas; • Adopting labour and capital intensive agricultural technologies, and promoting them in order to achieve better income for workers in the agricultural sector and the rural areas in general. In the field of protected cultivation, for example, the feddan needs 5 to 8 working units, in spite of the fact that this type of production is capital intensive as the capital cost for each feddan is around LE 500’000. This applies also to many production and support services such as milk collecting and processing centres, sorting, grading and packaging stations, vegetable and fruit processing stations, and many other fields; and • Giving greater attention and support to agricultural human resources’ development, including university and secondary education institutions, training, information and skill development centres, as well as other activities that make available enough numbers of skilled and specialized labourers to meet the requirements of modernized agricultural activities. Second: The unequal distribution of human capital represents a huge loss in social welfare. Assuming the distribution of ability is normal, if the distribution of education opportunities are more skewed than the distribution of ability. The society suffers from undeveloped human capital and under utilization of its potential human capital. This would have a negative impact on growth as well as on social welfare directly. According to econometric analysis using household survey data and based on the limited farm survey conducted for the purpose of this study, real income per capita is positively and significantly related to levels of education. There might be many reasons for this widening regional inequality in education opportunities in Egypt, ranging from lower income and lower demand for schooling (demand side factors); to insufficient fiscal transfers to the poor regions (supply side factors). Whatever the reason, this issue should be addressed if Egypt is to reduce its poverty and inequality. In addition, there is a need to increase human capacity at all levels (from farmers to practitioners and decision makers) to deal efficiently with research and development institutions in absorbing and developing new technologies. The state should be able to attract foreign sources of finance in the form of specialized or general development projects. In particular, the human and technical capacities of the MALR need to be strengthened in cooperation with other stakeholders, to prepare appropriate agricultural investment map including detailed project assessment covering social, economic, financial, institutional, and environmental aspects. 3. Enhance Investment in Research and Technology Transfer The budgets of research and extension that barely exceed 0.01% of the share of agricultural in national income is not acceptable, if the objectives of the agricultural development strategy till 2030 are to be attained. Enhancing coordination among the roles played by the different research institutions is pivotal to the effectiveness of the required investment. There is a need to support the newly established Agricultural Research and Development Centre, as well as other agricultural scientific research institutions. There is a need to develop their human resources and widening the scope of their activities. Investment in enhancing institutional capacities in agricultural research and technology transfer should be increased.

4. One-stop-shop for investments in land reclamation and improvement

While total Agricultural land increased from 5.87 m feddans in 1980 to approximately 8.44 m feddans in 2007, areas of the first grade lands in 2001–2005 have declined to less than one third of what it was in 1996-2000. This phenomenon underlines the importance of reviewing government policies in the field of land maintenance and putting investment in land improvement programmes and projects as a top priority in the coming years. To overcome the serious administrative and institutional problems, formalizing the one-stop-shop for land reclamation investments seems highly needed.

5. Resolving Food Security Challenges not Food Self-Sufficiency

Resolving food security challenges is of primary importance, especially with an increasing population. Consequently, Egypt imports about 40% of its food and 60% of its wheat requirements; hence, special emphasis on import substitution should be an integral part of any investment allocation and planning. Therefore, increasing self-sufficiency in selected primary strategic food crops and ensuring exports for some commodities is one of the main objective. Agricultural investment and in particular investment in research need to coincide with regional comparative advantages for sustainable agricultural and rural development and enhancing efficiency of resources utilization. Concentrating investment to achieve higher rate of self sufficiency at any cost could be very harmful and costly to the long run development and the already scarce water and land resources. In that context also, a clear distinction should be made between food security objectives (with its pillars such as availability, stability, access and utilization) and self sufficiency.

6. Agribusiness as an Engine of Growth

Enhancing agricultural investment could bring fruitful results if a sustainable development approach is further integrated by linking production with processing and export systems. The agriculture sector can be a source of economic growth and competitiveness as it possesses the ability to simultaneously achieve the goals of food security, increased employment, maximized farmer incomes and total national income as well as balanced, sustainable growth (ENCC, 2010). The dependence on both advanced and traditional schemes could bring positive results. One possibility is improving quantity and quality of horticultural production in Egypt, easing its channeling to Europe, building a comprehensive support plan for the whole production and export chain. This demand driven approach will allow to move from basic to more challenging targets according to the response of the market, the cooperation established among all the private stakeholders in the set up and management of the system and the political willingness to keep supporting the sector in the future through the necessary investments.

Meanwhile, Agricultural private investors need to benefit from the recent Government directed attention to the development of Upper Egypt, attracting investments and developing necessary infrastructure for market linkages, reflected in improved infrastructure including the many newly constructed highways. One observed success story is a sun drying facility for vegetables (mainly tomatoes) in Luxor, which was privately constructed. Making use of the abundance of tomatoes in the region, as well as the hot weather and the dry air, the project poses a feasible alternative for value addition, income generation and reduction of postharvest losses, in addition to harvesting export potential. In addition to scaling up such activities, a shift to high value crops such as grapes, pomegranates and cantaloupe could be achieved, recognizing their export potential. There are other potential observed in the agricultural supply chain of potatoes. Contract farming could be enhanced, where processors supply farmers with seedlings, some inputs such as fertilizers and pesticides and buy their produce at prices agreed upon by contract.

Also, the creation of strategically located agro-industrial zones with modern facilities would potentially drive private sector investment.

5. Investment Mapping should Target Regional Niches

The suggested first investment plan -till 2017- to implement the approved strategy till 2030 should be divided according to commodities and priority investments to ensure sustainability of the natural resource base. The commodity approach would provide measurable targets to follow-up on adoption of improved technologies. This will provide a good information base to measureable baselines and M&E indicators for productivity and yield measures.

However, to achieve optimum impact on agricultural productivity and sustainable agricultural and rural development, the investment in each region should consider the socio-economic and agro- ecological characteristics of each region (section 2-2-6). Allocate agricultural investment according to comparative advantages and niches in regions should take into consideration the following regional priorities: 1. Upper Egypt o Expanding the application of modern technologies in the production of sugar cane; o Expanding the cultivation of high-value ligneous tree species suitable for the climate of the region; o Promoting the production of dry and semi-dry date varieties, introducing the cultivation of sugar beet, as well as establishing sugar factories in Al’Wadi El’Jadeed (the New Valley) and Asyut governorates; o Paying greater attention to the establishment of infrastructure needed for linking the areas under horizontal expansion and other communities; o Encouraging farmers to establish voluntary associations for collective action, and proving technical support to such associations; o Promoting organic agriculture to meet export requirements, as well as producing early maturing vegetable and fruit varieties, as in the case of green beans, grapes and pomegranate; and o Expanding the areas planted to olive trees, and increasing olive production, especially in the New Valley. 2. Middle Egypt o Increasing the productivity of long-medium staple cotton varieties cultivated in this region; o Promoting contractual cultivation of vegetables, oil seed crops and aromatic pastes, for manufacturing purposes; o Increasing the productivity of the main crops cultivated in this region, especially wheat and maize; o Establishing infrastructure and institutional frameworks for enabling the region to specialize in the production of medicinal and aromatic plants, as well as protected agriculture; o Promoting small agricultural projects and income-generating projects for the poorer families; and o Promoting livestock production. 3. Eastern Delta o Considering agricultural development in Eastern Delta as a national security issue, particularly in Sinai; o Establishing infrastructure and institutional frameworks for enabling the region to specialize in production for export purposes, protected agriculture and the cultivation of organic products; o Promoting the production of the main crops (wheat, rice, groundnut and clover), as well as expanding the cultivation of sugar beet, and fodder beet, especially in AI-Husainiya plain and the El-Tina plain; o Developing the production of horticultural crops cultivated in the region (mango, peach, olive and citrus); and o Promoting capture fisheries, as well as sea aquaculture off the shores of Sinai. 4. Western Delta o Promoting the cultivation of vegetable and fruit crops, for processing and export purposes, and establishing an institutional framework for contractual cultivation; o Developing a programme for the safeguarding the excellent animal stocks of the region, and encouraging small farmers to breed such stocks; o Establishing the necessary infrastructure for expanding the cultivation of olive trees; o Developing and executing a national programme for removing the explosive mines in the North Coast region; o Promoting inland as well as off-shore aquaculture; o Increasing the productivity of the main crops cultivated in this region (wheat, cotton, clover, rice and potatoes), to reach maximum levels; o Developing policies for establishing agro-industrial communities in the region; o Developing irrigation systems in the region and establishing controls for water use; o Establishing milk-collection centers for small farmers, and o Developing a programme for range development in the North Coast areas. 5. Middle Delta o Increasing the productivity of the main crops of the region (wheat, clover, maize, cotton and citrus); o Making available suitable technologies for the development of aquaculture and developing a marketing system for aquaculture products, o Establishing the infrastructure and the institutional frameworks necessary for promoting the specialization of the region in producing milk, poultry and fisheries products; o Establishing mechanical poultry slaughterhouses, and providing linkages between them and poultry farms; o Establishing milk collection centers, as well as an institutional framework for their administration for the benefit of small farmers; o Improving nurseries for producing fruit trees and ornamental plants; o Expanding artificial insemination services and providing veterinary services; o Paying greater attention to crop intensification and the introduction of the cultivation of the multi-foliate clover (Berseem clover cultivar) in rotation with rice; o Promoting rural women development projects, as well as income-generating projects, and developing and promoting rural and environmental industries.

6. Agricultural Investment Plans should include Transparent Procedures for Intended Cost Recovery

Any future investment plan for Egypt should consider cost recovery investments and sets the transparent rules and procedures for the intended cost recovery. For example, the future plan for implementing the agricultural strategy till 2030 includes infrastructure projects where the State is intending to completely recover its investment costs. This includes on-farm irrigation and land reclamation. Government contribution in this group is about 62% of total investments. Total investments are about LE 86.4 billion and represent 72% of total Business Plan costs. The same applies for the development projects with primary funding by the private sector. Total funding for this group of projects is about LE 33.2 billion with government contribution of about LE 6 billion (18% of total) and private sector’s share of LE 27.2 billion (82%). The framework for cost recovery needs to be spelled out clearly up front. The past experience showed slow rate of recovery due to unclear rules and procedures.

7. The Need for a Comprehensive Approach for Planning Agricultural Investment, Poverty Alleviation, Rural Development and Capital Formation: Scaling Up the Case of the 1000 Villages Initiative

As indicated above, poverty is becoming more concentrated in rural areas and tends to be more concentrated in Upper Egypt. There is a particular concentration of poor in the rural Upper Egypt region, which accounts for 66 percent of the extreme poor in the country, 51 percent of its poor, and for 31 percent of the near poor. The National Democratic Ruling Party in Egypt is adopting an integrated rural development scheme for the poorest 1000 villages in upper Egypt. The elements of such project is based on encouraging agricultural and rural development with an aim to form the base for sustainable SARD. This is the most ambitious of all the projects on offer. The geographic poverty maps have identified the 1000 poorest villages in Egypt and illustrated that over 50% of households in these villages are below the national poverty line of 1US$ per person/day. These villages are also deprived of basic infrastructure and services. The proposed plan to address this poverty is an integrated master plan that combines the extension (or upgrading) of water, sanitation, roads, schools, health facilities, social services and programs, training for skills development, micro-credit and investments by private sector industries and companies. Such a concerted effort to eradicate poverty comes at a high cost in terms of human and material investments. The question is whether the State will be able to implement this ambitious plan? To ensure that reality matches the dream, a monitoring and impact evaluation component has to be included in the 1000 villages initiative/project. The above prioritization elements need to be integrated in this initiative. The initiative could be scaled up in the future after benefiting from the current pilot phase. National and international independent research centers and experts will be involved in this impact evaluation. The progress so far has been modest. After almost two years phase-one only encompasses 150 villages in which infrastructure and roads have been extended. The other types of possible intervention have yet to materialize.

8. Agricultural Investment Mapping should include Priorities for Enhancing Efficiency and Innovations at the Whole Value Chain

Planning agricultural investment need to cover all stages of the agricultural products and food value chain. Emphasis need to be given to natural resources management and maintenance to food safety and utilization. Productive agricultural investment for capital formation should consider the food security dimensions at the household, regional and national levels. Agricultural investment should be comprehensive to cover the availability, stability, access and utilization aspects of food security. Concentrating public agricultural investment to production capacities is not enough. Supply chain infrastructure including collection points and storage facilities for example, would reduce losses and enhance return to agricultural investment. Also, market enhancement will improve market access and reduces investment risk.

9. Fostering Market Oriented Risk Management Programme to Support Agricultural Investment

Farmers are exposed year round to a variety of risks, both market-related (e.g., price variations) and non-market-related (e.g., unfavorable weather, pests, and diseases). These risks render agricultural production unstable from year to year, affecting the income and welfare of agricultural producers and hence agricultural investment. The Government need to introduce market oriented (non-market distorting) measures to reduce risks faced by farmers and hence increase their ability to invest.

Technology-based Information Access and Agricultural Financial Commodity Markets will allow risk mitigation and introduces price transparency and competition. Agricultural Insurance further mitigate risk and encourages investment in the sector. Agricultural insurance is a financial tool to minimize the adverse effects of these agricultural risks and has been devised to address agricultural production or yield risks that are mainly due to adverse climatological and transboundary factors. Agricultural insurance permits reduction in risk costs by spreading risks in three ways: (1) among farmers; (2) to other sectors of economy; and (3) across time (EU, 2005).

However, as agriculture is becoming more sophisticated, producers, marketing companies and bankers are demanding insurance to cover a greater number of risks. In order to comply with this demand and to help overcome the limitations of traditional agricultural insurance that originates from the unique characteristics of agricultural risk (applying over a wide geographical area during a given period of time, etc.), the following new insurance products, schemes and alternatives are continuously being developed and may be considered by the GOE (FAO, 2007): . Revenue insurance; . Whole-farm insurance; . Livestock price insurance; . Index-based insurance; . Area-based yield insurance; and . Weather-based index insurance.

Additional innovative risk management tools – i.e. alternatives to core insurance instruments - include: . Self-insurance through preferential savings; . Market-based commodity price risk management instruments; . Weather derivatives; . Insurance securitization; and . Area-yield reinsurance and options.

