The period 1965-1986 was the Era of the Egyptian Government interventions in the agricultural sector. The control of crop area and install of the producers’ price and compulsory purchase of the major crops were the policy instruments used. Thereafter, Egypt has practiced a package of economic policies, known as structural adjustment program (SAP). The program has applied earlier on the agricultural sector, since 1986/1987, compared with other sectors in Egyptian economy, when the Ministry of Agriculture and Land Reclamation (MALR) started to eliminate taxes and subsidies in agriculture products and selling the public agricultural companies. Structural adjustment program, started, empirically, 1990/1991, a financial year, aimed to improve the conditions of the supply structure on base of the comparative advantage principles, to correct distortions in economic policies, development of the local resources, and promote institutional transformation to reduce vulnerability to external shocks in the future.
Since 1991/1992, the Government of Egypt (GOVEG) has applied the reform policies on all sectors in the Egyptian Economy. The main structural changes were liberalization of both monetary and financial markets. Therefore, it liberated both interest and exchange rates. Investment structure has shifted to the private sector. Currently, the private sector share in Egyptian investment surpassed 70%. Those policy instruments were associated with privatization mechanisms of public firms. All those amendments have impacts on the resources use, the food supply, and unemployment and not only income growth, but also on its distribution.
The SAP application in the agricultural sector is composed of five instruments. These are:
(1) Remove the farm price control, (2) Eliminating restrictions on crop area,
(3) Cancellation of Government control in purchasing crops, (4) Phasing out the subsidies on agricultural production inputs,
(5) Cancelling the Government deregulation, this prevented the entry of private sector in processing and marketing of agricultural products and agricultural production inputs.
The agricultural policy amendments can be classified under two dimensions. First, the policies geared to supply-side. Second, the policies directed to the demand-side.
The first package of reforms concerning the Policies Geared to agricultural supply was implemented during the period (1987-1994). Headed the State has oriented the application of the policy of economic liberalization to transition from central planning to indicative planning based on incentives. In this context, the ministry of agriculture developed so-called benchmark-cropping pattern, as a main production-policy, which take into account to secure the national needs of strategic crops, achieve market stability, water conservation, and limiting the expansion in water-consuming crops (rice and sugar cane). Such policy made agricultural land use (cropping pattern) and agricultural rotation to be determined by farmers’ decisions, except rice area, which has limited by a border of 1.2 million acres. The farmer who cultivates rice in a region not allowed for such crop pays a heavy fine. Whereas, other cereals, legumes, vegetables, fruits and fodders; area stayed unrestricted, barriers were induced to shrink the area under Egyptian cotton.
Up to 1986, there were two exchange rates for the local currency (Egyptian Pound, EGP). First official exchange rate equalled 1.43 USD/EGP and a free market exchange rate, which equaled US
$ 0.47/EGP. The official exchange rate applied on all exports of cotton and rice, but did not apply
to other crops. While half exports of crops, rather than cotton and rice, applied the official price, the other half applied the free market price. This excessive exchange rate levels resulted in low producer prices. Accordingly, there were indirect taxes on agricultural exports, which was equivalent to a taxed export price policy. In 1990, the official exchange rate was reduced to US$
0.5/EGP, while the exchange rate fell in the free market to US$ 0.34 /EGP. In 1991, there was a common exchange rate and the market exchange rate was US$ 0.30 /EGP (The World Bank, 2010).
However, GOVEG has continued subsidizing the various food products, most notably bread, sugar, and oil, for low-income groups.
Agricultural development efforts have experienced major changes since 1980 in the different fields of agricultural production, due to expansion of agricultural areas, and improving productivity. These efforts have led to the increase of the agricultural land from 2.5 million hectares in 1980 to approximately 3.7 million Hectares in 2007, as well as increasing cropped area from some 4.4 million Hectares in 1980 to 6.4 million Hectares in 2007. The horizontal and vertical improvement in cultivated area and crop productivity, achieved an average annual growth rate in agriculture of 3-4%. However, such achievements faced notable increase in population associated with expansion in their needs due to economic growth.
