In Egypt, SAP eliminated the compulsory quotas delivery of major field crops. Such policy was replaced by an optional delivery system for all crops, except sugar cane. The sugar cane should be delivered to domestic refineries at a price determined by GOVEG. Such price is usually above the international price. In addition, the Government has established a grantee price policy for major subsistence crops, wheat and rice, (usually at a level above the international market), with optional delivery of the production to government milling plants and/or agricultural cooperatives.
The objective was to encourage farmers to deliver their wheat for being processed as subsidized common bread and to raise the wheat self-sufficiency as basic strategic crop. This policy has lead to decrease the Berseem area from one third to less than one-fifth of agricultural area in Egypt for wheat and sugar beet area.
Financial assistance to the sector is provided in the form of subsidized price of water, the latter being provided almost free of charge to farmers. The price subsidy policy was kept valid for diesel fuel used for agricultural machinery operations, cottonseeds, and cotton protection operation. The national program to increase productivity of sugar cane was applied free of charge and funded entirely by a governmental institution called the national sugar cane Council.
The bulk of food subsidy is bread subsidy. It acquires 73% of total supply commodity subsidy. The difference between the imported wheat price and the subsidized price, delivered to the mill plants, is the value of subsidy per ton. However, the subsidy value per ton of domestic wheat delivered for backing the “Baladi Bread” is higher than the comparable imported quantity. This additional subsidy stems from the policy of paying a grantee price to the farmers, which is often, higher than the international market price. The difference is considered as an incentive to the farmers, not only for delivering their production to produce the subsidized flower, but also to gear them to cultivate more wheat area. The ultimate goal is raising the self-sufficiency rate of wheat.
Recently, a new policy has been implemented to lower the entire reliance upon wheat flower in making the subsidized bread. Such policy mix maize flower with wheat flower at a ratio (1:4). The price of maize delivered to such process is also subsidized.
It should be stressed that petroleum products represent the highest share in total direct and indirect subsidies in Egypt. It reaches around 46%, while food commodities supply price subsidy, devoted to consumers is around 19%. The subsidies left to the farmers, after liberalization of the market is less than 1% of the total subsidies in Egyptian economy. The farmer subsidy almost covers the expenditure of cotton protection operations on farm and sugar cane development program. Solar price is the main petroleum product-enjoying subsidy. Its subsidy volume reaches more than 52% of all petroleum products subsidy. Raising its price affects much the performance of the economy, as it is the source of energy for operating the transportation means, either for commodities or passengers, generating electricity, operations of many industries and for agricultural machinery. Butane share in subsidies is 23% and it is the main energy source for cooking and heating in houses. Restaurants also use Butane for preparing eating out meals, in addition to poultry farms heating. Therefore, the impacts of phasing out solar and butane subsidy are wide spread in the Egyptian economy.
The Jordan Valley Authority is under the institutions of the Ministry of Water and Irrigation. While, the ministry, in general, oversees the supply of water to Jordanian citizens, municipalities, industry, and agriculture, the Jordan Valley Authority provides water to agriculture and oversees development within the Valley to ensure that water demand does not exceed availability. The water has been supplied to horticultural producers at below cost until recently Producers in other areas of the country do not have access to subsidized water, relying instead on tube wells or rainfall The Agricultural Credit Corporation makes soft loans available to farmers and investors in
agribusiness. The loans fall into one of two classes—either operational or developmental.
