The Government of Egypt is putting great emphasis on its agricultural sector, as it accounts for nearly 20% of GDP and exports and employs approximately 30% of the workforce. Egypt is a prolific producer of commodities including tomatoes, potatoes, grapes and strawberries. In spite of its high productivity, it remains the world’s largest food importer due to its rapidly growing population. Only 3.5% of Egypt’s landmass, mainly around the Nile Delta, qualifies as agricultural land, and hence the government has made land reclamation projects a priority. This will trigger an increase in imports of agriculture and irrigation equipment.
According to official statistics, the area of reclaimed desert increased from 2.43 million hectares (ha) in 1980s to 3.44 million ha by the end of 2004, with an average increase of 37,000 ha a year. The Ministry of Agriculture has set a target to reclaim 1.34 million ha between 1997 -2016. In order to increase land productivity, the government needs to focus on teaching farmers about irrigation, crop rotation, efficient harvesting and transportation methods, in addition to market prices. The Ministry of Trade & Industry is now working with international organizations such as USAID and the World Food Program to educate farmers about fair market prices and provide them with technical information for storage and transportation. This is particularly of great value to farmers in Upper Egypt due to its distance from most markets and considerable soil erosion due to lack of crop rotation. Organic farming is also picking up in response to growing global demand for organic products.
Following years of negotiations, the European Union (EU) has reached a preliminary trade agreement with Egypt that will considerably liberalize trade in agricultural products. Under the terms of the agreement, Egypt will also cut import duties on European produced foods such as confectionery, chocolate and bakery products, although alcoholic drinks, tobacco and pork were exempt from the agreement. The long-awaited trade deal should provide a significant boost to Egypt's agricultural sector.
EU products will have free access to the Egyptian market for around 90% of their agricultural and fisheries exports, while around 70% of Egyptian agricultural products will have free entry to the EU. Certain Egyptian products will have limited access to the EU market, including tomatoes, cucumbers, artichokes, corgettes, grapes, garlic, strawberries, rice and sugar and processed tuna and sardines.
Despite the importance of this sector, only a small percentage of Egypt's landmass qualifies as agricultural land, a mere 3.5%, according to the UN Food and Agricultural Organization (FAO). Given these circumstances, the government has made land reclamation a priority, dedicating a large portion of its water resources to these projects. Nevertheless, Egypt must import vast quantities of food due to its rapidly growing population and has an increasingly negative food and drink trade balance.
This free trade agreement falls under the rubric of the Union for the Mediterranean. The preliminary EU/Egypt Association Agreement came into force on June 1, 2004 after it was ratified by both countries. The core focus of the Association Agreement is the establishment of a Free Trade Area between the EU and Egypt under which there is reciprocal tariff liberalization for both industrial and agricultural goods. These tariff dismantling agreements are skewed in favor of Egypt, in recognition of the fact that it is still a developing economy. This latest agreement is expected to form the basis of a future binding agreement, which should further bolster Egypt's agricultural sector's export opportunities.