GOE need to finalize the ongoing efforts for issuing the new agricultural insurance legislation and to issue a strong legislative framework for contract farming to consider the above innovative measures. The GOE could support any selected insurance scheme at the initiation stage to ensure its functioning and to streamline its impacts for increasing agricultural investment and capital formation in agriculture. IX. Suggestions for Further Studies

The following topics should be investigated further in the Egyptian context:

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57. World Bank. “Economic Growth, Inequality and Poverty: Social Mobility in Egypt between 2005 and 2008”, Cairo. 2008. Annexes Annex 1

Statistical Tables Table (1): Resources and Utilization for the Egyptian Economy during 1982/83 - 2008/9 (Billion LE) Resources Utilization GDP GDP Final Total Final total valued at Net valued Governmen of Private total of Final Stock's Expenditur Export Total of Producti Indirect at Imports t Investment resou Consumpti Consumption Turnover e on s Utilization on Factor tax Market Consumpti rces on Investment Years Costs Prices on 1982/83 25.4 1.2 26.6 9.1 35.7 17.2 4.2 21.4 8.1 0.1 8.2 6.1 35.7 1983/84 30.1 1.5 31.6 10.1 41.7 20.7 4.9 25.6 9.1 0.5 9.6 6.5 41.7 1984/85 35.6 1.7 37.3 10.4 47.7 24.1 5.7 29.8 10.5 0.6 11.1 6.8 47.7 1985/86 41.4 2.7 44.1 9.8 53.9 28.3 6.5 34.8 12.8 0.2 13 6.1 53.9 1986/87 49.3 2.2 51.5 11.7 63.2 35.9 7.4 43.3 14.1 -0.7 13.4 6.5 63.2 1987/88 58.6 3 61.6 21.7 83.3 43.6 8.6 52.2 20.1 0.3 20.4 10.7 83.3 1988/89 73.2 3.8 77 24.9 101.9 54.1 9.7 63.8 23.5 0.9 24.4 13.7 101.9 1980/90 91.5 4.3 95.8 31.2 127 68.9 10.9 79.8 25.9 1.8 27.7 19.5 127 1990/91 110 2.5 112.5 39.8 152.3 82.2 12.5 94.7 26.7 0 26.7 30.9 152.3 1991/92 131.1 8 139.1 43 182.1 101 14.5 115.5 27.7 -0.6 27.1 39.5 182.1 Average- 65 3.1 68 21.2 89 48 8.5 56 17.9 0.3 18.2 14.6 88.9 Period Growth 17.70 rate 17.84% 20.89% 17.99% 16.80% % 19.37% 13.19% 18.36% 13.08% 12.70% 20.54% 17.70% 1992/93 146.2 9 155.2 46.7 201.9 115 16 131 29 1.8 30.8 40.1 201.9 1993/94 163 12 175 49.1 224.1 130.5 18 148.5 34 2.1 36.1 39.5 224.1 1994/95 191 13 204 56.5 260.5 151.9 21.5 173.4 39.1 2 41.1 46 260.5 1995/96 214.2 15.2 229.4 60.1 289.5 176.5 23.8 200.3 39.7 1.9 41.6 47.6 289.5 1996/97 247 18.9 265.9 66.2 332.1 205.2 30.1 235.3 47.7 -1 46.7 50.1 332.1 1997/98 266.7 20.7 287.4 73.9 361.3 220.4 32.5 252.9 61.3 0.5 61.8 46.6 361.3 1998/99 282.6 25 307.6 71.7 379.3 230.8 35.7 266.5 64 2.5 66.5 46.3 379.3 1999/2000 315.7 24.4 340.1 77.6 417.7 258 38.1 296.1 64.4 2.1 66.5 55.1 417.7 2000/01 332.5 26.2 358.7 80.1 438.8 270 40.6 310.6 63.6 1.9 65.5 62.7 438.8 2001/02 354.5 24.4 378.9 85.9 464.8 279.5 47.7 327.2 67.5 0.7 68.2 69.4 464.8 2002/03 390.6 26.9 417.5 101.8 519.3 304.9 52.9 357.8 68.1 2.4 70.5 91 519.3 2003/04 456.3 29 485.3 143.6 628.9 347.8 61.9 409.7 79.6 2.6 82.2 137 628.9 2004/05 506.5 32 538.5 175.6 714.1 385.3 68.6 453.9 96.5 0.3 96.8 163.4 714.1 2005/06 581.1 36.6 617.7 195 812.7 436.1 75.9 512 115.7 0 115.7 185 812.7 1004. 2006/07 710.4 34.4 744.8 259.4 539.2 84.4 623.6 155.3 0 155.3 225.3 1004.2 2 1241. 2007/08 855.3 40.2 895.5 346 647.6 97.5 745.1 199.5 1 200.5 295.9 1241.5 5 1369. 2008/09 990.2 48.4 1038.6 331 791.2 118.3 909.5 197.1 2.9 200 260.1 1369.6 6 Average- 412 26 438 131 568 323 51 374 84 1.4 85 109 568 Period Growth Rate- 13.61 Period 13.60% 11.87% 13.51% 13.95% % 13.72% 14.27% 13.79% 13.63% 3.23% 13.28% 13.27% 13.61% Overall 283 17 301 90 391 221 35 256 59 1.0 60 74 391 Average Overall Growth 15.71 Rate 15.78% 15.94% 15.79% 15.46% % 16.55% 14.29% 16.18% 13.62% 14.42% 13.63% 16.20% 15.71%

Table (2): Private and Public Gross Domestic Product during 1982/83 - 2008/9 (Million LE) Agriculture Others Total Economic Sectors Public Private Subtotal Public Private Subtotal Public Private Subtotal 83/1982 68 4998 5066 11201.0 9145.0 20346.0 11269.0 14143.0 25412.0 84/1983 103 5619 5722 13097.0 11261.0 24358.0 13200.0 16880.0 30080 85/1984 123 6257 6380 15302.0 13956.0 29258.0 15425.0 20213.0 35638 86/1985 133 7536 7669 16812.0 16952.0 33764.0 16945.0 24488.0 41433 87/1986 140 9971 10111 17673.0 21551.0 39224.0 17813.0 31522.0 49335 88/1987 181 10935 11116 21838.0 25676.0 47514.0 22019.0 36611.0 58630 89/1988 205 14190 14395 24946.0 33829.0 58775.0 25151.0 48019.0 73170 90/1989 225 17510 17735 30571.0 43229.0 73800.0 30796.0 60739.0 91535 91/1990 245 18865 19110 42094.0 48807.0 90901.0 42339.0 67672.0 110011 92/1991 254 21426 21680 50534.0 58843.0 109377.0 50788.0 80269.0 131057 Average-Period 168 11731 11898 24407 28325 52732 24575 40056 64630 Growth rate 14.09% 15.67% 15.65% 16.26% 20.46% 18.32% 16.25% 18.96% 17.83% 1992/93 207 24220 24427 55525.0 66208.0 121733.0 55732.0 90428.0 146160 1993/94 152 27348 27500 59686.0 75781.0 135467.0 59838.0 103129.0 162967 1994/95 171 31879 32050 67953.0 91007.0 158960.0 68124.0 122886.0 191010 1995/96 196 36772 36968 73803.0 103414.0 177217.0 73999.0 140186.0 214185 1996/97 188 41694 41882 83773.0 121373.0 205146.0 83961.0 163067.0 247028 1997/98 195 45457 45652 83724.4 137381.3 221105.7 83919.4 182838.3 266757.7 1998/99 201 48734 48935 85919.1 147723.9 233643.0 86120.1 196457.9 282578 1999/2000 208.8 52636.2 52845 96617.8 166204.2 262822.0 96826.6 218840.4 315667 2000/01 215.8 54849.2 55065 103527.5 173951.3 277478.8 103743.3 228800.5 332543.8 2001/02 54.5 58314.5 58369 121530.7 174664.1 296194.8 121585.2 232978.6 354563.8 2002/03 51.4 63770.6 63822 143580.5 183216.9 326797.4 143631.9 246987.5 390619.4 2003/04 52.5 69199.5 69252 172228.6 214841.8 387070.4 172281.1 284041.3 456322.4 2004/05 53.6 75237.6 75291.2 193866.9 237352.9 431219.8 193920.5 312590.5 506511 2005/06 13.5 81752.7 81766.2 230770.0 268607.9 499377.9 230783.5 350360.6 581144.1 2006/07 18.8 99934.3 99953.1 266780.2 343654.4 610434.6 266799 443588.7 710387.7 2007/08 21.1 113082.7 113103.8 334551.6 407647.4 742199.0 334572.7 520730.1 855302.8 2008/09 24.5 135440.1 135464.6 375445.7 479301.4 854747.1 375470.2 614741.5 990211.7 Average-Period 119 62372 62491 149958 199549 349507 150077 261921 411998 Growth Rate-Period -11.80% 10.66% 10.60% 11.90% 12.35% 12.15% 11.88% 11.93% 11.91% Overall Average 137 43616 43753 103457 136133 239590 103595 179748 283343 Overall Growth Rate -3.71% 13.00% 12.94% 13.89% 15.79% 14.85% 13.87% 14.99% 14.53% Table (3): Relative Importance of Private and Public Gross Domestic Product during 1982/83 - 2006/07 (%) Years Agriculture others Total

Public Private Subtotal Public Private Subtotal Public Private Subtotal 83/1982 1.30 98.70 19.90 55.10 44.90 80.10 44.30 55.70 100.00 84/1983 1.80 98.20 19.00 53.80 46.20 81.00 43.90 56.10 100.00 85/1984 1.90 98.10 17.90 52.30 47.70 82.10 43.30 56.70 100.00 86/1985 1.70 98.30 18.50 49.80 50.20 81.50 40.90 59.10 100.00 87/1986 1.40 98.60 20.50 45.10 54.90 79.50 36.10 63.90 100.00 88/1987 1.60 98.40 19.00 46.00 54.00 81.00 37.60 62.40 100.00 89/1988 1.40 98.60 19.70 42.40 57.60 80.30 34.40 65.60 100.00 90/1989 1.30 98.70 19.40 41.40 58.60 80.60 33.60 66.40 100.00 91/1990 1.30 98.70 17.40 46.30 53.70 82.60 38.50 61.50 100.00 92/1991 1.20 98.80 16.50 46.20 53.80 83.50 38.80 61.20 100.00 Average- Period 1.49 98.51 18.78 47.84 52.16 81.22 39.14 60.86 100.00 Growth rate -1.35% 0.02% -1.85% -1.74% 1.81% 0.42% -1.34% 0.96% 93/1992 0.80 99.20 16.70 45.60 54.40 83.30 38.10 61.90 100.00 94/1993 0.80 99.20 16.70 44.10 55.90 83.10 36.70 63.30 100.00 95/1994 0.60 99.40 16.90 42.70 57.30 83.20 35.70 64.30 100.00 96/1995 0.50 99.50 16.80 41.60 58.40 82.70 34.50 65.50 100.00 97/1996 0.50 99.50 17.30 40.80 59.20 83.00 34.00 66.00 100.00 98/1997 0.40 99.60 17.00 37.90 62.10 82.90 31.50 68.50 100.00 99/1998 0.40 99.60 17.10 36.80 63.20 82.70 30.50 69.50 100.00 2000/1999 0.40 99.60 17.30 36.80 63.20 83.30 30.70 69.30 100.00 2001/2000 0.40 99.60 16.70 37.30 62.70 83.40 31.20 68.80 100.00 2002/2001 0.40 99.60 16.60 41.00 59.00 83.50 34.30 65.70 100.00 2003/2002 0.10 99.90 16.50 43.90 56.10 83.70 36.80 63.20 100.00 2004/2003 0.10 99.90 16.30 44.50 55.50 84.80 37.80 62.20 100.00 2005/2004 0.10 99.90 15.20 45.00 55.00 85.10 38.30 61.70 100.00 2006/2005 0.10 99.90 14.90 46.20 53.80 85.90 39.70 60.30 100.00 2007/2006 0.00 100.00 14.10 43.70 56.30 85.90 37.60 62.40 100.00 2008/2007 0.00 100.00 14.10 45.10 54.90 86.80 39.10 60.90 100.00 * 2009/2008 0.00 100.00 13.20 43.90 56.10 86.30 37.90 62.10 100.00 Average- Period 0.329 99.671 16.082 42.171 57.829 84.094 35.553 64.447 100.000 Growth Rate- Period -20.11% 0.05% -1.37% -0.22% 0.18% 0.21% -0.03% 0.02% 0.00% Overall Average 0.76 99.24 17.08 44.27 55.73 83.03 36.88 63.12 100.00 Overall Growth Rate -14.65% 0.05% -1.51% -0.83% 0.82% 0.28% -0.58% 0.41% 0.00% Table (4) Sectoral Contribution in GDP Real Growth, (2006/2007)

Sector Relative Annual Contribution in Weight Growth GDP Growth Rate (2006/07) Rate (%) Agriculture and Irrigation 15.5 3.7 0.57 Petroleum and Mining 8.9 3.9 0.34 - Petroleum 3.9 -0.7 -0.03 - Gas 4.8 7.5 0.36 - Others 0.2 4.7 0.01 Manufacturing 18.9 7.3 1.39 Industries - Petroleum Products 0.7 -1.8 0.01 - Others 18.2 7.6 (1.38 Water and Electricity 2.3 6.5 0.15 Building and 4.6 15.8 0.73 Construction Transportation and Storage 5.0 8.0 0.40 Suez Canal 3.3 14.9 0.49 Communications 2.2 14.1 0.31 Wholesale and Retail Trade 11.5 8.3 0.96

Financial Intermediary, 8.2 7.0 0.58 Insurance and Social Insurance Restaurants and Hotels 3.3 13.2 0.44 Real Estate 3.7 4.3 0.16 Social and Personal 3.3 6.8 0.22 Services Public Government 9.3 3.4 0.32 Grand Total 100 7.1 7.1

