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'EGYPT's SUGARCANE POLICY and STRATEGY for WATER MANAGEMENT

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'EGYPT's SUGARCANE POLICY and STRATEGY for WATER MANAGEMENT APRP - RDI Unit USAlD CONTRACT No. 263-C-00-97-00005-00 Report No. 33 'EGYPT's SUGARCANE POLICY AND STRATEGY FOR WATER MANAGEMENT by Dr. John Keith (EPIQ) Dr. Sayed Hussein (APRP) Dr. EI Sayed Mahdy (EPIQ) June 1998 Reform Design and Implementation Unit DfNelopment Alternatives Inc. Group: Officefor Studies & Finance. ;Vational Consultmg Firm. Developmem Associates. Cargill Technical Services. The Services Group, Traming Resources Group. Purdue Uni!;ersiry. Universiry ofMaryland ACKNOWLEDGMENTS This Report was prepared jointly by the Sugarcane Working group, APRP Technical Assistance (RDIIAPRP and EPIQ), j\.1PWWR. MALR. The Working Group was formulated by the P MU of AP RP, and funded by USAID. Members of the Working Group were Dr. John E. Keith and Dr. EI-Sayed Jliahdy (EPIQ). Dr. Sayed Hussein (RDIIAPRP), Eng. Mahmoud Nour (Pi\.1IJIAPRP), Eng. Hussein Elwan and Eng. Taiaat Ei-Raqabawi (MPWWR). Dr. Abdei Wahab Ailam and Dr. Saleh Faraag (Sugar Crops Research Institute/ARC of lvfALR), Dr. Azmy Berry and Dr. Ahmed EI-Beheiry (Agricultural Engineering Research insti[we/ARC ofA1ALR), and Dr. Tawakui Younis Rizk (Professor. Ain Shams [1niversiry). Sugarcane growers were interviewed during the field trips to the main cane producing regions (Luxor. Sohag, and Aswan). Informal interviews were held with other members of Agricultural Directorates. Extension officers, and members of Sugar processing mills in Armant and Komombo regions. Special thanks are due to Eng. Gamil Mahmoud (Head of Water Policy Advisory Unit. A1PWWR) for his insightful contribution and Dr. Jeffery W. Fredricks (COPIWater Team) who participated significantly to working group discussion. Dr. •Max Goldensohn (COPIRDI) for his valuable comments, and Dr. Jane Gleason (RDIIAPRP) for her critical review and comments. Thanks are extended also to all technicians and experts of both MPWWR and AfALR who facilirated achieving the tasks of the Working Group and their field visits to sugarcane plantations and sugar processing mills. Special thanks due £0 Dr. Gad EI-Karim and his sraff of KomOmbo sugar mill. EGYPT's SUGARCANE POLICY AND STRATEGY FOR WATER J-fANAGE.WEiVT 2 TABLE OF CONTENTS A.CKNOWLEGEMENTS .................................................................................. 2 RDI ACRONYMS LIST................................................................................... 6 EXECUTIVE SUMMARy............................................................................... 9 1. INTRODUCTION..................................................................................... 11 2. PROBLEM STATEMENT........................................................................ 12 3. OBJECTIVES AND SCOPE OF REPORT. ............................................... 13 4. METHODOLOGY AND APPROACH ................................................ l3 5. BACKGROUND OF SUGARCANE AREAS, YIELDS, AND GOVER.NMENT POLICy...................................................................................... 14 5.1. The area..................................................................................................... 14 5.2. The Productivity................ ................................................................... 16 5.3. The Producrion 0/sugarcane .......................................................... 18 5.4. Why sugarcane in Upper Egypt... .............................................. 19 6. GOVERNNIENT POLICy............................................................................... 20 7. NATIONAL WATERBALANCE .................................................................... 21 8. WATER UTILIZATION AND MA.!'\TAGEMENT IN CAl~-r: PLANT.t\TIONS ............................................................................................... 23 8.1. Water source and irrigation systems in Upper Egypt.................................. 24 8.2. Improved Sur/ace Irrigation system in cane areas................................ 25 8.3. Policy aspects affecting/or water saving in sugar- cane regions .... 29 8.3.1. Physical and Technical aspects.............................................. 29 8.3.2. Financial aspects................................................................... 35 9. NfACRO-ECONOMICS OF SUGAR PRODUCTION IN EGYPT..................... 39 9.1. Local Production o/Sugar.......................................................................... 40 9.2. Consumption and Sugar Imports .......................................................... .42 9.3. Revenues and Costs o/Sugar Produced and Value Added............... 44 9.4. Import Parity Prices o/Imported Sugar .................................... .47 10. RECOMMENDED STRATEGY M'D POLICY OPTIONS FOR OPTIMIZING WATER MAl'\TAGEMENT W CANE PLANTA TIONS IN UPPER EGypT .... 