Operational loans are from 12-24 months in duration while development loans may be made for up to 15 years, although the bulk of long term loans are for 8 years, (Johansson, Dahl and August, 2009)
Prior to the fall of 1997, the ministry of supply announced a minimum and maximum purchase price for durum wheat before or during the planting season. Announced prices would have had little effect on subsistence farmers’ planting decisions—instead rainfall expectations are the most important factor. However, large-scale commercial operations in the south would base their planting decisions on those prices. After harvest, most farmers with surplus wheat transported the grain to ministry of supply collection centres located throughout the country. At the ministry of supply centres, the grain is tested for quality, priced between the minimum and maximum based on its quality, and the farmer is issued a check. A very small proportion of farmers sold wheat to traders at the farm gate who then in turn took it to the ministry of supply collection centers. The subsidy to wheat producers under the announced purchase program has varied from JD0.05 million to JD2.5 million since 1990. The value of the subsidy varies because domestic prices are measured against fluctuating world prices for wheat. For example, in 1996, when world commodity prices were quite high, wheat producers were actually taxed but then in 1997, a subsidy was given to producers. No procurement price was announced during the 1998 planting season for non-seed durum wheat. However, as the main harvesting season began, the government did announce that it would purchase wheat from producers at a base price, which could below that of previous years but it would reflect the international wheat prices.
The government of Jordan, has almost phased out the wheat price subsidy The only remaining specific subsidy to wheat producers is the sale of certified seed. The Ministry of Supply (MOS) purchases seed at announced prices from registered seed producers. The seeds are then sold by the Jordan Cooperatives Corporation to farmers in the next planting season. The seed discount had been about 10-15 percent of the average cost of seeds purchased by MOS. Nevertheless, currently, the Jordan Cooperatives Corporation spends significant costs for cleaning, fumigating, and other handling costs associated with preparing the seeds for sale to farmers. These costs generally are not recovered by JCC when selling to farmers.
In Lebanon, a 1959 law supports government subsidization of wheat, barley, corn and sugar beet production. In recent years, only the wheat and sugar subsidy have continued, in addition to a subsidy for tobacco farmers. Periodically, bakeries have been given subsidized fuel) to encourage them to continue supplying bread: this occurred once in 1981 and again in 1991. Financial assistance to agriculture in Lebanon takes many shapes and forms. The Government provides assistance to the sector in the form of input, or output subsidies and export subsidies as well as through credit. These are:
1) For Input subsidies: The Ministry of Agriculture subsidizes inputs to farmers (pesticides, seeds, seedlings etc) on an annual basis. Thus, pesticides are periodically subsidized for strategic crops including olives and wheat and in reaction to pest outbreaks. In addition, certified seeds produced by the Lebanese Agricultural Research Institute are sold to farmers at subsidized prices. Also, numerous irrigation projects are financed by the government and international donors (water is now used at prices that are significantly below its marginal cost of production). On the other side, the Ministry of Agriculture subsidizes inputs to livestock breeders in the form of reduced cost of vaccinations and veterinary drugs.
2) For the output subsidy: Five main agricultural product are subsidized by the government, namely: (wheat , sugar beet, apple, olive oil, and tobacco).
Wheat and sugar beets are bought from producers at a higher than global market prices by the Directorate General of Cereals and Sugar Beets (DGCSB) at the Ministry of Economy and Trade, and then the wheat is resold to millers at the global price or slightly less. the state ensures that all wheat produce is purchased from local farmers at a subsidized rate.
Apples have started only recently enjoying the benefits of price support due to their small volume.
Olive oil: The Higher Commission for Relief, supports the marketing of their produce through buying the oil from farmers and cooperatives at guaranteed floor prices.
Tobacco subsidy program is run by the Régie des Tabacs at the Ministry of Finance.
3) For the credit subsidy: the Lebanese Government is using elaborate schemes of financial assistance as well as credit-assistance schemes relevant to the agricultural sector, which are of great importance in further organizing the sector. Subsidized interest loans are introduced from banks to the farmers. Those are mainly short term loans. Less than 1.5% of commercial banks‟ loans are allocated to the private sector of agricultural activities and those who receive them are mainly owners of large farms and agro-food industrial facilities.
There are other types of agricultural subsidies including:
Tax exemption: most of the agro - food activities is exempted from taxes. In addition, There are tax exemptions on agricultural buildings and land, and 10-year tax exemptions on agricultural industries.
Free agricultural services (research, extension, training, infrastructure, …etc)
Subsidized food purchases: Agricultural products are periodically bought for the army at heavily subsidized prices.