* GDP at factor cost and constant prices. Source: Ministry of Economic Development (MOED) Table (5): Private and Public Investment for Economic Sectors during 1982/83 - 2008/09 (Million LE) Years Agriculture Others Total Public Private Total Public Private Total Public Private Total 1982/83 265.8 127 392.8 4754.1 3229 7983.1 5019.9 3356 8375.9 1983/84 406.4 119 525.4 5111.8 3618 8729.8 5518.2 3737 9255.2 1984/85 378.7 227 605.7 6165.4 3967 10132.4 6544.1 4194 10738.1 1985/86 610.2 250 860.2 7650.8 4610 12260.8 8261 4860 13121 1986/87 504.2 237 741.2 8520 5462 13982 9024.2 5699 14723.2 1987/88 701.8 780 1481.8 12820.5 6720 19540.5 13522.3 7500 21022.3 1988/89 728.7 1360 2088.7 10758.1 11151 21909.1 11486.8 12511 23997.8 1980/90 854.4 864 1718.4 13396.8 11037 24433.8 14251.2 11901 26152.2 1990/91 1084.8 959 2043.8 18968.5 9437 28405.5 20053.3 10396 30449.3 1991/92 1223.3 1399 2622.3 19478 10303 29781 20701.3 11702 32403.3 Average-Period 676 632 1308 10762 6953 17716 11438 7586 19024 Growth Rate 16.49% 27.12% 20.91% 15.15% 12.30% 14.07% 15.22% 13.30% 14.49% 1992/93 1573.4 725 2298.4 20607.8 9826 30433.8 22181.2 10551 32732.2 1993/94 2325.1 853 3178.1 26472.7 10364 36836.7 28797.8 11217 40014.8 1994/95 1863.4 1518 3381.4 28022.8 14617 42639.8 29886.2 16135 46021.2 1995/96 2072.4 2412 4484.4 32115.9 18288 50403.9 34188.3 20700 54888.3 1996/97 2469.2 2723 5192.2 37794.6 25494 63288.6 40263.8 28217 68480.8 1997/98 4351.3 3806 8157.3 36307.3 16884 53191.3 40658.6 20690 61348.6 1998/99 3895.1 4524 8419.1 29698.8 25906 55604.8 33593.9 30430 64023.9 1999/2000 3212.5 4921 8133.5 30327.3 25988 56315.3 33539.8 30909 64448.8 2000/01 2888.3 5309 8197.3 28482.1 26902.4 55384.5 31370.4 32211.4 63581.8 2001/02 3695.5 5898 9593.5 31969.6 25948.4 57918 35665.1 31846.4 67511.5 2002/03 3220.3 3183.3 6403.6 31236.8 30462.7 61699.5 34457.1 33646 68103.1 2003/04 3559 4000 7559 38897 33100 71997 42456 37100 79556 2004/05 3170.1 4250.1 7420.2 46869.3 42166.9 89036.2 50039.4 46417 96456.4 2005/06 2799.7 5244.1 8043.8 46616.2 61080.9 107697.1 49415.9 66325 115740.9 2006/07 2433.7 5357.5 7791.2 55607.9 91942.8 147550.7 58041.6 97300.3 155341.9 2007/08 2849.5 5223 8072.5 67605.2 123857 191464.7 70454.7 129080 199537.2 2008/09 2743.3 4119 6862.3 98917.9 91357 190274.9 101661.2 95476 197137.2 Average-Period 2600 3256 5857 31282 27407 58689 33882 30664 64546 Growth Rate-Period 2.95% 14.26% 8.48% 6.84% 16.08% 11.10% 6.62% 15.96% 10.94% Overall Average 1946 2373 4319 24039 20629 44667 25985 23002 48986 Overall Growth Rate 9.26% 16.15% 12.69% 10.34% 14.33% 12.38% 10.29% 14.42% 12.39% Table (6): Relative Importance of Private and Public Investment for Economic Sectors during 1982/83 -2008/09(%) Years Agriculture Others Total Public Private Total Public Private Total Public Private Total

1982/83 68.00 32.00 5.00 60.00 40.00 95.00 60.00 40.00 100.00 1983/84 77.00 23.00 6.00 59.00 41.00 94.00 60.00 40.00 100.00 1984/85 63.00 37.00 6.00 61.00 39.00 94.00 61.00 39.00 100.00 1985/86 71.00 29.00 7.00 62.00 38.00 93.00 63.00 37.00 100.00 1986/87 68.00 32.00 5.00 61.00 39.00 95.00 61.00 39.00 100.00 1987/88 47.00 53.00 7.00 66.00 34.00 93.00 64.00 36.00 100.00 1988/89 35.00 65.00 9.00 49.00 51.00 91.00 48.00 52.00 100.00 1980/90 50.00 50.00 7.00 55.00 45.00 93.00 54.00 46.00 100.00 1990/91 53.00 47.00 7.00 67.00 33.00 93.00 66.00 34.00 100.00 1991/92 47.00 53.00 8.00 65.00 35.00 92.00 64.00 36.00 100.00 Average- 57.90 42.10 6.70 60.50 39.50 93.30 60.10 39.90 100.00 Period Growth -3.65% 5.14% 5.61% 0.94% -1.55% -0.36% 0.64% -1.03% rate 1992/93 68.00 32.00 7.00 68.00 32.00 93.00 68.00 32.00 100.00 1993/94 73.00 27.00 8.00 72.00 28.00 92.00 72.00 28.00 100.00 1994/95 55.00 45.00 7.00 66.00 34.00 93.00 65.00 35.00 100.00 1995/96 46.00 54.00 8.00 64.00 36.00 92.00 62.00 38.00 100.00 1996/97 48.00 52.00 8.00 60.00 40.00 92.00 59.00 41.00 100.00 1997/98 53.00 47.00 13.00 68.00 32.00 87.00 66.00 34.00 100.00 1998/99 46.00 54.00 13.00 53.00 47.00 87.00 52.00 48.00 100.00 1999/2000 39.00 61.00 13.00 54.00 46.00 87.00 52.00 48.00 100.00 2000/01 35.00 65.00 13.00 51.00 49.00 87.00 49.00 51.00 100.00 2001/02 39.00 61.00 14.00 55.00 45.00 86.00 53.00 47.00 100.00 2002/03 50.00 50.00 9.00 51.00 49.00 91.00 51.00 49.00 100.00 2003/04 47.00 53.00 10.00 54.00 46.00 90.00 53.00 47.00 100.00 2004/05 43.00 57.00 8.00 53.00 47.00 92.00 52.00 48.00 100.00 2005/06 35.00 65.00 7.00 43.00 57.00 93.00 43.00 57.00 100.00 2006/07 31.00 69.00 5.00 38.00 62.00 95.00 37.00 63.00 100.00 2007/08 35.00 65.00 4.00 35.00 65.00 96.00 35.00 65.00 100.00 2008/09 40.00 60.00 3.00 52.00 48.00 97.00 52.00 48.00 100.00 Average- Period 47% 53% 10% 57% 43% 90% 56% 44% 100% Growth Rate- Period 5.10%- 5.33% 2.22%- 3.83%- 4.48% 0.14% 3.89%- 4.53% Overall Average 51.7% 48.3% 8.3% 57.8% 42.2% 91.7% 57.2% 42.8% 100.0% Overall Growth Rate 3.04%- 3.06% 0.27% 1.81%- 1.74% 0.01%- 1.87%- 1.80% Table (7): Capital Stocks in Agriculture by Activities in Current Prices, 1990-2007 (Mill $) Structure Land Livestock Machinery total Years values % values % values % values % values % 0.3 2.4 1990 84 1 21,522 78.01 5,303 19.22 681 7 27,591 100 0.3 2.4 1991 90 2 21,490 76.87 5,685 20.34 691 7 27,955 100 0.3 2.3 1992 95 1 23,559 77.48 6,047 19.89 706 2 30,407 100 0.3 2.5 1993 101 0 26,352 78.31 6,353 18.88 847 2 33,653 100 0.3 2.5 1994 102 0 26,353 78.05 6,454 19.12 855 3 33,765 100 0.3 2.7 1995 106 1 26,693 77.85 6,554 19.11 937 3 34,290 100 0.3 2.7 1996 106 1 26,822 78.26 6,417 18.72 928 1 34,273 100 0.3 2.6 1997 113 3 26,830 77.96 6,560 19.06 911 5 34,412 100 0.3 2.6 1998 113 3 26,830 77.80 6,633 19.23 910 4 34,486 100 0.3 2.6 1999 117 3 26,943 77.46 6,808 19.57 916 3 34,783 100 0.3 2.6 2000 119 4 26,773 77.07 6,930 19.95 918 4 34,739 100 0.3 2.7 2001 123 5 27,142 76.74 7,140 20.19 962 2 35,367 100 0.3 2.6 2002 127 5 27,826 76.78 7,319 20.19 971 8 36,242 100 0.3 2.6 2003 131 6 27,827 76.38 7,499 20.58 977 8 36,434 100 0.3 2.7 2004 133 6 27,871 76.16 7,590 20.74 1,000 3 36,593 100 0.3 2.7 2005 134 7 27,900 76.00 7,655 20.85 1,022 8 36,711 100 0.3 2.7 2006 137 6 28,715 76.35 7,719 20.52 1,041 7 37,611 100 0.2 2.8 2007 109 9 28,718 77.23 7,298 19.63 1,061 5 37,185 100 Average 113 0 26,454 77 6,776 20 907 3 34,250 100 Growth Rate 1.4% 1.6% 1.8% 2.5% 1.7% Source: FAO http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and-environmental- indicators/capital-stock-of-agriculture/es/ Table (8): Capital Stocks in Agriculture by Activities in Constant Prices*, 1990-2007 (Mill $) Structure Land Livestock Machinery total Years values % values % values % values % values % 1990 45 0.31 11,615 78.01 2,862 19.22 367 2.47 14,890 100 1991 47 0.32 11,164 76.87 2,953 20.34 359 2.47 14,522 100 1992 46 0.31 11,459 77.48 2,941 19.89 343 2.32 14,790 100 1993 48 0.30 12,460 78.31 3,004 18.88 400 2.52 15,912 100 1994 54 0.30 13,936 78.05 3,413 19.12 452 2.53 17,856 100 1995 53 0.31 13,407 77.85 3,292 19.11 471 2.73 17,222 100 1996 49 0.31 12,499 78.26 2,990 18.72 432 2.71 15,970 100 1997 49 0.33 11,773 77.96 2,878 19.06 400 2.65 15,100 100 1998 43 0.33 10,083 77.80 2,493 19.23 342 2.64 12,960 100 1999 41 0.33 9,477 77.46 2,395 19.57 322 2.63 12,235 100 2000 43 0.34 9,704 77.07 2,512 19.95 333 2.64 12,591 100 2001 42 0.35 9,270 76.74 2,439 20.19 328 2.72 12,079 100 2002 42 0.35 9,186 76.78 2,416 20.19 320 2.68 11,965 100 2003 41 0.36 8,781 76.38 2,366 20.58 308 2.68 11,497 100 2004 40 0.36 8,446 76.16 2,300 20.74 303 2.73 11,089 100 2005 32 0.37 6,608 76.00 1,813 20.85 242 2.78 8,695 100 2006 28 0.36 5,875 76.35 1,579 20.52 213 2.77 7,695 100 2007 23 0.29 5,992 77.23 1,523 19.63 221 2.85 7,758 100 Average 43 0 10,096 77 2,565 20 342 3 13,046 100 Growth Rate -3.8% -3.6% -3.4% -2.8% -3.6% *Deflated by Wholesale Price Index 1986-1987=100 Sources: Calculations based on FAO http://www.fao.org/economic/ess/otras-estadisticas/socio-economic-agricultural-and- environmental-indicators/capital-stock-of-agriculture/es/ Table (9): Numbers of Workers in Private and Public Sectors during 1982/83 -2007/8 (000 Worker) Economic Sectors Agriculture Others total Years Public Private Subtotal Public Private Subtotal Public Private Subtotal 1982/83 115 4029 4143 4178 2474 6652 4292 6503 10795 1983/84 115 4071 4186 4238 2648 6886 4353 6719 11072 1984/85 116 4114 4229 4315 2823 7138 4430 6937 11367 1985/86 116 4164 4280 4371 3018 7389 4487 7182 11669 1986/87 116 4214 4330 4462 3206 7668 4579 7419 11998 1987/88 118 4263 4381 4571 3383 7953 4689 7646 12334 1988/89 120 4310 4429 4702 3554 8256 4821 7864 12685 1980/90 121 4350 4471 4985 3576 8561 5106 7926 13032 1990/91 126 4387 4513 5011 3853 8863 5137 8240 13376 1991/92 128 4424 4552 5160 4030 9190 5288 8454 13742 Average- Period 119 4210 4329 4556 3170 7725 4674 7380 12054 Growth rate 1.06% 0.95% 0.96% 2.07% 5.23% 3.31% 2.04% 2.73% 2.46% 1992/93 103 4475 4578 5284 4149 9433 5387 8624 14011 1993/94 92 4529 4621 5393 4422 9815 5485 8951 14436 1994/95 87 4571 4657 5495 4727 10222 5582 9297 14879 1995/96 81 4612 4693 5634 5013 10647 5715 9625 15340 1996/97 83 4664 4747 5661 5417 11078 5744 10081 15825 1997/98 84 4718 4802 5698 5650 11347 5782 10368 16149 1998/99 85 4772 4857 5767 5945 11712 5852 10717 16569 1999/2000 87 4828 4915 5848 6237 12085 5935 11065 17000 2000/01 89 4883 4972 5827 6541 12368 5916 11424 17340 2001/02 79 4940 5019 5891 6765 12655 5970 11704 17674 2002/03 79 4940 5019 5891 6765 12655 5970 11704 17674 2003/04 77 5007 5084 5923 7072 12995 6000 12079 18079 2004/05 76 5081 5157 5972 7379 13351 6048 12460 18508 2005/06 74 5169 5243 5998 7762 13760 6072 12931 19003 2006/07 72 5261 5333 6010 8197 14207 6082 13458 19540 2007/08 70 5357 5427 6006 8687 14693 6076 14044 20120 2008/09 67 5478 5545 5995 9270 15265 6062 14748 20810 Average-Period 81 4899 4980 5782 6470 12252 5863 11369 Growth Rate-Period -2.50% 1.20% 1.13% 0.75% 4.84% 2.87% 0.70% 3.21% 2.35% Overall Average 95 4652 4747 5344 5280 10624 5439 9932 Overall Growth Rate -1.88% 1.14% 1.08% 1.35% 5.10% 3.14% 1.29% 3.09% 2.47% Table (10): Relative Importance of Workers in Private and Public Sectors during 1982/83 -2007/8 (%) Economic Sectors Agriculture Others total Public Private Subtotal Public Private Subtotal Public Private Subtotal 1982/83 2.80 97.20 38.40 62.80 37.20 61.60 39.80 60.20 100.00 1983/84 2.70 97.30 37.80 61.60 38.40 62.20 39.30 60.70 100.00 1984/85 2.70 97.30 37.20 60.40 39.60 62.80 39.00 61.00 100.00 1985/86 2.70 97.30 36.70 59.20 40.80 63.30 38.50 61.50 100.00 1986/87 2.70 97.30 36.10 58.20 41.80 63.90 38.20 61.80 100.00 1987/88 2.70 97.30 35.50 57.50 42.50 64.50 38.00 62.00 100.00 1988/89 2.70 97.30 34.90 57.00 43.00 65.10 38.00 62.00 100.00 1980/90 2.70 97.30 34.30 58.20 41.80 65.70 39.20 60.80 100.00 1990/91 2.80 97.20 33.70 56.50 43.50 66.30 38.40 61.60 100.00 1991/92 2.80 97.20 33.10 56.10 43.90 66.90 38.50 61.50 100.00 Average 2.74 97.26 36.06 59.25 40.75 63.94 38.83 61.17 100.00 Growth rate 0.10% 0.00% -1.47% -1.21% 1.85% 0.83% -0.41% 0.27% 0.00% 1992/93 2.20 97.80 32.70 56.00 44.00 67.30 38.50 61.50 100.00 1993/94 2.00 98.00 32.00 54.90 45.10 68.00 38.00 62.00 100.00 1994/95 1.90 98.10 31.30 53.80 46.20 68.70 37.50 62.50 100.00 1995/96 1.70 98.30 30.60 52.90 47.10 69.40 37.30 62.70 100.00 1996/97 1.70 98.30 30.00 51.10 48.90 70.00 36.30 63.70 100.00 1997/98 1.70 98.30 29.70 50.20 49.80 70.30 35.80 64.20 100.00 1998/99 1.80 98.20 29.30 49.20 50.80 70.70 35.30 64.70 100.00 1999/2000 1.80 98.20 28.90 48.40 51.60 71.10 34.90 65.10 100.00 2000/01 1.80 98.20 28.70 47.10 52.90 71.30 34.10 65.90 100.00 2001/02 1.60 98.40 28.40 46.50 53.50 71.60 33.80 66.20 100.00 2002/03 1.60 98.40 28.40 46.50 53.50 71.60 33.80 66.20 100.00 2003/04 1.50 98.50 28.10 45.60 54.40 71.90 33.20 66.80 100.00 2004/05 1.50 98.50 27.90 44.70 55.30 72.10 32.70 67.30 100.00 2005/06 1.40 98.60 27.60 43.60 56.40 72.40 32.00 68.00 100.00 2006/07 1.40 98.60 27.30 42.30 57.70 72.70 31.10 68.90 100.00 2007/08 1.30 98.70 27.00 40.90 59.10 73.00 30.20 69.80 100.00 2008/09 1.20 98.80 26.60 39.30 60.70 73.40 29.10 70.90 100.00 Average- Period 1.65 98.35 29.09 47.82 52.18 70.91 34.33 65.67 100.00 Growth Rate- Period -3.59% 0.06% -1.19% -2.07% 1.92% 0.51% -1.62% 0.83% Overall Average 2.08 97.92 31.83 52.31 47.69 68.17 36.10 63.90 100.00 Overall Growth Rate -2.93% 0.06% -1.35% -1.74% 1.90% 0.66% -1.15% 0.61% Table (11): Egypt’s Poverty Indices by Governorates/Regions