48 EGYPT's S[;'GARCANE POLICY AND STRATEGY FOR WATER J-fANAGEJlENT 3 -:_.~ ___ .. "'7'_.---.--:"11 ___ ~.~_~~-,...,-. __________ ...----.,. -:-...n_. - '-'~. ... - - -. - ,.... ..... 1 10.1. Policy Option (1) ...................................................................................... 48 1 10.2. Policy Option (2) ................................................................................ 48 10.3. Policy Option (3) .......................................................................... 49 11. RECOM1vfENDATIONS .................................................................................. 49 12. REFERENCES ................................................................................................. 51 EGYPT's SUGARCANE POLICY AND STRATEGY FOR WATER ,'vIANAGE.I,fENT 4 LIST OF TABLES Table (1) : The average acreage and productivity of sugarcane in the main producing governorates during the period 1978 - 1996. Table (2) : Sugarcane acreage and yield during the seasons 1995 to 1997. Table (3) : Sugarcane production in the last three seasons. Table (4) : National water balance. Table (5) : Cultivated land ('000 feddans) by main source of irrigation in major sugarcane producing governorates. Table (6) : Cultivated land ('000 feddans) by main irrigation systems in the major sugarcane producing governorates. Table (7) : Water requirements (m3/fed.) for the sugarcane in Upper Egypt, as an average for planting seasons 1993/94 and 1994/95. Table (8) : Consumptive use and field requirements for major crop rotations in Middle and Upper Egypt. Table (9): On-fann water requirements and yields for sugarcane by irrigation systems in major production regions. Table (10): The gross margins (LE/fed.) of the major crops in Upper Egypt. Table (11): Financial Returns (profitability) per (LE/fed.) for major crop rotations. and inter-cropped in Upper Egypt. Table (12): Net Returns (LE/fed.) for sugarcane in main production regions in Middle and Upper Egypt. Table (13): Local production capacity of sugar mills ('000 ton/year) in Egypt. Table (14): Sugar production, imports, self-sufficiency ratio, and per capita consumption in Egypt. Table (15): Expectation of supply and demand of sugar in Egypt. Table (16): Estimates of value added (LE/fed.) from cane plantation and processing in 1996. EGYPT's SUGARCANE POLICY AND STRATEGY FOR WATER .'v!4..'VAGEJfE.VT 5 RDI ACRONYMS LIST ACRONYM IDESCRIPTION AC Agricultural Census AEnRI Agriculture Engineering Research Institute ABD Aswan High Dam AlC Agricultural and Irrigation Committee of the People's Assembly ALCOTEXA Alexandria Cotton Exporters Association APRP Agricultural Policy Refonn Program ARC Agriculture Research Center A Y Agricultural Year Locator (October 1st to September 30 th of the following year) BOD Board of Directors CAGA Central Administration for Governorates Affairs CAPQ Central Administration for Plant Quarantine, :MALR CA WD Central Administration for Water Distribution CBE Central Bank of Egypt CIDA Canadian International Development Agency CIF Cost, Freight and Insurance CMA Capital Market Authority Co. Company COP Chief of Party CSPP Egyptian-Gennan Cotton Sector Promotion Program CTS Cargill Technical Services DA Development Associates, Inc. DAIIB Development Alternatives, Inc.lBethesda ELS Extra Long Staple Cotton ERSAP Economic Reform and Structural Adjustment Program ESAs Employee Shareholder's Association ESOPs Employees Stock Ownership Program . EU European Union FAO Food and Agricultural Organization of the United ~ations FDIs Foreign Direct Investments Fed. Feddan = 4200 square meter FmC Food Industries Holding company FOB Free on Board EGYPT"s SUGARCANE POLlCY AND STRATEGY FOR WATER .'vL·tVAGHfE.\T 6 ACRONYM DESCRIPTION FSR Food Security Research Unit GA General Assembly GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GOE Government of Egypt HC Holding Company IDA International Development Association IFC International Financial Cooperation IPPC International Plant Protection Convention IPO Initial Public Offering IIMI International Irrigation Management Institute 1R Intermediate Results Kg. Kilogram Kt. Kentar Libra Pound of 0.45359 kilogram, also abbreviated as lb. LE Egyptian Pound LK Lint Kentar of cotton, 50 kgs. LS Long Staple cotton MALR Ministry of Agriculture & Land Reclamation MENA Middle East North Africa I\IIEIC Ministry of Economy & International Cooperation MIMW Ministry of Industry & Mineral Wealth MT Metric Ton MoTS Ministry of Trade & Supply MPE Ministry of Public Enterprises MPWWR Ministry of Public Works & Water Resources MLS Medium-Long Staple cotton MVE Monitoring, Verification & Evaluation Unit ~""BE National Bank of Egypt NCF National Consulting Firm NGO Non-Governmental Organization O&M Operation & Maintenance OSAF Office for
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