In the past, subsidies were widely used to support the rural sector in Jordan. However, under Jordan’s agricultural sector restructuring program, subsidies have been abolished and support is now provided through other, non-market distorting means In November 1996, the legislature enacted the "Agricultural Policy Charter", called simply the Charter, which institutionalizes the policy reform undertaken as part of the restructuring program and establishes long term goals and objectives for the Kingdom’s agricultural sector and agricultural policies. The Charter is developed on the premise that rural areas in Jordan and the holding of farmland links current generations to a “homeland and natural and cultural habitat”. In addition, because of the fragility of the environment in much of the country, rural peoples can play important roles in protecting the environment and managing natural resources efficiently. Agricultural policy therefore, aims to promote efficient and sustainable use of rural resources while increasing economic opportunities in rural areas so that farm incomes are more equitably distributed within the sector and are closer to urban incomes
The Government of Jordan also faces the absolute necessity of ensuring that the population has access to basic foodstuffs at stable prices that preserve the living standards of limited opportunity and the lowest-income groups. As a result, policies also are directed at increasing Jordan’s food self- sufficiency through export of high-value agricultural products and import of lower value goods. To support a growing horticultural export economy, the government is promoting production of quality products at internationally competitive prices. This is being implemented through provision of more water for irrigation, an enhanced research and extension program, and expanded marketing services such as grading and residue testing using internationally accepted measures of quality assurance.
Another mandate in the Charter is the expansion of private sector participation in the agricultural sector. This is being supported in several ways. The most important mean is removal of the government from the role of both primary buyer and supplier of feed and food grains and pulses.
In addition, economic incentives, such as exclusion of 75 percent of investment expenditures on agricultural projects from trade and domestic general sales taxes, are being provided to the private sector to encourage investment. Overall, the idea is to limit government’s role in agriculture to provision of institutional support such as extension, research and infrastructure investments
The transition from a government-dependent or highly subsidized sector to a completely free market oriented sector under the agricultural adjustment program is not without costs. For example, most livestock holders have reduced, or in some cases liquidated, their holdings in the last decade because the reduction in, and then subsequent elimination of, feed subsidies resulted in non-cost effective production. Vegetable farmers have faced significantly higher prices for water, challenging their competitive export position. Even so, the government has not slowed its pace of reforms
In general, the Government of Jordan has supported producers through a combination of means including procurement of domestic production and provision of inputs (seeds for cereals, water, credit, and livestock feed). The following two profiles provide two lists of laws and regulations that were issued to implement the economic adjustment program in agricultural sector in Jordan during the past decade.
In Lebanon, agricultural policy is carried out in a highly fragmented, disconnected manner and as a low priority. A wheat and sugar beets subsidy is managed by the Directorate General of Cereals and Sugar Beets at the Ministry of Economy and Trade and a tobacco subsidy program is run by the Régie des Tabacs at the Ministry of Finance. The Ministry of Agriculture is responsible for other crops, agricultural services and cooperatives. It also supervises the Lebanese Agricultural Research Institute and the Green Plan, which helps rehabilitate lands and rural roads neglected or destroyed during the war. An export-promotion program is managed by the para-governmental body Investment Development Authority of Lebanon spell out and the Council for Development and Reconstruction manages infrastructure projects, including irrigation and mobilizes foreign funding.
Agricultural and food trade policy in Lebanon in recent decades has done little to improve the situation of an agricultural sector weakened by years of civil war and occupation. While other sectors of the economy have received considerable financial resources for reconstruction (contributing to the countries massive debt load), agriculture has benefited from little aid or even attention from the national government.
A large portion of government funds (and private subsidization, in the case of wheat) which are attributed to agriculture go to the specific crops of wheat, sugar and tobacco. The fact that there are no specific criteria for eligibility for these subsidies indicates that they are not part of an overall strategy for agricultural development. The price supports also do not particularly encourage farmers to invest in the productive capacities of their farms but act instead as short term solutions to a problem (MOA 2003).
Libya had also begun some market-oriented reforms after 2000. Initial steps have included applying for membership in the World Trade Organization, reducing subsidies, and announcing plans for privatization. Authorities have privatized more than 100 government owned companies since 2003 in industries including oil refining, tourism and real estate, of which 29 are 100%
foreign owned. The following is a retrospective view of past public policies implemented during the past decades since political independence.