Region and Governorate % of Poor Population % of Extremely Poor Ranking Population Middle Delta 11.4 0.7 Al-Qalubeyya 11.2 1.0 12 Al-Menofiya 17.5 0.4 1 3 Al-Gharbiya 6.1 0.8 8 Al-Daqaliya 7.0 0.5 10 Kafr Al-Sheikh 12.3 0.9 18 De myat 2.6 0.2 5 East Delta 22.0 2.3 Al-Sharqiya 28.2 2.9 14 Port Said 7.6 0.9 2 Al-Ismailia 6.4 0.5 7 Al-Suez 2.4 0.7 3 North Sinai 1 1 South Sinai 1 West Delta 14.7 2.1 Al-Beheira 20.5 2.8 1 5 Alexandria 8.0 1.2 6 Matrouh 16 Middle Egypt 28.0 6.2 Al-Giza 13.1 1.4 1 7 Bani Sueif 45.4 1 1.8 20 Al-Fayoum 12.0 1.1 24 Al-Minya 39.4 9.8 22 Upper Egypt 43.1 12.2 Asyout 60.6 22.7 23 Sohag 40.7 9.8 21 Qena 33.7 6.0 1 9 Aswan 23.9 4.8 9 New Valley 4 Average 23.8 4.7 Sources: (1) MALR, 2009; and (2) UNDP, 2008 Table (12): Value of Agricultural Production and Income during 1982-2008 (LE million) year Value of Agricultural Production Value of Agricultural Income 1982 6464 4432 1983 7761 5441 1984 8992 6260 1985 10914 7717 1986 12747 9128 1987 15472 11431 1988 16841 12856 1989 20524 15984 1990 24846 19111 1991 27650 20473 1992 30963 23009 Average-Period 16652 12349 Growth rate 15.31% 16.15% 1993 36510 27349 1994 41542 31774 1995 49985 37662 1996 56166 41975 1997 61270 47087 1998 63640 47961 1999 68888 50458 2000 71664 50695 2001 74740 53621 2002 84260 60488 2003 96853 68546 2004 111530 82237 2005 126971 92888 2006 137419 102366 2007 155945 116307 2008 185666 136755 Average-Period 88940.56 65510.56 Growth Rate-Period 10.70% 10.58% Overall Average 59489.74 43852.26 Overall Growth Rate 13.24% 13.54% Table (13): Development of Cultivated and Cropped Areas in Egypt during 1981-2009 Cultivated area Cropped area Old Lands New Lands Total Old Lands New Lands Total years Fadden Fadden Fadden Fadden Fadden Fadden 1981 5879948 5879948 11259536 11259536 1982 5833751 5833751 11167049 11167049 1983 5846289 5846289 11138848 11138848 1984 5830130 5830130 11026534 11025534 1985 5978968 5978968 11174729 11174729 1986 6003810 6003810 11136685 11136685 1987 5975909 5975909 11130440 11130440 1988 6182595 6182595 11325848 11325848 1989 6270149 6270149 11525479 11525479 1990 6917883 6917883 12181114 12181114 1991 7023201 7023201 12405950 12405950 1992 7120332 7120332 12489454 12489454 Average-Period 6238580 6238580 11496806 11496722 Growth Rate 1.61% 1.61% 0.87% 0.87% 1993 6141006 1037682 7178688 11418814 1361154 12779968 1994 5948255 1224550 7172805 11421750 1580846 13002596 1995 6203633 1609110 7812743 11782857 2031604 13814461 1996 6227884 1335610 7563494 11848146 1861538 13709684 1997 6187851 1538076 7725927 11683590 2145440 13829030 1998 6295202 1465931 7761133 11712092 2146563 13858655 1999 6279864 1568009 7847873 11707486 2231049 13938535 2000 6237956 1594754 7832710 11698459 2223407 13921866 2001 6405334 1540240 7945574 11823148 2204428 14027576 2002 6486922 1661118 8148040 11953962 2396312 14350274 2003 6457817 1655402 8113219 12018202 2455414 14473616 2004 6623286 1655368 8278654 12145099 2406131 14551230 2005 6648330 1736438 8384768 12288919 2616060 14904979 2006 6656160 1754826 8410986 12280391 2640070 14920461 2007 6536055 1887024 8423079 12349877 2826048 15175925 2008 6454076 1978110 8432186 12229128 3007849 15236977 2009 6156531 2626683 8783214 11632094 3856723 15488817 Average-Period 6349774.24 1639348.88 7989123.12 11882000.82 2352390.35 14234391.18 Growth Rate- Period 0.01% 5.62% 1.19% 0.11% 6.32% 1.14% Overall Average 6142733.14 1707113.27 7167001.10 11360798.18 2469909.07 12842740.29 Overall Growth Rate 0.10% 5.62% 1.34% 0.14% 6.32% 1.13% Table (14): The Cropping Pattern and the Relative Importance of Some of the Groups of the Main Crops 1980 1990 2007 Crop 1’000 feddans % 1’000 feddans % 1’000 feddans % Wheat 1326 11.9 1955 16.1 2716 17.7 Maize 1906 17.1 1975 16.2 1848 12.1 Rice 970 8.7 1036 8.5 1673 10.9 Cotton 1245 11.2 993 8.5 575 3.8 Sugar beet - - 34 0.3 248 1.6 Total field crops 9745 87.6 1091 83.7 12022 78.3 Total vegetable crops 1035 9.3 1123 9.2 2014 13.1 Total fruit crops 350 3.1 866 7.1 1310 8.5 Total cropped area 11130 12181 15346 Source: Compiled and computed from summer and winter crops’ statistics bulletins, Economic Affairs Department, Ministry of Agriculture and Land Reclamation.

Table (15) Productivity Increases and Potentials of the Main Crops Productivity Productivity Present Productivity Crops (tonne/feddan) Potential Compared to Potential 1980 2007 (tonne/feddan) (%) Wheat 1.5 2.7 3.6 75 Rice 2.5 4.1 5.2 79 Maize 1.8 3.5 4.2 83 Cotton 1.1 1.4 1.8 78 Sugar beet 12.3 22.0 40.0 55 Sugar cane 34.0 50.0 65.0 77 Groundnut 0.9 1.4 2.0 70 Perennial clover 25.0 30.0 60.0 50 Beans 0.9 1.4 1.8 79 Tomato 7.4 16.0 30.0 53 Potatoes 7.3 10.7 14.0 76 Grape 5.2 9.7 16.0 61 Citrus 5.4 10.1 18.0 56 Banana 8.9 18.0 24.0 75 Olive - 4.6 8.0 58 Source: Compiled and computed from statistics bulletins, Economic Affairs Department, Ministry of Agriculture and Land Reclamation (MALR). Table (16) Evolution of the Value of Animal Products, 1980 – 2007 (LE million)

1980 1990 2007 Products Value % Value % Value % Red meat 549 40.6 2674 33.8 20129 34.1 Milk 408 30.2 216 27.4 13423 22.8 Poultry meat 166 12.3 961 12.1 7182 12.2 Eggs 95 7.0 932 11.8 278 4.7 Fish 122 9.0 1104 14.0 930 15.8 Other products* 10 0.7 77 1.0 6170 10.5 Total Agricultural 4249 - 23738 - 137419 - products Total animal products 1351 31.5 7913 33.3 58994 42.9 Source: Compiled and computed from income and agricultural production value estimates bulletins, Economic Affairs Department, Ministry of Agriculture and Land Reclamation. * Rabbit, duck, ostrich meats, etc.

Table (17): Estimates of Self Sufficiency Ratio for Main Food Commodity until 2030 Main Food Current Situation 2007 Estimates 2017 Estimates 2030 Commodities production consumption Self production consumption Self production consumption Self (000 tons) (000 tons) Sufficiency (000 tons) 000 tons)) Sufficiency (000 tons) 000 tons)) Sufficiency % % % Wheat 7388 13591 54.4 12000 16238 73.9 15120 18709 80.8 Rice 4553 3273 139.1 4161 3956 105.2 4809 4664 103.1 Maize 6300 11900 53.2 12600 16100 78.3 18500 20100 91.9 Sugar 1487 1933 76.9 2260 2760 81.9 3460 3710 93.3 Broad bean 301 578 52.1 480 690 69.6 720 795 90.6 Potato 2793 1548 180.4 3600 2024 177.9 4900 2650 184.9 Tomato 7888 7623 103.5 11600 9200 126.1 18600 10812 172 Citrus 3594 2672 134.5 5400 3496 154.5 7500 4240 176.9 Grapes 1683 1294 128.5 2400 1656 144.9 3500 2120 165.1 Dairy 4400 4859 90.6 7200 7332 98.2 9540 9540 100 Red meat 670 1001 66.9 853 1104 77.3 1089 1166 93.4 White meat 850 847 100.4 1095 1095 100 1410 1410 100 Eggs 240 240 100 288 288 100 373 373 100 Fish 971 1001 97 1500 1380 108.7 1950 1961 99.4 Population 77 92 106 (million) Source: Compiled and calculated from the tables of the Statistical Supplement Table (18): Estimates of per capita consumption of selected food items in the context of agricultural development strategy until 2030 Some items of food of high The Status Quo in nutritional value 2007 Estimates 2017 Estimates 2030

Average per capita Average per Protein Average per capita Protein Content G / day per capita Content Kg Kg / year Kg capita Kg Kg / year Red meat 13 4.8 12 4.4 11 4.1

White meat 11 3.8 11.9 4.1 13.3 4.6

All Meat 23 8.6 23.9 8.3 24.3 8.7

Dairy 63.1 6.1 79.8 7.7 90 8.7

Eggs 3.1 0.9 3.1 0.9 3.5 1

Fish 12.6 3.5 16.3 4.5 18.5 5.2

Total - 19.1 - 21.7 - 23.5

Source: Compiled and calculated from the tables of the Statistical Supplement Annex 2 Questionnaire Form

Faculty of Agriculture FAO Regional Office for the Near East Department of Agricultural Cairo, Egypt Economics Zagazig University Zagazig, Egypt

Respondent Number: ......

Questionnaire to study:

The Structure, Magnitude and Trend of Capital Formation in and for Agriculture in Egypt

Farmer’s Name: ...... Governorate:……………………………….. District:...... Village: ...... Date of Interview: ...... Place of the Interview: ...... Telephone Number (if any): ......

