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Fatma Aglan (World Bank)• 2018 IFPRI Egypt Seminar: “Advancing the Food System for Growth, Job Creation and Better Nutrition in Egypt”


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as part of the IFPRI-Egypt Seminar Series- funded by the United States Agency for International Development (USAID) project called “Evaluating Impact and Building Capacity” (EIBC) that is implemented by IFPRI.

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Fatma Aglan (World Bank)• 2018 IFPRI Egypt Seminar: “Advancing the Food System for Growth, Job Creation and Better Nutrition in Egypt”

  2. 2. TABLE OF CONTENTS 1. Sectoral Context: Presenting challenges and opportunities. 2. Vision 2030: Highlighting the evolution of the food system and the importance of digital transformation 3. A Proposal: Egypt as a Highly Efficient Agricultural Producer and Supplier 4. The Means: Leveraging private investment to increase agricultural market’s competitiveness and efficiency
  3. 3. SECTORAL CONTEXT Agriculture and agribusiness combined contribute to about 35 percent of GDP, and provide jobs to a quarter (25.6%) of the population Tremendous market potential (i) untapped export potential is around US$16 billion, this is three times the current export levels. (ii) domestic food market could reach US$90 billion by 2030 The governorate level share of poverty is positively correlated with the share of employment in primary agriculture. For example, Upper Egypt has more than 30% employed in agricultural production Although only 10% of agricultural products are currently processed, they account for approximately 50% of exports. This indicates significant opportunities to increase processing and move towards higher-value processed foods. Egypt has a negative agricultural trade balance, estimated at US$ 11 billion in 2014. About 40 percent of total (ag and non-ag) export revenue is spent on ag imports The share of public investment in the sector has decreased from about six percent in 2004 to less than four percent in 2014
  4. 4. KEY CHALLENGES Inefficiencies Along Key Agricultural Value Chains • The losses along key value chains range between 10 percent and 50 percent, averaging around 30 percent. About half of the losses result from poor, or lack of, access to logistics and marketing infrastructure. • Poor skills and poor access to new technologies affect sector development. There is a need to upgrade the formal education, as well as skilling in the sector, as the current level and sophistication of skills do not meet requirements of modern agriculture and agribusiness sectors. • Lack of extension services, prevent farmers from receiving advice on good practices and suitable technologies, which would help Jobs and Incomes • Most of the jobs in agriculture are seasonal, irregular and informal • Jobs shrinking in agriculture as they shift to manufacturing and services as a result of structural changes. •A high share of jobs in the agriculture sector require little or no technical or business skills discouraging education/skill upgrading and resulting in low pay. Water Scarcity • Low water use efficiency, exacerbated by population growth and climate change effects, intensifying the water scarcity issue. • • 2. Over 86 percent of Egypts’ water is used for agriculture. Irrigation on the “old lands” is mostly inefficient flood irrigation, with water use efficiency of around 30 percent. • 3. Agriculture in the desert, drawing non-renewable water resources (e.g. the Nubian Sandstone Aquifer), carries additional market risks related to natural resource sustainability, additionally consumers in the developed countries increasingly demand more sustainable products. Sector Fragmentation • 80% of farming units in the country are under three Feddans (predominantly along the Nile River valley). Such high fragmentation of land deters competitiveness and does not allow for use of machinery in land cultivation (which would increase production efficiency), and it also limits access to markets for the smallholder farmers due the small volumes produced by the highly fragmented farming units. • Farmer cooperation is underdeveloped as the existing cooperative system does not work well. • Aggregation is difficult due to lack of infrastructure, resulting in fragmented value chains and lesser interest of Egypt’s agricultural products to the global markets.
  5. 5. STRENGTHS AND OPPORTUNITIES Strengths  Relatively high crop yields  Extended & multiple growing seasons  Competitive advantages identified in dairy, horticulture, poultry and fish.  Reforms to investment and licensing processes have improved business environment  Subsidy reform has reduced distortions in the sector (but also increased production costs)  Historic name recognition Opportunities  Geographical location provides easy access to major markets  Membership of multilateral and bilateral free trade agreements and harmonization  Relatively developed port and sea transport infrastructure network  Consistent climate and rich natural endowments  Fast-growing domestic market (estimated at US$90 billion by 2030)  Devaluation of EGP has increased the competitiveness of the sector  Untapped potential (to triple agricultural exports) through increased efficiency
  6. 6. VISION 2030: DOING MORE WITH LESS Wealthier urbanized population and diversified diets Structural Transformation More competitive, efficient and resilient Digital Transformation Shift towards value addition, agro processing and food More jobs moving up the value chain  Increasing Agricultural Market Efficiency: With current population at 97 million, growing at 2.56% annually, Egypt needs to be able to achieve food security and nutrition, and produce high quality and safe food products and decrease its food loss and waste (averaging at 30%).  Job Creation. According to CAPMAS, the agricultural sector is the highest single contributor to employment (20.5%). By enabling inclusive job growth through the diversification towards high-value crops, decreased value chain inefficiencies, and wider access to markets, the agricultural sector can further contribute to Egypt's sustainable growth.  Inclusion of Women and Youth. 75% of the unemployed in Egypt are between 15 and 29 years old. Promoting growth of agricultural and rural SMEs, the digital solutions may encourage youth to remain in commercial in high-tech, sustainable agriculture.
  7. 7. A PROPOSAL: TOWARDS INCREASING COMPETITIVENESS, EFFICIENCY AND SUSTAINABILITY. 0 20 40 60 Seed Fertilizer Machinery Finance Markets Transport Water ICT Egypt All countries Low income Lower mid-inocme Source: EBA, The World Bank One of the tools developed by the World bank is the Enabling the Business of Agriculture (EBA) report. To inform policy through cross-country benchmarking. Egypt as a Highly Efficient Agricultural Producer and Supplier • Apply resource- and climate- smart precision agricultural production and logistics to existing lands to maximize agricultural productivity, improve sustainability of the use of natural resources, and ensure timely response to markets • Develop strong value chain linkages and spatial solutions (agri-industrial hubs) in the sector, reduce losses and waste and improve efficiencies along the value chains, including smallholder value chains • Enable cross-sectoral synergies, such as integrated agriculture-aquaculture systems, could further improve smart utilization of scarce natural resources and open new market opportunities.
  8. 8. ENABLING PRIVATE INVESTMENT AND SUPPORTING SMALLHOLDERS Example: Tunisia Food system Of $5.4 million in GDP generated by $1 million investment in agro-processing, about 1.3 million is taxes, 2.8 in salaries and 1.8 in profits – and this does not include the 26% of induced GDP growth. Source: Madhur Gautam, Lead Economist, The World Bank adapted from Steward Redqueen. (2012) “Modeling the Socio- Economic Impact of Potential IFC Investments in Tunisia.” This shift requires: • Enabling Environment • Investment in physical infrastructure • Upstream and downstream linkages