Policies prior to the 1969 revolution:
From the beginning, the discovery of oil reserves in Libya has had a direct negative impact on agriculture as most of the labour force fled to oil related activities which were significantly higher remunerative of the human effort and capital than agriculture. As a result, agricultural activities declined in importance and contribution to the general economic output of the country. Planning efforts were made during the fifties and sixties to preserve the historical role of agriculture but with no significant impact on really enhancing it as the oil tide was running against it.
During those years, prices were freely determined by the market with no significant public authority intervention and consumption deficits of various food commodities were imported. So for the most part, Libya was a free market economy all the way through the 1969 political overthrow of the monarchy.
Post 1969 revolution policies
From the start Libya, as many developing nations, set for itself the objective of food self-sufficiency in almost all commodities. While some production sectors performed relatively well during some periods (barley, vegetables, certain fruits and eggs), the objective of self-sufficiency for many other products turned out to be infeasible (wheat, milk, olive oil and most fruits). As a result, Libya has always been a continuous food importer.
In the meantime, Libya got involved in subsidizing most food commodities at the consumption level which boosted the Libyan intake of most food items. Subsidy levels were so high during the eighties and the nineties that many imported agricultural products from neighboring countries and elsewhere were re-exported to their countries of origin. As an illustration, the so called “Libyan markets” everywhere in Tunisia are regularly full with re-exported Libyan imports. They represent an important share of the domestic markets of agricultural commodities in Tunisia.
During the seventies, agricultural policy aimed at supporting producer prices way above international prices, while at the same time subsidizing most agricultural inputs, including interest free credit. The data contained in the table below give an idea about how big the spread between the national and international price levels was.
Agricultural policies during the 80’s
Construction of a storage and silo network along with cooling houses and road infrastructure was among the relevant achievements that public authorities realized during that period.
In view of the diagnostic of failure that excessive public intervention led to during the decade before, room began to be given to private entrepreneurs to market their produce themselves and commercialize farm inputs so as to rehabilitate market mechanisms and hope to reduce food shortages.
In so far as pricing policy of agricultural commodities, public support to basic food commodities continued (wheat and barley) along with providing a selection of farm inputs to farmers at cost. A stress was also put on accompanying agricultural research and financing activities.
Despite these efforts, national agricultural production was quite volatile which led to increased imports by about 50% between early and late 1980’s.
Agricultural market liberalization, beginning 1986
After many years of public domination over the Libyan economic systems new policies were introduced to promote private initiatives around the year 1987. In 1988 decisions were taken to open up borders with neighbouring countries to enhance trade and labour movements. At the same time prices of vegetables and fruits were liberalized. This gave an important push to the development of these crops, particularly in irrigated areas, which had a positive impact on enhancing farm incomes. The development of cash crops was at the expense of cereals however.
To make up for the decline in cereals production, decisions were taken to grow wheat and barley in public projects in irrigated areas. During this period, reliance began on market forces (supply and demand) for most commodities whereas imported inputs were provided to farmers almost at cost.
Towards the end of the eighties, a gradual disengagement process got underway from providing input subsidies and supporting cereal and olive oil prices.
Policies during the nineties
An attempt was made to structure agricultural activities according to regional comparative advantages of the country. Prices of agricultural produce and inputs became market determined.
This automatically led to increasing input prices. In a parallel fashion and for food security reasons, Libyan authorities put together a strategic buffer stock program, enough to cover 3 to 6 month needs for most commodities. For this purpose a national institution was put in charge of either buying on the local market when local supply conditions or importing the required stocks
Policies after 2000
The willingness on the part of Government authorities to liberalize the economy in general, and the agricultural branch, in particular continued. This got translated automatically into a significant cost price squeeze for farmers as the cost of inputs increased tremendously while the price of outputs were severely challenged by the competition from imports. As result incentives to carry out agricultural activities and much less to invest in the sector were fading away. These problems were not obviously as visible as they would have been in other countries that are not similarly endowed with oil revenues as Libya.
As in many developing countries and for social considerations for the most part, Tunisia has adopted the inexpensive food policy approach by subsidizing staple food commodities at the consumption level, namely the cereals products, sugar and vegetable oil. This translated into much higher consumption levels of these products than otherwise would be the case.