Data in this form is confidential and used only for the purposes of scientific research

2010

First: Personal Data: 1 - Age: ...... Years old * Number of years of experience in agriculture...... Years. 2 - Educational status: - The literacy: does not read and/or write ( ) - Reads and writes without qualification ( ) Education - Primary ( ) - Preparatory School ( ) - High School ( ) - University ( ) 3 - Occupation: Working in agriculture only ( ) - Works in agriculture and another profession ( ) 4 - The size of the household...... Persons 5 - Number of family workers in agriculture ...... persons . 6 - The business structure of the human family On-Farm Off-Farm Items Winter SummerWinter Summer Number of persons on Farm Days/Week Daily work hours Daily wage per hours Average daily wage in the region ( LE/Day)………………….. 7 - Marketing of agricultural products: -Village Market lie ( ) - Village Traders ( ) - District Market ( ) - Traders ( ) - Other (indicate) ------

Second: the Farm-Specific Data: (Characteristics of the Farm) 1 - Development of the Size of Agricultural Holdings during the Last Five Years:

2010: Type: Owned ( ) Rental ( ) Share ( ) Total ( ) 2009: Type: Owned ( ) Rental ( ) Share ( ) Total ( ) 2008: Type: Owned ( ) Rental ( ) Share ( ) Total ( ) 2007: Type: Owned ( ) Rental ( ) Share ( ) Total ( ) 2006: Type: Owned ( ) Rental ( ) Share ( ) Total ( ): Farm Size Owned Rental Share Total Fed. Ker. Fed. Ker. Fed. Ker. Fed Ker. . Current Previous (2005)

1 Feddan = 24 Kerates=0.65 Hectar - Current average price per Kerat in the region ...... thousand pounds - Average price per Kerat in the region in 2005 ...... thousand pounds - Average current rent in the region Kerat...... pounds - Average rent in the region per Kerat in 2005 ...... LE

2 - Development of the Farm Animal Size over the Past Five Years:

Type Buffalo Cows Calves Sheep Donkeys Camels fattening and goats Current Number Previous Number Current average price per head in the market Previous Price (2005)

3 - Evolution of the Value of the Acquisition of Agricultural Machinery during the Last Five Years: Ownership Own Non

Type of machine Owned Rented Current Previous Current Previous Current Previous Tractor

Irrigation machine

Harvesting machine Motor spray Automatic pesticides

Other Secify - - -

4 - The Type of Farm Activity: Farm Crops ( ) Animal ( ) Joint ( )

5 – Human Labor Work at the Farm: Family ( ) Tenant ( ) Joint ( )

6 - Private Investment in the Farm during the Last Period (5 years):

Farm Investments Owned Hired Number Value Number Value

Establishment of developed channels

Improve the properties of soil

Purchase of agricultural land Establishment of Road

Purchase of agricultural machinery Purchase of animals Animal production farms The establishment of poultry farms

Other: Specify - - 7 - Farm Loans : Did you take loans during the last period? Yes ( ) No ( ) If Yes: Complete: 1 - What is the value of the loan ( ) 2 – When did you obtain the loan ( ) And complete the following data

A. Source of the loan 1 - Village Bank ( ) 2 - Commercial Banks ( ) 3 - a Friend ( ) Other (State) : - ( ) - ( ) B. Purpose of the loan (1) - Purchase of machinery and equipment ( ) 2 - Purchase of Animals ( ) 3 - Agriculture fruit trees ( ) 4 - improve soil fertility ( ) 5 - Development of irrigation systems ( ) Other (Specify) - ( ) - ( ) - ( ) Third: The Capital/Output Ratio: Table: A. Human labor for most important farm crops per feddan:

Land Soil Crop Preparation Planting Clean Irrigation Fertilizer Harvesting Transportation Man/Day(#) Man/Day(LE)

Paddy

Man/Day(#) Man/Day(LE) Maize Man/Day(#)

Wheat Man/Day(LE) Man/Day(#) Cotton Man/Day(LE)

Man/Day(#) Berseem Man/Day(LE) Man/Day(#) Other Man/Day(LE) Man/Day(#) Other Man/Day(LE) Man/Day(#) Other Man/Day(LE)

B - the average amount of capital invested in the farm during the recent period (5 years) (………………….) Fourth: the Capital/Land ratio: A - Sources of Capital: Loans ( ) Owned ( ) Debt ( ) Production input costs for the most important crops

Nitrate Phosphatic Potasium Green Crop Seeds Fertilizer Fertilizer Fertilize Fertilizer Pesticides Other Quantity

Paddy Price

Quantity

Maize Price Quantity

Wheat Price Quantity Cotton Price

Berseem Quantity (Clover) Price Other Quantity Specify Price Other Quantity Specify Price Other Quantity Specify Price B: Factors Affecting Capital Formation (Investments) in the Farm: 1- 2- 3- C - Development of Capital Used in the Farm over the Last Five Years: -1 2- 3-

D - Development of Yield per Feddan over the Last Five Years:

Yield Yield 2009 2004 Crop

Wheat

Paddy

Maize

Cotton

Other Specify

-

E - Development of the Farm-Gate Price over the Last Five Years:

Average Price Average Price 2005 2010 Crop

Wheat

Paddy

Maize

Cotton

Other Specif y

- F: Development of human labor mobility from the Farm to Non-farm Sectors: Causes are: 1- 2- 3- 4- Fifth: Farm Capital Accumulation:

Rented Owned Land Holding Year

2005

2006

2007

2008

2009

2010 Annex 3

Socio-economic Characteristics of Selected Farms

The input and output data of targeted farms have been collected from eight villages selected from four districts, Table 1-Annex 3. Two districts, i.e., Zagazig and El Hosonia, from Sharkia governorate and two districts, i.e., El Mansoura and El Mataria, from Dakahlia governorate have been chosen. Twenty five farms have been selected from each village. Enshas El Basel, Baher El Baker, Tanah and El Asafra villages are far from capital city. The other villages, Bani Omer, Semakin El Shark, El Baramoun and Ewlad Sabour, have closer distances to the capital city.

The socio-economic characteristics of the targeted farms could be summarized as follows: 1- The averages farmer ages in Enshas El Basel, Bani Omer, Semakin El Shark, Baher El Baker, El Baramoun, Tanah, El Asafra and Ewlad Sabour is estimated at 52.4 years, 51 years, 46.4 years, 48.8 years, 54.9 years, 61.8 years, 47.5 years and 56.6 years, respectively, table 2 in annex 3.

2- The averages targeted farmer experience in Enshas El Basel, Bani Omer, Semakin El Shark, Baher El Baker, El Baramoun, Tanah, El Asafra and Ewlad Sabour is estimated at 31.5 years, 28.9 years, 29.6 years, 30.2 years, 35.5 years, 44 years, 26.2 years and 33.4 years, respectively, table 3 in annex 3.

3- The distribution of targeted farmers according to their educational status and by their selected villages is presented in table 4 in annex .. The finding refer to that 22.5% of the farmers are literacy, 26.5% of them are only read and write, 6% of them had got primary school, 6% of them had got preparatory school, 24.5% of them had got high school, 1.5% of them had got above high school and 13% of them had got university certificates.

4- The frequency distribution of targeted farmers according to their occupation, e.g., agriculture only or agriculture and other job, and by village is showed in table 5 in annex 3. Most of targeted farmers are working in agriculture only (59.5%) whereas 40.5% of them are working in other job beside the agriculture.

5- The average size of household in the selected farms is estimated at 5.84 members in Enshas El Basel, 6.08 members in Bani Omer, 6.2 members in Semakin El Shark, 6.8 members in Baher El Baker, 5.68 members in El Baramoun, 5.52 members in Tanah, 7.96 members in El Asafra and 5.8 members in Ewlad Sabour, table 6 in annex 3.

6- The average numbers of family labor working in agriculture (on or off- farm in winter and summer) according to their villages are showed in table 7 in annex 3. the results reveal that an average of 1.9 family members in Enshas El Basel, 2 family members in Bani Omer, 2.28 family members in Semakin El Shark, 2.4 family members in Baher El Baker, 1.64 family members in El Baramoun, 2.2 family members in Tanah, 3.6 family members in El Asafra and 2.24 members in Ewlad Sabour.

7- The average working days per family member and per week in agriculture (on or off- farm in winter and summer) according to their villages are showed in table 8 in annex 3. the results reveal that: (i) an average on-farm working days per family members in winter are estimated at 6 days/week in Enshas El Basel, 6 days/week in Bani Omer, 5.64 days/week in Semakin El Shark, 5.24 days/week in Baher El Baker, 6.24 days/week in El Baramoun, 7 days/week in Tanah, 5.4 days/week in El Asafra and 4.48 days/week in Ewlad Sabour. (ii) an average on- farm working days per family members in summer are estimated at 6 days/week in Enshas El Basel, 6.04 days/week in Bani Omer, 5.72 days/week in Semakin El Shark, 5.48 days/week in Baher El Baker, 6.24 days/week in El Baramoun, 7 days/week in Tanah, 5.56 days/week in El Asafra and 4.6 days/week in Ewlad Sabour. (iii) an average off-farm working days per family members in winter are estimated at 0.9 days/week in Enshas El Basel, 0.12 days/week in Baher El Baker, 0.64 days/week in El Asafra and 1.08 days/week in Ewlad Sabour. (iv) an average off-farm working days per family members in summer are estimated at 0.9 days/week in Enshas El Basel, 0.16 days/week in Baher El Baker, 0.52 days/week in El Asafra and 1.04 days/week in Ewlad Sabour.

8- The average working hours per day in agriculture (on or off- farm in winter and summer) according to their villages are showed in table 9 in annex 3. the results reveal that: (i) an average on-farm working hours per day in winter are estimated at 4 hours/day in Enshas El Basel, 5.72 hours/day in Bani Omer, 4.72 hours/day in Semakin El Shark, 7 hours/day in Baher El Baker, 5.16 hours/day in El Baramoun, 5.28 hours/day in Tanah, 4.48 hours/day in El Asafra and 4.12 hours/day in Ewlad Sabour. (ii) an average on-farm working hours in summer are estimated at 5.32 hours/day in Enshas El Basel, 5.36 in Bani Omer, 6.36 hours/day in Semakin El Shark, 7.12 hours/day in Baher El Baker, 5.12 hours/day in El Baramoun, 5.28 hours/day in Tanah, 4.72 hours/day in El Asafra and 4.44 hours/day in Ewlad Sabour.

9- The averages daily wage rates in winter and in summer by village in selected farms are presented in Table 10 in annex 3. The average daily wage rate in both winter and summer is very high in Bani Omer (i.e., 50 LE/day) because it very near from the capital city whereas average daily wage rate in both winter and summer is very low in Tanah (i.e., 21 LE/day) because it is far from the capital city.

10- The marketing channels of agricultural commodities by the selected villages are presented in table 11 in annex 3. the results reveal that 62% and 20.5% of studied farms market their commodities for the village trader and district market.

11- Data in Table 12 in annex 3, reveal that the average size of agricultural holding between 2010 and 2005 for the studied farms has been increased by 22.6% for owned holding, 8.2% for rental holding and 44.2% for shared holding with an grand mean of 23.8%.

12- Data in Table 13 in annex 3, show that the average price per kirat during the last five years for the studied farms have been increased from 6027 LF/kirat in 2005 to 8868 LE/kirat, an increase of 47%. The average rent rate of kirat during the last five years for the studied farms has been increased from 101 LF/kirat in 2005 to 111 LE/kirat, an increase of 10%.

13- The development of an averages animal holding by type of animal and by village during the last five years for the studied farms are presented in Table 14 in annex 3. Data in the table show that the grand mean of buffalo, native cattle and donkey holdings in the studied villages have been increased from 1.35 head in 2005 to 1.55 head in 2010 for buffalo, from 1.17 head in 2005 to 1.19 head in 2010 for native cattle and from 0.55 head in 2005 to 0.56 head in 2010 for donkey. Whereas the grand mean of fattened head and sheep and goats holdings have been decreased during the last five years.

14- The development of an averages farmgate prices of farm animals by type of animal and by village during the last five years for the studied farms are presented in Table 15 in annex 3. Data in the table show that the grand mean of buffalo, native cattle, fattened heads, sheep & goats and donkey prices in the studied villages have been increased from 11976 LE/head in 2005 to 22190 head in 2010 for buffalo (85% an increase rate), from 9722 LE/head in 2005 to 21907 LE/head in 2010 for native cattle (125% an increase rate), from 7229 LE/head in 2005 to 10184 LE/head in 2010 for fattened head (41% an increase rate), from 1252 LE/head in 2005 to 3157 LE/head in 2010 for sheep & goats (152% an increase rate) and from 731 LE/head in 2005 to 948 LE/head in 2010 for donkey (an increase rate of 30%). 15- The development of farming machineries holdings by type of machinery and by village between 2005 and 2010 in the selected farms are presented in Table 16 in annex 3. Data in the table show that the grand mean of tractors, irrigation pumps, spray motors and chemical sprier in the studied villages have been increased by 50%, 14%, 27% and 33% respectively.

16- The development of values of owned farming machineries by type of machine and by village between 2005 and 2010 in the selected farms are presented in Table 17 in annex 3. Data in the table show that the grand mean of tractors, irrigation pumps, spray motors and chemical sprier values in the studied villages have been increased by 81%, 61%, 95% and 52% respectively.

17- The frequency distribution of the selected farms by type of the production activity and by the village is presented in Table 18 in annex 3. Data in the table show that the studied farms can be categorized to three types of productive activities, i.e., plant, animal and mixed. The plant farms are the dominant, representing 61%.

18- The frequency distribution of the selected farms by type of the human labor and by the village is presented in Table 19 in annex 3. Data in the table show that the studied farms can be classified into three types of labor used in the farm operations, i.e., family, hired and mixed. The mixed labor used - farms are the dominant, representing 52.5%.

19- The types of the private Investments in the owned farm by village of the selected farms are presented in Table 20 in annex 3. Data in the table show that the studied farms invest their owned capitals in seven farming activities, establish of developed channels, improve the properties of the soil, purchase of agricultural lands, purchase of farm animals, establish animal and poultry production farms.

