x Abu Dhabi, UAETuesday 25 July 2017

'Crony capitalism' undermines Egyptian food security

Decades of 'crony capitalism' have seriously undermined agricultural activity in Egypt, causing a major food security crisis.

Abdelazim Mohammed Kamel, who once farmed wheat on his own land, is pictured in front of the shack he shares with his family at the villa he guards in Cairo. Photos by Rebecca Collard for The National
Abdelazim Mohammed Kamel, who once farmed wheat on his own land, is pictured in front of the shack he shares with his family at the villa he guards in Cairo. Photos by Rebecca Collard for The National

When Yussef Wali, the former Egyptian agriculture minister, was arrested in his west Cairo villa last year, he joined a collection of ex-officials who have been detained since Hosni Mubarak's departure.

Wali was convicted earlier this year and sentenced to 10 years in prison for a deal that saw thousands of hectares of public land near Luxor transfer into the hands of Hussein Salem, a businessman close to Mubarak. Under the terms of the deal, the land - valued at over 208 million Egyptian pounds (Dh126m) - was sold to Salem for just 8 million Egyptian pounds (Dh4.86m).

Under Mubarak's regime, corruption of this kind favoured the business class and contributed to widening Egypt's economic disparity, pushing the number of Egyptians who live on less than 12 Egyptian pounds (Dh7) per day to more than 40 per cent of the total population.

In agriculture, the effect was particularly dire and turned Egypt's self-sustaining food industry into one where the nation became the world's largest importer of wheat.

Fifty years ago Egyptian farmers produced enough wheat for the entire population on the 3.5 per cent of land that was naturally fertile. As the population grew, the government looked to reclaim swaths of arid land to increase the country's cultivated territory. Water and resources, which had sustained generations of farmers, were diverted away from the fertile soil of Egypt's Nile Valley to the desert.

"You lose land in the [Nile] valley and you gain sand. It takes a lot of time to make that fertile, where in the valley you have good land," says Richard Tutwiler, director of the Desert Development Center at the American University in Cairo.

Egypt eventually increased its cultivated land by a quarter, and, in turn, the amount of food it produced.

However, steered by the liberalisation schemes of the US Agency for International Development and the International Monetary Fund in the 1990s, Wali pushed to transform Egypt's farming sector from subsistence to cash crop. Instead of seeding the desert with the wheat and affordable produce required to feed Egyptians, most of this reclaimed land was given to connected businessmen who cultivated high-profit strawberries, guavas and mangos bound for European supermarkets.

In theory, the money earned from these cash crops would be used to buy cheaper goods (like wheat) on the international market, while at the same time being invested in projects to create jobs for Egypt's unemployed.

Instead, investors built heavily mechanised mega-farms, providing few jobs and little food for the domestic market. At the same time, many allege that large international loans were used to fill coffers, rather than implement development projects.

The policies achieved economic growth, says Magda Kandil, executive director of the Egyptian Center for Economic Studies, but lack of regulation allowed corruption to prevail and the fruits of this growth fell into the hands of a few.

"The economy at large was growing but it was not trickling down," says Kandil. It was because of this endemic "crony capitalism", he says, that these policies had such destructive effects.

While supporting these investors, says Adel William, founder of Sons of the Soil (an organisation of farmers who joined the anti-government protests last year), the previous government decimated farming communities by banning agricultural labour unions, reducing subsidies for agricultural products, and pushing farmers into accepting high-interest loans.

On average OECD countries provided their agricultural sectors with subsidies amounting to approximately 30 per cent of annual farm receipts, in Egypt that figure is closer to two per cent and millions of Egyptians gave up on the land in these difficult conditions.

"We cannot even fight for our rights because we are not allowed to organise," says William.

Abdelazim Mohammed Kamel is one of an estimated five million Egyptians to have forsaken his farm for the streets of Cairo. He sold his 10 acres in El-Sharkeya, 70 kilometres north-west of Cairo, more than a decade ago and now works as a bowab (doorkeeper) for an apartment block in one of the capital's middle-class neighbourhoods.

"A farmer's life is not easy, so I moved to Cairo to get a better job," says Kamel, standing in the courtyard of the building he watches. The two-room makeshift home he shares with his family sits within the building's walls.

The 300 Egyptian pounds (Dh182)he earns every month is too little to feed his family of five, but Kamel says his 16-year-old son works to make up the difference.

"He makes more per month than I do," says Kamel.

Other farmers stayed on their land but abandoned wheat production.

"[The government] started encouraging farmers to grow anything but wheat in the late 1980s," says Mohammed Tawfik, a researcher at Egypt's Agricultural Research Center.

Egypt's massive population consumes 15 million tonnes of wheat each year and has a per capita wheat consumption almost double that of Italy. More than half of this is imported and around 80 per cent of the population depends on subsidised bread, costing the government more than $2.5 billion per year.

To mitigate the cost, the government capped the domestic wheat price below the international market value. The artificially low price at which the government purchased the grain from Egyptian farmers encouraged many to stop planting this staple crop as they could not make a profit. The amount of land dedicated to growing wheat shrunk, while demand increased.

But, when the international price of wheat doubled between 2006 and 2008 and the cost of grain jumped, the Egyptian government didn't increase subsidies to cover the difference.

Rising food prices were a key grievance when protesters took to the streets of Egypt in January 2010 - at least five Egyptians died in bread line clashes, drawing attention to the flaw in the food production system - but since the uprising started, food prices have increased, putting basic staples out of reach for even more Egyptians. Like many farmers who migrated to cities, Kamel's wages are too low to buy the crops he once grew and he now depends on subsidised bread.

"It doesn't matter if we cultivate another 100,000 acres if the crops are still too expensive for [Egyptians]," says Tawfik. "Egypt is now only self-sufficient in citrus fruit."

Tawfik says this puts Egypt at the whim of foreign states. Egypt imports around 10 million tonnes of wheat per year, most of it from the US and Russia, along with a number of other foodstuffs: "You can't have an independent political decision if you can't guarantee the next morning you have food on the table," says Tawfik. "So whoever sells you the food will have the upper hand."

Rebecca Collard is a Canadian journalist and photographer