An Export Plus Program was started in August 2001, aims at supporting the Lebanese agricultural exports. The main financial tenet of the Export Plus program bind to certain standards functions just like a subsidy, since it acts as a reduction on the cost of transport of the agro - food produce to the importer.
However, there is recent moves to cut subsidies that are driven partly by chronic budget deficits and public debt. In recent years, only the wheat and sugar subsidy have continued, in addition to a subsidy for tobacco farmers. Periodically, bakeries have been given subsidized fuel) to encourage them to continue supplying bread: this occurred once in 1981 and again in 1991.
In Tunisia, the preservation of income purchasing power of both consumers and producers will in all likelihood be at the centre of future economic policies. A trade-off however will be searched by public decision makers between the need to promote economic growth, which implies the reduction in inefficiencies that may result from increasing bureaucratic running of the economy, and the necessity to promote social stability through reductions in inequities.
As a specific possible measure to sustain incomes for low income segments of the population (in agriculture and outside) there will be the activation of the minimum wage laws either by increasing their levels significantly or via enhancing their scope. Other policy measures that are likely to be designed and implemented will aim at identifying specific incentives to encourage inland, as opposed to coastal, investment.
In Turkey, minimum purchase prices exist for cereals, sugar, tobacco and tea. These prices, which are set by the relevant SEE, take into account world prices, the cost of production and domestic market conditions. However, as these prices are generally not announced until well after the __ _______ ___ __
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farmers’ production plans can be frustrated. Deficiency payments (so called “premium payments”) are provided for the products that are in short domestic supply. The payments are made in the form of a lump sum for every production period. Production costs, domestic and world prices, as well as budgetary considerations, are taken into account in determining the amount of support.
Producers of oilseeds, olive oil, cotton and cereals and tea since 2005, and pulses (in 2009) benefit from such payments. As from 2005, there has been a growing interest in producing energy crops in Turkey. In 2010, a “basin-based support programme” was introduced, under which crop deficiency payments are differentiated according to 30 agricultural basins throughout the country. The law requires the Cabinet to determine “the agricultural basins where agricultural production is to be concentrated, supported, organised and specialised according to the regions’ ecological conditions”. The boundaries of these 30 agricultural basins were established in 2009, based on a sophisticated model developed by MARA. According to estimates made by MARA, under the new support system total crop production is expected to increase by 7.1 million tonnes more than under the current system, which provides support to 16 crops no matter where they are produced. In particular, the new support system is expected to increase production of wheat and oilseeds, despite the fact that area planted for wheat is estimated to decrease. Area payments for hazelnuts: The previous policy was ineffective in controlling excess hazelnut production in areas that were not best-suited to this activity, in terms of environment and quality of production. As a result, an area-based payment to reduce production was announced for 2009-12, replacing previous public intervention measures. The new support system shifts all support to per-hectare payments. Licensed producers will receive about USD 1 000 per hectare for three years (150 TRY/da/year), with compensation of the un-licensed producers being slightly more in the first year of participation. The hazelnut-growing regions are defined at the district level. The government’s target is to achieve a fully licensed, high-quality hazelnut production area of 432 000 ha, and to uproot 237 000 ha of un-licensed plantings. Compensatory payments: Tea growers are partially (70%) compensated for the costs incurred in implementing the strict pruning requirements to control, supply and increase quality. Compensatory payments are also granted to potatoes and livestock producers to compensate for income losses. A new, three-year transitional payment programme aimed at helping farmers switch from tobacco to other commodities was approved in 2009. Livestock support: Budgetary support is also given to the livestock sector (“animal improvement support”): fodder crops; apiculture; animal health; registration of animals; and protection of animal gene sources. There is also support for dairy premiums and milking units.
These support programmes are production-based (per head, litre or kg) or project-based, for fodder crop support. Animal husbandry supports, which were implemented for five year period since 2000, have been implemented annually as of 2008. The share of these two programmes in total budgetary payments has increased from 7% in 2004 to 22% in 2009.