The following are selected statistics/basic results based on the farm survey. Table (1): Sample framework of selected farms by governorate, by district and by village, 2009 - 2010 Number Governorate District Village of farms Enshas El Basel 25 Zagazig Bani Omer 25 El Hosonia Semakin El Sharek 25 Sharkia Baher El Baker 25 El Mansoura El Baramoun 25 Tanah 25 El Asafra 25 Dakahlia El Mataria Ewlad Sabour 25 Total 200 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (2): The average farmer age in the selected farms Minimum Maximum Mean Villages Count (year) (year) (year) Enshas El Basel 25 30 86 52.4 Bani Omer 25 30 82 51 Semakin El Sharek 25 22 66 46.4 Baher El Baker 25 28 75 48.8 El Baramoun 25 41 72 54.9 Tanah 25 40 75 61.8 El Asafra 25 35 70 47.5 Ewlad Sabour 25 26 80 56.6 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (3): Average farmer experience years Mean Minimum Maximum Villages Count (year) (year) (year) Enshas El Basel 25 31.48 10 60 Bani Omer 25 28.96 8 60 Semakin El Sharek 25 29.64 5 54 Baher El Baker 25 30.16 13 60 El Baramoun 25 35.48 10 60 Tanah 25 44 15 60 El Asafra 25 26.2 15 55 Ewlad Sabour 25 33.44 4 55 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (4): Frequency of the educational status for the selected farmers above Village literacy reads and write primary preparatory high high university Total Count 5 9 4 3 3 1 25 Enshas El Basel % 20 36 16 12 12 4 100 Count 7 5 2 8 3 25 Bani Omer % 28 20 8 32 12 100 Count 6 3 1 1 6 3 5 25 Semakin El Sharek % 24 12 4 4 24 12 20 100 Count 8 4 1 1 5 6 25 Baher El Baker % 32 16 4 4 20 24 100 Count 1 6 2 1 9 6 25 El Baramoun % 4 24 8 4 36 24 100 Count 8 7 1 7 2 25 Tanah % 32 28 4 28 8 100 Count 6 7 2 4 6 25 El Asafra % 24 28 8 16 24 100 Count 4 12 1 5 3 25 Ewlad Sabour % 16 48 4 20 12 100 Count 45 53 12 12 49 3 26 200 Total % 22.5 26.5 6 6 24.5 1.5 13 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (5): Frequency of the farmer’s occupation in selected farms agriculture Village agriculture only and others Total Count 15 10 25 Enshas El Basel % of Total 7.5 5 12.5 Count 16 9 25 Bani Omer % of Total 8 4.5 12.5 Count 13 12 25 Semakin El Sharek % of Total 6.5 6 12.5 Count 12 13 25 Baher El Baker % of Total 6 6.5 12.5 Count 9 16 25 El Baramoun % of Total 4.5 8 12.5 Count 16 9 25 Tanah % of Total 8 4.5 12.5 Count 23 2 25 El Asafra % of Total 11.5 1 12.5 Count 15 10 25 Ewlad Sabour % of Total 7.5 5 12.5 Count 119 81 200 Total % of Total 59.5 40.5 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (6): average size of the household in selected farms Mean Villages Count (feddans) Enshas El Basel 25 5.84 Bani Omer 25 6.08 Semakin El Sharek 25 6.2 Baher El Baker 25 6.8 El Baramoun 25 5.68 Tanah 25 5.52 El Asafra 25 7.96 Ewlad Sabour 25 5.8 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (7) Average members of family working in agriculture in selected farms Number of Number of persons Number of persons family workers working on-farm working off-farm Villages Count in agriculture winter Summer Winter summer Enshas El Basel 25 1.92 1.92 1.92 0.32 0.32 Bani Omer 25 2 2 2 0 0 Semakin El Sharek 25 2.28 2.08 2.24 0.04 0.04 Baher El Baker 25 2.4 2.08 2.2 0.12 0.16 El Baramoun 25 1.64 1.64 1.64 0 0 Tanah 25 2.2 2.2 2.2 0 0 El Asafra 25 3.6 3.48 3.48 0.36 0.36 Ewlad Sabour 25 2.24 2.2 2.2 0.4 0.4 total 200 18.28 17.6 17.88 1.24 1.28 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (8): Average working days per member and per week on and off-farm in winter and summer in selected farms Average Mean Average Mean Gov. Village working days Season Count (days) Gov. Village working days Count (days) on-farm per Winter 25 6 on-farm per winter 25 6.24 week Summer 25 6 week summer 25 6.24 Enshas El off-farm per Winter 25 0.88 off-farm per winter 25 0 Basel week Summer 25 0.88 El Baramoun week summer 25 0 on-farm per Winter 25 6 on-farm per winter 25 7 week Summer 25 6.04 week summer 25 7 off-farm per Winter 25 0 off-farm per winter 25 0 Bani Omer week Summer 25 0 Tanah week summer 25 0 Sharkia Dakahlia on-farm per Winter 25 5.64 on-farm per winter 25 5.4 week Summer 25 5.72 week summer 25 5.56 Semakin El off-farm per Winter 25 0 off-farm per winter 25 0.64 Sharek week Summer 25 0 El Asafra week summer 25 0.52 on-farm per Winter 25 5.24 on-farm per winter 25 4.48 week Summer 25 5.48 week summer 25 4.6 Baher El off-farm per Winter 25 0.12 off-farm per winter 25 1.08 Baker week Summer 25 0.16 Ewlad Sabour week summer 25 1.04 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (9): Average working hours per day on and off-farm in winter and summer in selected farms Average working Mean Average working Mean Village hours per day Count (hours) Village hours per day Count (hours) winter 25 4 winter 25 5.16 on-farm summer 25 5.32 on-farm summer 25 5.12 Enshas El winter 25 1.12 winter 25 0 Basel off-farm summer 25 1.12 El Baramoun off-farm summer 25 0 winter 25 3.72 winter 25 5.28 on-farm summer 25 5.36 on-farm summer 25 5.28 winter 25 0 winter 25 0 Bani Omer off-farm summer 25 0 Tanah off-farm summer 25 0 winter 25 4.72 winter 25 4.48 on-farm summer 25 6.36 on-farm in winter summer 25 4.72 Semakin El winter 25 0 winter 25 0.64 Sharek off-farm summer 25 0 El Asafra off-farm in winter summer 25 0.64 winter 25 7 winter 25 4.12 on-farm summer 25 7.12 on-farm in winter summer 25 4.44 Baher El winter 25 0.24 winter 25 1.44 Baker off-farm summer 25 0.24 Ewlad Sabour off-farm in winter summer 25 1.44 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (10): Average daily wage rate in winter and in summer by village in selected farms Village Season Count Average daily wage rate (LE) winter 25 39 Enshas El Basel summer 25 39 winter 25 50 Bani Omer summer 25 50 winter 25 30 Semakin El Sharek summer 25 35 winter 25 35 Baher El Baker summer 25 45 winter 25 22 El Baramoun summer 25 22 winter 25 21 Tanah summer 25 21 winter 25 25 El Asafra summer 25 25 winter 25 27 Ewlad Sabour summer 25 27 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (11): Marketing channels of agricultural commodities in selected farms village trader village and village village district district home and district Village market trader market trader consumption market market Total Count 24 1 25 % of Enshas El Basel Total 12 0.5 12.5 Count 23 1 1 25 % of Bani Omer Total 11.5 0.5 0.5 12.5 Count 21 3 1 25 Semakin El % of Sharek Total 10.5 1.5 0.5 12.5 Count 6 6 4 6 3 25 % of Baher El Baker Total 3 3 2 3 1.5 12.5 Count 22 1 1 1 25 % of El Baramoun Total 11 0.5 0.5 0.5 12.5 Count 25 25 % of Tanah Total 12.5 12.5 Count 1 19 5 25 % of El Asafra Total 0.5 9.5 2.5 12.5 Count 2 2 16 4 1 25 % of Ewlad Sabour Total 1 1 8 2 0.5 12.5 Count 8 124 41 9 7 8 3 200 % of Total Total 4 62 20.5 4.5 3.5 4 1.5 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (12): Development of the size of agricultural holdings between 2010 and 2005 in selected farms Village Average agricultural holdings (feddans) Type of holding 2010 2005 Change % owned 22.04 20.4 8.0% rental 20.8 20.8 0.0% shared 0 0 Enshas El Basel total 42.84 41.2 4.0% owned 33.16 33.16 0.0% rental 12.2 12.52 -2.6% shared 0 0 Bani Omer total 45.36 45.68 -0.7% owned 73.32 68.28 7.4% rental 0.5 2.4 -79.2% shared 7.68 7.68 0.0% Semakin El Sharek total 79.8 78.36 1.8% owned 95.32 33.88 181.3% rental 19.04 14.56 30.8% shared 102 69.12 47.6% 216.36 117.56 84.0% Baher El Baker total 117.56 owned 60.2 51.2 17.6% rental 6.08 3.92 55.1% shared 1.92 1.92 0.0% El Baramoun total 68.2 57.04 19.6% owned 80.6 76.52 5.3% rental 3.52 3.52 0.0% shared 0 0 Tanah total 84.12 80.04 5.1% owned 132.72 120.96 9.7% rental 0.96 0 shared 1.92 0 El Asafra total 135.6 120.96 12.1% owned 84.48 70.08 20.5% rental 1.92 1.92 0.0% shared 0 0 Ewlad Sabour total 86.4 72 20.0% owned 72.73 59.31 22.6% rental 8.065 7.455 8.2% shared 14.19 9.84 44.2% Grand mean total 94.835 76.605 23.8% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (13): Development of average price and rental rate per kirat in selected farms Average price and rental rate per kirat Village (LE/kirat) Price or rate 2010 2005 Changes % price/kirat 8180 4660 76% Enshas El Basel rent rate/kirat 53 84 -37% price/kirat 8280 5500 51% Bani Omer rent rate/kirat 53 100 -47% price/kirat 8600 6800 26% Semakin El Sharek rent rate/kirat 117 106 10% price/kirat 5820 2946 98% Baher El Baker rent rate/kirat 104 72 44% price/kirat 8320 8768 -5% El Baramoun rent rate/kirat 124 123 1% price/kirat 8960 8000 12% Tanah rent rate/kirat 126 120 5% price/kirat 11160 5720 95% El Asafra rent rate/kirat 154 104 48% price/kirat 11620 5820 100% Ewlad Sabour rent rate/kirat 160 101 58% price/kirat 8868 6027 47% Grand mean rent rate/kirat 111 101 10% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (14): Development of the farm animal holding between 2005 and 2010 in the selected farms Average animal holding (animal head) Village Animal type 2010 2005 Changes % Buffalo 0.72 0.8 -10.0% Native cattle 0.36 0.44 -18.2% fattened head 0.12 0.24 -50.0% sheep & goats 1.08 1.16 -6.9% donkey 0.58 0.6 -3.3% Enshas El Basel Camel 0 0 Buffalo 0.72 0.52 38.5% Native cattle 0.28 0.32 -12.5% fattened head 0.2 0.24 -16.7% sheep & goats 0.48 0.8 -40.0% donkey 0.52 0.44 18.2% Bani Omer Camel 0.04 0 Buffalo 0.12 1.08 -88.9% Native cattle 0.24 2.2 -89.1% fattened head 0.08 0.52 -84.6% sheep & goats 0.64 1.52 -57.9% donkey 0.52 0.64 -18.8% Semakin El Sharek Camel 0 0 Buffalo 0.32 0.88 -63.6% Native cattle 0.68 1.56 -56.4% fattened head 0.32 0.36 -11.1% sheep & goats 0.56 2.52 -77.8% donkey 0.48 0.36 33.3% Baher El Baker Camel 0 0 Buffalo 3.76 0.84 347.6% Native cattle 0.28 0.32 -12.5% fattened head 0.08 0.12 -33.3% sheep & goats 2.04 1.6 27.5% donkey 0.64 0.64 0.0% El Baramoun Camel 0.04 0 Buffalo 1.72 1.84 -6.5% Native cattle 1.32 1.04 26.9% fattened head 0 0 sheep & goats 0 0 donkey 0.88 0.88 0.0% Tanah Camel 0 0 Buffalo 3.24 3.24 0.0% Native cattle 2.2 2.12 3.8% fattened head 0.08 0.08 0.0% sheep & goats 0 0 donkey 0.44 0.44 0.0% El Asafra Camel 0 0 Buffalo 1.76 1.6 10.0% Native cattle 4.16 1.32 215.2% fattened head 0.24 0.24 0.0% Sheep & goats 0.08 0.12 -33.3% donkey 0.4 0.16 150.0% Ewlad Sabour Camel 0 0 Buffalo 1.55 1.35 14.8% Native cattle 1.19 1.17 1.7% fattened head 0.14 0.23 -39.1% Sheep & goats 0.61 0.97 -37.1% donkey 0.56 0.52 7.7% Grand mean Camel 0.01 0 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (15): Development of average farm-gate prices of animals between 2005 and 2010 in the selected farms Average farmgate prices of animals (LE/head) Village Type 2010 2005 Changes% Buffalo 12038 4964 143% Native cattle 6889 3000 130% fattened head 8333 7000 19% Sheep & goats 1140 860 33% donkey 957 541 77% Enshas El Basel Camel Buffalo 20538 7222 184% Native cattle 8000 4000 100% fattened head 12000 7333 64% Sheep & goats 1875 1067 76% donkey 1075 700 54% Bani Omer camel 5000 Buffalo 7667 11269 -32% Native cattle 8800 24958 -65% fattened head 3250 8200 -60% Sheep & goats 1425 1138 25% donkey 528 607 -13% Semakin El Sharek camel Buffalo 9600 5500 75% Native cattle 10800 3905 177% fattened head 10000 4167 140% Sheep & goats 2133 590 262% donkey 323 757 -57% Baher El Baker camel Buffalo 18017 10000 80% Native cattle 11500 6375 80% fattened head 12000 15000 -20% Sheep & goats 50000 16000 213% donkey 1100 789 39% El Baramoun camel Buffalo 22333 12095 85% Native cattle 21692 9000 141% fattened head Sheep & goats donkey 1195 571 109% Tanah camel Buffalo 36833 21625 70% Native cattle 18696 11886 57% fattened head 16000 10000 60% Sheep & goats donkey 1100 745 48% El Asafra camel Buffalo 21059 14938 41% Native cattle 58786 11875 395% fattened head 15333 8667 77% Sheep & goats 1600 1050 52% donkey 1220 2600 -53% Ewlad Sabour camel Buffalo 22190 11976 85% Native cattle 21907 9722 125% fattened head 10184 7229 41% Sheep & goats 3157 1252 152% donkey 948 731 30% total camel 5000 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (16): Development of farming machineries holdings between 2005 and 2010 in the selected farms by village Number of farming machineries (number) Village Type of machinery 2010 2005 Changes % Tractor 1.00 0.40 150% irrigation pump 0.64 0.56 14% spray motor 0.20 0.20 0% Enshas El Basel chemical sprier 0.04 0.04 0% Tractor 0.08 0.08 0% irrigation pump 0.44 0.44 0% spray motor 0.08 0.08 0% Bani Omer chemical sprier 0.08 0.08 0% Tractor 0.12 0.04 200% irrigation pump 1.12 0.84 33% spray motor 0.00 0.00 Semakin El Sharek chemical sprier 0.12 0.04 200% Tractor 0.08 0.08 0% irrigation pump 1.96 1.64 20% spray motor 0.44 0.24 83% Baher El Baker chemical sprier 1.20 0.88 36% Tractor 0.12 0.12 0% irrigation pump 0.52 0.44 18% spray motor 0.00 0.00 El Baramoun chemical sprier 0.00 0.00 Tractor 0.20 0.12 67% irrigation pump 0.60 0.44 36% spray motor 0.00 0.00 Tanah chemical sprier 0.00 0.00 Tractor 0.08 0.04 100% irrigation pump 0.96 0.96 0% spray motor 0.32 0.28 14% El Asafra chemical sprier 0.36 0.36 0% Tractor 0.12 0.08 50% irrigation pump 0.96 0.96 0% spray motor 0.08 0.04 100% Ewlad Sabour chemical sprier 0.08 0.04 100% Tractor 0.12 0.08 50% irrigation pump 0.90 0.79 14% spray motor 0.14 0.11 27% Grand mean chemical sprier 0.24 0.18 33% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (17): Development of values of owned farming machineries by type of machine and by village between 2005 and 2010 in the selected farms Average values of farming machineries (LE/unit) Village Type of machinery 2010 2005 Changes % Tractor 2800 1400 100% irrigation pump 4040 1680 140% spray motor 104 80 30% Enshas El Basel chemical sprier 60 108 -44% Tractor 5800 3600 61% irrigation pump 1900 1480 28% spray motor 720 520 38% Bani Omer chemical sprier 22 36 -39% Tractor 4800 2000 140% irrigation pump 2380 1350 76% spray motor 0 0 Semakin El Sharek chemical sprier 40 2 1900% Tractor 4000 1780 125% irrigation pump 4036 2040 98% spray motor 904 316 186% Baher El Baker chemical sprier 211.2 177.6 19% Tractor 5400 4400 23% irrigation pump 1352 772 75% spray motor 0 0 El Baramoun chemical sprier 0 0 Tractor 8600 6200 39% irrigation pump 2280 1320 73% spray motor 0 0 Tanah chemical sprier 0 0 Tractor 5200 2200 136% irrigation pump 4372 3420 28% spray motor 664 336 98% El Asafra chemical sprier 226.8 50.8 346% Tractor 9000 3600 150% irrigation pump 4060 3120 30% spray motor 160 60 167% Ewlad Sabour chemical sprier 15.2 4 280% Tractor 5700 3147.5 81% irrigation pump 3052.5 1897.75 61% spray motor 319 164 95% Total chemical sprier 71.9 47.3 52% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (18): Sample farm distribution according to the type of the production activity in the selected farms Plant Animal Mixed Village farms farms farms Total Count 21 4 25 Enshas El Basel % 84 16 100 Count 25 25 Bani Omer % 100 100 Count 23 2 25 Semakin El Sharek % 92 8 100 Count 7 18 25 Baher El Baker % 28 72 100 Count 22 3 25 El Baramoun % 88 12 100 Count 14 11 25 Tanah % 56 44 100 Count 1 2 22 25 El Asafra % 4 8 88 100 Count 9 1 15 25 Ewlad Sabour % 36 4 60 100 Count 122 3 75 200 Grand mean % 61 1.5 37.5 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (19): Studied farm distribution by village according to the type of human labor used Village Family Hired Mixed Total Count 8 2 15 25 Enshas El Basel % 32 8 60 100 Count 6 3 16 25 Bani Omer % 24 12 64 100 Count 3 3 19 25 Semakin El Sharek % 12 12 76 100 Count 2 6 17 25 Baher El Baker % 8 24 68 100 Count 1 14 10 25 El Baramoun % 4 56 40 100 Count 1 8 16 25 Tanah % 4 32 64 100 Count 17 2 6 25 El Asafra % 68 8 24 100 Count 12 7 6 25 Ewlad Sabour % 48 28 24 100 Count 50 45 105 200 Total % 25 22.5 52.5 100 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (20): Development of the Private Investment in the owned farm by village during the last five years Village Variable Number Value (LE/feddan) Establishment of developed channels 0.12 0 Improve the properties of soil 0 0 Purchase of agricultural land 2.24 8420 Purchase of agricultural machinery 0.84 3452 Purchase of animals 3.2 5102 Animal production farms 0 0 Enshas El Basel The establishment of poultry farms 0 0 Establishment of developed channels 0 0 Improve the properties of soil 0 0 Purchase of agricultural land 6.72 672 Purchase of agricultural machinery 0.8 3812 Purchase of animals 2.24 5888 Animal production farms 0 0 Bani Omer The establishment of poultry farms 0 0 Establishment of developed channels 0.2 1120 Improve the properties of soil 40.91 5238 Purchase of agricultural land 2.4 10000 Purchase of agricultural machinery 0.28 3244 Purchase of animals 0.08 68 Animal production farms 0 0 Semakin El Sharek The establishment of poultry farms 0 0 Establishment of developed channels 0.48 6084 Improve the properties of soil 2.24 102884 Purchase of agricultural land 17.76 29000 Purchase of agricultural machinery 0.4 491 Purchase of animals 0.2 1248 Animal production farms 0.08 0 Baher El Baker The establishment of poultry farms 720 0 Establishment of developed channels 0.04 32 Improve the properties of soil 18 946 Purchase of agricultural land 2.44 13810 Purchase of agricultural machinery 0.08 180 Purchase of animals 0.16 680 Animal production farms 0 0 El Baramoun The establishment of poultry farms 0 0 Establishment of developed channels 0.08 0 Improve the properties of soil 25 2520 Purchase of agricultural land 4.08 27680 Purchase of agricultural machinery 0.12 