At the same time, nominal prices at the production levels were maintained constant during decades which, together with fluctuating production resulting from climatic conditions, led to increasing import needs of these products. This was also encouraged by stability in world prices during a long period of time.
One can see the almost six-fold increase in budget expenditures on imported wheat, as compared to average expenditures during the period 2000/06, so as to maintain domestic wheat prices at their levels prior to the rising in the respective world prices. This has resulted in a revision in domestic cereals prices which were increased on three different occasions, the third one of which was then called exceptional measure, meaning transitory, but in reality more likely to be permanent.
Traditionally, Turkey’s key policy objectives for agriculture, as mostly set out in successive Development Plans are: improving productivity; ensuring food security and food safety; and stability of food supply; raising self-sufficiency and exploiting export potential; providing stable and sustainable income levels in agriculture; enhancing competitiveness; fostering rural development; and intuitional-capacity building to come into alignment with EU agricultural and rural development policies.
Historically, government intervention in agriculture has been considerable, with price support, input subsidies and high border protection being the main policy instruments. Over the mid-1980s-2000, domestic agricultural support measures in Turkey were almost entirely based on commodity price support for crop commodities and variable input subsidies. Although the rates of support on products and input use fluctuated considerably prior to 2000, there were no fundamental changes to the kind of policies and delivery mechanisms used.
Market price support was primarily carried out through intervention buying operated by the SEEs (grains and pulses, sugar, tobacco, tea) and the ASCUs (horticultural crops, cotton, oilseeds, nuts
and olive oil). Intervention buying of crop commodities at support prices began in the early 1930s with wheat: by 1992 the total number of crops accorded price support was up to 25.
Restrictions on area planted were introduced for three commodities (hazelnuts, tobacco and tea) in the mid-1980s, under the authority of the relevant ASCU or SEE. However, enforcement was ineffective and stricter controls and compensation incentives were adopted in 1994. From 1994 onwards, tea growers were also required to cut back part of their plantation each year, in order to improve the quality of the crop. A “pruning premium” was introduced to compensate them for lost volume. Over the period 1996-2000, payments for tea pruning averaged USD 17 million annually. In addition, informal area controls operated for sugar beet.
By contrast, in the livestock sector, domestic policies played a relatively less important role. Since 1986, producers delivering milk to dairies that were certified as meeting certain technical standards have received an extra payment per litre, the “milk incentive premium”. The only other form of support for dairy products has been provided by border measures. Tariffs on most dairy products are bound at 180% (lower for some cheeses). Applied MFN tariffs were significantly below these bindings in the late 1990s, but moved closer to bound levels in the early 2000s. Apart from temporary intervention purchases of live animals during the drought of 1989, the only source of support for bovine meat has been from border measures. For example, in 1995 MFN tariffs on red meat stood at just 15%, but shortly afterwards were raised to 165%. Since 1996 there have been restrictions on red meat and live cattle imports due to concerns over animal diseases, such as BSE, FMD and blue tongue in a number of countries of origin. The restrictions have been progressively and partially lifted for some countries from the second half of 2010, following changes in the animal health status in these countries. A meat incentive premium was paid in 1990-01, and again in 1994-05, per kilogram of beef and sheep-meat, on animals delivered to
By contrast, in the livestock sector, domestic policies played a relatively less important role. Since 1986, producers delivering milk to dairies that were certified as meeting certain technical standards have received an extra payment per litre, the “milk incentive premium”. The only other form of support for dairy products has been provided by border measures. Tariffs on most dairy products are bound at 180% (lower for some cheeses). Applied MFN tariffs were significantly below these bindings in the late 1990s, but moved closer to bound levels in the early 2000s. Apart from temporary intervention purchases of live animals during the drought of 1989, the only source of support for bovine meat has been from border measures. For example, in 1995 MFN tariffs on red meat stood at just 15%, but shortly afterwards were raised to 165%. Since 1996 there have been restrictions on red meat and live cattle imports due to concerns over animal diseases, such as BSE, FMD and blue tongue in a number of countries of origin. The restrictions have been progressively and partially lifted for some countries from the second half of 2010, following changes in the animal health status in these countries. A meat incentive premium was paid in 1990-01, and again in 1994-05, per kilogram of beef and sheep-meat, on animals delivered to