344 Purchase of animals 0.4 2640 Animal production farms 0 0 Tanah The establishment of poultry farms 0 0 Establishment of developed channels 0 0 Improve the properties of soil 0 0 Purchase of agricultural land 0 0 Purchase of agricultural machinery 0.04 260 Purchase of animals 0.08 640 Animal production farms 0 0 El Asafra The establishment of poultry farms 0 0 Establishment of developed channels 0.12 560 Improve the properties of soil 0 0 Purchase of agricultural land 2.88 31680 Purchase of agricultural machinery 0.04 80 Purchase of animals 2.8 22400 Animal production farms 0.04 0 Ewlad Sabour The establishment of poultry farms 0 0 Establishment of developed channels 0.13 975 Improve the properties of soil 10.77 13949 Purchase of agricultural land 4.82 15158 Purchase of agricultural machinery 0.33 1483 Purchase of animals 1.15 4833 Animal production farms 0.02 0 grand mean The establishment of poultry farms 90 0 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (21): Human labor profile per feddan of rice in Zagazig district Farming Number of man- Wage Rate Value (LE Operations Count day/feddan (LE/man-day) per feddan) land preparation 50 5.00 44.74 223.70 Planting 50 10.00 43.37 433.68 Weeding 50 9.00 40.06 360.56 Irrigation 50 18.00 43.12 776.10 Fertilization 50 2.00 43.09 86.18 Harvesting 50 6.82 42.33 288.82 Transportation 50 2.00 44.12 88.24 Total 52.82 42.73 2257.28 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (22): Human labor profile per feddan of maize in Zagazig district Farming Number of man- Wage Rate Value (LE Operations Count day/feddan (LE/man-day) per feddan) land preparation 50 5.00 46.18 230.88 Planting 50 9.30 45.14 419.68 Weeding 50 7.00 43.42 303.96 Irrigation 50 12.00 43.72 524.66 Fertilization 50 3.00 44.10 132.31 Harvesting 50 8.47 38.14 322.98 Transportation 50 2.00 44.72 89.44 Total 46.77 43.28 2023.92 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (23): Human labor profile per feddan of wheat in Zagazig district Farming Number of man- wage Rate value (LE per Operations Count day/feddan (LE/man-day) feddan) Land preparation 50 7.00 46.80 327.60 Planting 50 5.02 47.01 236.19 Weeding 50 4.00 47.75 191.00 Irrigation 50 5.00 44.89 224.46 Fertilization 50 3.00 44.09 132.26 Harvesting 50 15.00 44.38 665.70 transportation 50 5.62 45.89 257.86 Total 44.64 45.59 2035.07 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (24): Human labor profile per feddan of cotton in Zagazig district Farming Number of man- Wage Rate Value (LE Operations Count day/feddan (LE/man-day) per feddan) Land preparation 50 6.00 44.23 265.40 Planting 50 8.00 43.14 345.14 Weeding 50 14.00 43.85 613.85 Irrigation 50 12.00 48.05 576.64 Fertilization 50 3.00 47.41 142.23 Harvesting 50 45.00 42.90 1930.50 transportation 50 3.00 43.98 131.95 Total 91.00 44.02 4005.71 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (25): Human labor profile per feddan of berseem in Zagazig district Value Farming Number of man- Wage Rate (LE per Operations Count day/feddan (LE/man-day) feddan) Land preparation 50 4 41.8 167.27 Planting 50 2 42.5 85.00 Weeding 50 0.00 Irrigation 50 12 42.5 510.00 Fertilization 50 2 42.5 85.00 Harvesting 50 20 42.5 850.00 Transportation 50 2 42.5 85.00 Total 42.00 42.44 1782.27 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (26): Human labor profile per feddan of rice in El Hosonia district Farming Number of man- wage Rate value per operations Count day/feddan (LE/man-day) feddan Land preparation 50 10.00 34.30 342.99 Planting 50 8.00 31.19 249.54 Weeding 50 12.00 26.81 321.77 irrigation 50 18.00 24.87 447.61 fertilization 50 2.00 31.30 62.60 harvesting 50 14.00 45.21 632.97 transportation 50 2.00 38.13 76.27 Total 66.00 32.33 2133.74 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (27): Human labor profile per feddan of maize in El Hosonia district Farming Number of man- Wage Rate Value per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 11.00 31.08 341.91 planting 50 7.00 30.31 212.16 weeding 50 12.00 30.90 370.76 irrigation 50 18.00 24.41 439.34 fertilization 50 3.00 28.90 86.70 harvesting 50 16.00 30.91 494.51 transportation 50 3.00 30.02 90.05 Total 70.00 29.08 2035.43 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (28): Human labor profile per feddan of wheat in El Hosonia district Farming Number of man- Wage Rate Value per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 6.00 32.86 197.15 planting 50 3.00 28.68 86.05 weeding 50 3.00 29.21 87.64 irrigation 50 11.00 27.98 307.74 fertilization 50 2.00 27.55 55.10 harvesting 50 26.00 43.42 1128.87 transportation 50 3.00 22.52 67.55 Total 54.00 35.74 1930.11 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (29): Human labor profile per feddan of cotton in El Hosonia district Farming Number of man- Wage Rate Value per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 12.00 25.64 307.64 planting 50 4.00 25.19 100.75 weeding 50 15.00 30.28 454.24 irrigation 50 18.00 28.40 511.12 fertilization 50 3.00 19.73 59.18 harvesting 50 54.00 20.00 1080.00 transportation 50 2.00 24.44 48.89 Total 108.00 23.72 2561.81 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (30): Human labor profile per feddan of berseem in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 2.00 30.01 60.03 planting 50 2.00 26.14 52.29 weeding 50 0.00 0.00 0.00 irrigation 50 18.00 20.14 362.59 fertilization 50 2.00 25.22 50.44 harvesting 50 28.00 25.66 718.52 transportation 50 4.00 25.79 103.15 Total 56.00 24.05 1347.01 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (31): Human labor profile per feddan of melon seeds in El Hosonia district Value Number of man- Wage Rate per Farming Operations Count day/feddan (LE/man-day) feddan Land preparation 50 9.00 32.89 296.01 Planting 50 4.00 30.42 121.67 Weeding 50 4.00 30.81 123.26 Irrigation 50 8.00 27.12 216.97 Fertilization 50 3.00 31.02 93.06 Harvesting 50 13.00 30.14 391.84 Transportation 50 2.00 2.28 4.55 Total 43.00 29.01 1247.36 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (32): Human labor profile per feddan of broad bean in El Hosonia district Value Farming Number of man- wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 8.00 0.67 5.33 planting 50 6.00 30.00 180.00 weeding 50 3.00 30.00 90.00 irrigation 50 12.00 30.00 360.00 fertilization 50 2.00 30.00 60.00 harvesting 50 15.00 40.00 600.00 transportation 50 2.00 100.00 200.00 Total 48.00 31.15 1495.33 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (33): Human labor profile per feddan of sesame in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 4.00 40.00 160.00 planting 50 3.00 40.00 120.00 weeding 50 5.00 40.00 200.00 irrigation 50 12.00 40.00 480.00 fertilization 50 2.00 40.00 80.00 harvesting 50 9.00 40.00 360.00 transportation 50 2.00 40.00 80.00 Total 37.00 40.00 1480.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (34): Human labor profile per feddan of sugar beet in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 9.00 40.00 360.00 planting 50 4.00 40.00 160.00 weeding 50 7.00 30.00 210.00 irrigation 50 8.00 30.00 240.00 fertilization 50 3.00 30.00 90.00 harvesting 50 22.00 30.00 660.00 transportation 50 2.00 40.00 80.00 Total 55.00 32.73 1800.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (35): Human labor profile per feddan of squash in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 7.00 30.00 210.00 planting 50 3.00 31.17 93.50 weeding 50 3.00 30.09 90.28 irrigation 50 11.00 30.00 330.00 fertilization 50 2.00 30.00 60.00 harvesting 50 30.00 30.00 900.00 transportation 50 2.00 30.00 60.00 Total 58.00 30.07 1743.78 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (36): Human labor profile per feddan of cabbage in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 12.00 30.00 360.00 planting 50 2.00 20.00 40.00 weeding 50 5.00 30.00 150.00 irrigation 50 11.00 20.00 220.00 fertilization 50 2.00 30.00 60.00 harvesting 50 19.00 30.00 570.00 transportation 50 3.00 30.00 90.00 Total 54.00 27.59 1490.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (37): Human labor profile per feddan of tomato in El Hosonia district Farming Number of man- Wage Rate Value per Operations Count day/feddan (LE/man-day) feddan Land preparation 50 13.00 30.00 390.00 planting 50 5.00 30.00 150.00 weeding 50 12.00 30.00 360.00 irrigation 50 14.00 30.00 420.00 fertilization 50 3.00 30.00 90.00 harvesting 50 45.00 25.15 1131.79 transportation 3.00 25.00 75.00 Total 95.00 27.55 2616.79 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (38): Human labor profile per feddan of pepper in El Hosonia district Value Farming Number of man- Wage Rate per Operations Count day/feddan (LE/man-day) feddan land preparation 50 8.00 29.04 232.35 planting 50 4.00 26.82 107.27 weeding 50 3.00 25.00 75.00 irrigation 50 15.00 20.11 301.67 fertilization 50 3.00 26.44 79.33 harvesting 50 45.00 28.15 1266.53 transportation 50 3.00 27.87 590.00 Total 81.00 32.74 2652.16 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (39): Human labor profile per feddan of cantaloupe in El Hosonia district Value Farming Number of man- Wage rate per Operations Count day/feddan (LE/man-day) feddan land preparation 50 8.00 27.96 223.69 planting 50 4.00 23.58 94.33 weeding 50 6.00 26.97 161.80 irrigation 50 11.00 22.32 245.51 fertilization 50 2.00 20.00 40.00 harvesting 50 35.00 15.84 554.42 transportation 50 3.00 16.61 1319.76 Total 69.00 38.25 2639.51 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (40): Human labor profile per feddan of rice in El Mansoura district Number of man- Wage Rate Value per Farming Operations Count day/feddan (LE/man-day) feddan land preparation 50 12.00 40.00 480.00 planting 50 4.00 38.00 152.00 weeding 50 8.00 25.00 200.00 irrigation 50 20.00 25.85 517.07 fertilization 50 3.00 22.71 68.13 harvesting 50 19.00 40.00 760.00 transportation 50 2.00 26.71 53.42 Total 68.00 32.80 2230.62 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (41): Human labor profile per feddan of maize in El Mansoura district Number of man- Wage Rate Value per Farming Operations Count day/feddan (LE/man-day) feddan land preparation 50 10.00 40.00 400.00 planting 50 4.00 38.00 152.00 weeding 50 6.00 30.00 180.00 irrigation 50 13.00 25.85 336.09 fertilization 50 3.00 30.00 90.00 harvesting 50 13.00 40.00 520.00 transportation 50 3.00 45.00 135.00 Total 52.00 34.87 1813.09 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (42): Human labor profile per feddan of wheat in El Mansoura district Number of man- Wage Rate Value per Farming Operations Count day/feddan (LE/man-day) feddan land preparation 50 6.00 40.00 240.00 planting 50 4.00 38.00 152.00 weeding 50 3.00 25.00 75.00 irrigation 50 5.00 25.85 129.27 fertilization 50 3.00 22.71 68.13 harvesting 50 30.00 40.00 1200.00 transportation 50 3.00 26.71 80.13 Total 54.00 36.01 1944.53 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (43): Human labor profile per feddan of berseem in El Mansoura district Value Number of man- Wage Rate per Farming Operations Count day/feddan (LE/man-day) feddan land preparation 50 5.00 30.00 150.00 planting 50 2.00 30.00 60.00 weeding 50 0.00 0.00 irrigation 50 16.00 25.85 413.65 fertilization 50 2.00 30.00 60.00 harvesting 50 30.00 30.00 900.00 transportation 50 6.00 26.71 160.26 Total 61.00 28.59 1743.91 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (44): Human labor profile per feddan of rice in El Mataria district Number of man- Wage Rate Value per Farming Operations Count day/feddan (LE/man-day) feddan Land preparation 50 12.00 35.00 420.00 planting 50 4.00 35.00 140.00 weeding 50 8.00 25.00 200.00 irrigation 50 16.00 25.00 400.00 fertilization 50 3.00 25.00 75.00 harvesting 50 29.00 35.00 1015.00 transportation 50 3.00 35.00 105.00 Total 75.00 31.40 2355.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (45): Human labor profile per feddan of maize in El Mataria district Number of man- Wage rate Value per Farming Operations Count day/feddan (LE/man-day) feddan Land preparation 50 12.00 35.00 420.00 planting 50 3.00 35.00 105.00 weeding 50 10.00 25.00 250.00 irrigation 50 9.00 25.00 225.00 fertilization 50 3.00 25.00 75.00 harvesting 50 21.48 35.00 751.80 transportation 50 3.00 35.00 105.00 Total 61.48 31.42 1931.80 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (46): Human labor profile per feddan of wheat in El Mataria district Number of man- Wage Rate Value per Farming Operations Count day/feddan (LE/man-day) feddan Land preparation 50 10.00 35.00 350.00 planting 50 4.00 35.00 140.00 weeding 50 0.00 25.00 0.00 irrigation 50 8.00 25.00 200.00 fertilization 50 3.00 25.00 75.00 harvesting 50 35.00 35.00 1225.00 transportation 50 3.00 35.00 105.00 Total 63.00 33.25 2095.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (47): Human labor profile per feddan of berseem in El Mataria district Value Number of man- Wage Rrate per Farming Operations Count day/feddan (LE/man-day) feddan Land preparation 50 5.00 35.00 175.00 planting 50 2.00 35.00 70.00 weeding 50 0.00 25.00 0.00 irrigation 50 12.00 25.00 300.00 fertilization 50 2.00 25.00 50.00 harvesting 50 25.00 35.00 875.00 transportation 50 9.00 35.00 315.00 Total 55.00 32.45 1785.00 Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (48): Quantities and value of inputs used for rice in Zagazig district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 159.0 2.8 437.3 25% Nitrogen 50 350.0 1.5 525.0 30% Phosphorus 50 200.0 1.6 320.0 18% Potash 50 250.0 1.2 300.0 17% Leaf fertilizers 50 0.0 0.0 0.0 0% Chemicals 50 2.5 61.0 155.0 9% Total 50 1737.3 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (49): Quantities and value of inputs used for rice in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 72.0 2.2 156.6 8% Nitrogen 50 250.0 1.5 375.0 20% Phosphorus 50 175.0 1.0 170.2 9% Potash 50 175.0 1.9 325.0 17% Leaf fertilizers 50 7.4 62.3 461.1 25% Chemicals 50 6.1 61.0 369.9 20% Total 1857.8 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (50): Quantities and value of inputs used for rice in El Mansoura district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 60.00 2.84 170.4 10% Nitrogen 50 420.00 1.50 630.0 36% Phosphorus 50 230.00 1.00 230.0 13% Potash 50 120.00 1.36 162.8 9% Leaf fertilizers 50 8.91 25.72 229.1 13% Chemicals 50 18.70 17.94 335.5 19% Total 1757.9 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (51): Quantities and value of inputs used for rice in El Mataria district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 66 2.6 171.6 10% Nitrogen 50 375 1.5 562.5 32% Phosphorus 50 280 1.2 336.0 19% Potash 50 100 2 200.0 11% Leaf fertilizers 50 0 0.0 0% Chemicals 50 11 45 495.0 28% Total 1765.1 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (52): Quantities and value of inputs used for maize in Zagazig district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 165.0 2.8 462.0 25% Nitrogen 50 430.0 1.4 602.0 32% Phosphorus 50 177.0 1.2 212.4 11% Potash 50 155.0 2.6 403.0 22% Leaf fertilizers 50 0.0 0% Chemicals 50 1.7 108.2 181.7 10% Total 1861.1 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (53): Quantities and value of inputs used for maize in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 65.0 12.0 780.0 42% Nitrogen 50 440.0 1.5 660.5 35% Phosphorus 50 250.0 1.0 240.9 13% Potash 50 0.0 0% Leaf fertilizers 50 0.0 0.0 0.0 0% Chemicals 50 3.5 57.0 198.0 11% Total 1879.4 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (54): Quantities and value of inputs used for maize in El Mansoura district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 48.2 18.0 866.7 44% Nitrogen 50 340.0 1.5 510.0 26% Phosphorus 50 280.0 1.0 280.0 14% Potash 50 0.0 30.0 0.0 0% Leaf fertilizers 50 0.0 30.0 0.0 0% Chemicals 50 4.1 81.0 332.8 17% Total 1989.5 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (55): Quantities and value of inputs used for maize in El Mataria district, 2009 - 2010 Quantity Price Value % Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) Seeds 50 46 11 523 29% Nitrogen 50 430 2 645 36% Phosphorus 50 225 1 270 15% Potash 50 0 0 0% Leaf fertilizers 50 0 0 0% Chemicals 50 3 107 355 20% Total 1793 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (56): Quantities and value of inputs used for wheat in Zagazig district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 170.4 3.1 525.9 29% Nitrogen 50 536.6 1.3 713.6 39% Phosphorus 50 211.2 1.0 211.2 12% Potash 50 0.0 0.0 0.0 0% Leaf fertilizers 50 2.5 87.0 217.5 12% Chemicals 50 1.4 103.8 149.3 8% Total 1817.5 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (57): Quantities and value of inputs used for wheat in El Hosonia district, 2009 - 2010 Quantity Price Value % Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) Seeds 50 175.0 3.3 577.5 36% Nitrogen 50 330.0 1.5 500.7 31% Phosphorus 50 250.0 1.0 246.5 15% Potash 50 0.0 0.0 0.0 0% Leaf fertilizers 50 0.0 0.0 0.0 0% Chemicals 50 2.8 106.9 301.8 19% Total 1626.5 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (58): Quantities and value of inputs used for wheat in El Mansoura district, 2009 - 2010 Quantity Price Value % Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) Seeds 50 180 3 540 36% Nitrogen 50 350 2 559 38% Phosphorus 50 230 1 225 15% Potash 50 50 3 140 9% Leaf fertilizers 50 0 0 0 0% Chemicals 50 4 4 17 1% Total 1481 100%

Table (59): Quantities and value of inputs used for wheat in El Mataria district, 2009 - 2010 Quantity Price Value % Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) Seeds 50 190 3.2 608.0 42% Nitrogen 50 380 1.5 570.0 40% Phosphorus 50 230 1.1 253.0 18% Potash 50 0 0.0 0% Leaf fertilizers 50 0 0.0 0% Chemicals 50 0 0.0 0% Total 0.0 1431.0 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (60): Quantities and value of inputs used for cotton in Zagazig district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 79 3 260 10% Nitrogen 50 383 2 575 21% Phosphorus 50 250 1 250 9% Potash 50 152 3 426 16% Leaf fertilizers 50 0 0 0 0% Chemicals 50 10 120 1200 44% Total 2711 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (61): Quantities and value of inputs used for cotton in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 306 3 875 32% Nitrogen 50 412 2 618 22% Phosphorus 50 212 1 210 8% Potash 50 0 0 0% Leaf fertilizers 50 0 0 0% Chemicals 50 11 95 1050 38% Total 2753 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (62): Quantities and value of inputs used for berseem in Zagazig district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 154 3 470 38% Nitrogen 50 100 2 150 12% Phosphorus 50 250 1 250 20% Potash 50 0 0 0% Leaf fertilizers 50 0 0 0% Chemicals 50 3 120 360 29% Total 1230 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (63): Quantities and value of inputs used for berseem in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 40.0 3.5 140.0 11% Nitrogen 50 210.0 1.6 345.3 28% Phosphorus 50 300.0 1.0 293.6 24% Potash 50 0.0 0.0 0% Leaf fertilizers 50 0.0 0.0 0.0 0% Chemicals 50 5.0 90.0 450.0 37% Total 1228.9 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010 Table (64): Quantities and value of inputs used for berseem in El Mansoura district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 60 3.5 210.0 14% Nitrogen 50 220 1.6 352.0 24% Phosphorus 50 360 1.1 396.0 27% Potash 50 0.0 0% Leaf fertilizers 50 0.0 0% Chemicals 50 6 85 510.0 35% Total 1468.0 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (65): Quantities and value of inputs used for berseem in El Mataria district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 171.1 4.8 821.3 55% Nitrogen 50 450 1.5 675.0 45% Phosphorus 50 0 0.0 0% Potash 50 0 0.0 0% Leaf fertilizers 50 0 0.0 0% Chemicals 50 0 0.0 0% Total 0.0 1496.3 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (66): Quantities and value of inputs used for melon seeds in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 12.0 15.0 180.0 14% Nitrogen 50 300.0 1.5 450.0 36% Phosphorus 50 200.0 1.0 200.0 16% Potash 50 100.0 2.2 220.0 18% Leaf fertilizers 50 0.0 0% Chemicals 50 4.0 50.0 200.0 16% Total 1250.0 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (67): Quantities and value of inputs used for broad bean in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 70.0 3.9 270.0 37% Nitrogen 50 100.0 1.5 150.0 21% Phosphorus 50 200.0 0.8 160.0 22% Potash 50 0.0 0.0 0.0 0% Leaf fertilizers 50 0.0 0.0 0.0 0% Chemicals 50 3.0 48.0 144.0 20% Total 724.0 100% Table (68): Quantities and value of inputs used for sugar beet in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 2 60 120.0 13% Nitrogen 50 300 1.5 450.0 48% Phosphorus 50 200 0.9 180.0 19% Potash 50 0 0.0 0% Leaf fertilizers 50 0 0.0 0% Chemicals 50 4 45 180.0 19% Total 930.0 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010

Table (69): Quantities and value of inputs used for squash in El Hosonia district, 2009 - 2010 Quantity Price Value Inputs Count (kg/fed.) (LE/kg) (LE/Fed.) % Seeds 50 8 18 144.0 18% Nitrogen 50 200 1.5 300.0 37% Phosphorus 50 150 1.1 165.0 20% Potash 50 0 0.0 0% Leaf fertilizers 50 0 0.0 0% Chemicals 50 5 40 200.0 25% Total 809.0 100% Source: compiled and computed from the field questionnaire sheet, 2009 - 2010