The agricultural sector accounts for nearly 20% of the Egyptian GDP and employs approximately 34% of the workforce. The total market for agricultural machinery is estimated at $1.25 billion, with an expected annual growth of 4%. 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 4% 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 the 1980s to 3.44 million ha by the end of 2004, with an average increase of 37,000 ha per year. The Ministry of Agriculture 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.
Egypt’s agriculture equipment market is made up of 95% imports and 5% domestic goods. The U.S. has a total market share of approximately 7% mainly in pop-up sprinklers, pivots, landscape and golf course equipment. Agriculture equipment is imported mainly from Europe, Israel, China, Japan, and the United States. The local market is very receptive to U.S. equipment because of its excellent reputation and value.
Egypt manufactures 5% of its agriculture equipment, including hoses, fittings & accessories, pumps, UPVC rigid pipes, cultivators, tunnels, sorting facilities, drip lines and irrigation systems; however, locally manufactured products are not of high quality or state-of-the-art equipment.
Agriculture is extremely important for the Egyptian economy. It employs 34% of the workforce, which in turn supports 55% of the total population, and contributes 20% to the country’s GDP. Production has generally kept pace with population growth. Egypt has the world’s most productive cultivation of rice (3.8 tons per acre), cane sugar (50 tons/acre) and sorghum (1.9 ton/acre). Agricultural exports reached approximately $1.8 billion in 2007, and account for almost 13% of all non-petroleum exports. According to recent reports, in the desert, a cubic meter of water will produce 12 times what it would in the Nile Delta, traditionally Egypt’s agricultural heartland. This is due to problems with plant disease, fragmented, overcrowded farm holdings and inefficient transport in the region.
Egypt’s success in developing its agricultural sector has been due in part to irrigation programs, price incentives for farmers, and technology transfer throughout the country’s agricultural sector. Advances in technology mean that crops can now be grown in the desert in silica "glass pebbles", which greatly reduces the need for water. Flowers and indoor and medicinal plants are also areas that Egypt plans to exploit. Industrial farmers are eagerly developing areas such as the Cairo-Alexandria and Cairo-Suez corridors, the Mediterranean coast and the northern Sinai desert. However, Egypt is still reliant on imports for many important foodstuffs; almost all its meat and much of its grains come from abroad.
Other projects that will increase Egypt’s arable land include the North Sinai Development project, with land reclamation of 400,000 feddans. Due to water shortages in the region, Nile water will be transferred to an area of 400,000 feddans through the Al Salam/Sheikh Gaber canal to North Sinai and mixed with drainage water from Al Serw and Hadous drains in a 1:1 ratio. These 400,000 feddans are an extension of another 220,000 feddans irrigated by the same canal on the western side of the Suez Canal. Collectively, both areas constitute around 17 percent of the 3.4 million feddans projected increase in cultivable land until 2017. The canal is named Al Salam in the western side of the Suez Canal, whereas its extension in North Sinai is named after Sheikh Gaber Al Sabah, of Kuwait. This project started in1986 when the Ministry of Agriculture & Land Reclamation identified 250,000 feddans with prospects of viable reclamation in North Sinai. This area was incorporated into the 1.2 million feddans elected as priority areas in the Land Master Plan. The Project’s implementation will go beyond the canal and land reclamation, extending to all reconstruction and industrial development activities in the region under study.
Also, the Egyptian government has embarked on large-scale horizontal expansion projects to increase habitable land from the current 5% to 25% as a comprehensive scheme for developing desert areas. The scheme was based on increasing the cultivable land area from the current 8 million feddans to 11.4 million feddans by the year 2017 as an urgent and necessary condition for development. The projected increase is planned through a series of mass land-reclamation projects of which the South Valley Development Project ranks on top in terms of size and goals. With a huge $53 billion in investment requirements, this project is the government’s most ambitious development initiative yet and is expected to take 20 years to complete.
The South Valley Development Project aims at reclaiming an area of around 1 million feddans in the New Valley governorate in three regions: around the Toshka depression, in East Oweinat and in the New Valley governorate oases. Toshka and East Oweinat are considered the most important phases of the project since, combined, they count for over 750,000 feddans of the total targeted area. With regard to the Toshka project, water is supplied through a concrete-lined canal connected to Lake Nasser. East Oweinat, on the other hand, targets an area of 200,000 feddans in the extreme south of the Western Desert as the stage of large-scale reclamation activities relying solely on abundant underground water. The major objectives of both projects are to develop an agriculture-for-export scheme, create job opportunities and divert investment pools outside the Old Valley to new regions.
Silos: The total covered storage capacity for wheat is estimated at 1 MMT. This included about 350,000 MT in silos at three different ports (Alexandria/Damietta/Safaga), 250,000 MT in inland silos and 400,000 MT in open storage mostly in metropolitan areas. In addition, the private sector traders and mills currently have their receiving and storage facilities, estimated at 500,000 MT. In order to increase the storage capacity, the government is promoting a project to the private sector. This project encourages the private sector to build 50 inland silos with 30,000 MT capacities in different locations throughout the country and The Ministry of Supply will then commit to using 60 percent (90,000 MT) of each silos capacity at the prevailing storage fee for 5 years.
Slaughterhouses: Egypt produces 2 MMT of poultry per year and has a capacity of 500,000 MT slaughterhouses. To eradicate the Avian Influenza the government plans to levy severe punishments on those who grow poultry at their homes and in the street. They also plan to establish slaughterhouses by building 1.5 MMT of slaughterhouses during the next three years. Slaughterhouses are mainly imported from the Netherlands, and have a capacity for 3000 birds/hour, 6000 birds/hour or 9000 birds/hour. To encourage the private sector to invest in this industry, the government has signed a joint agreement with a Kuwaiti fund to provide $90 million in credit facilities.
Fisheries: The national fish catch was estimated at 393,494 tons in 2004, according to the UN. The government hopes to increase annual production to meet expected demand of 1.4m tons by 2012 by managing natural fish stocks and encouraging the use of the country's inland lakes and waterways for intensive aquaculture.
Fertilizers: The fertilizer market of Egypt is booming due to the growing demand from the agricultural sector, the country's central geographical position and the availability of cheap gas. Hence, Egypt is attracting international players and inviting investors to build fertilizer production units and use the country as a convenient export base.
Despite the gradual reduction of subsidies as part of the government's economic liberalization program and the steadily raising prices of natural gas which is expected to reach $2.65 per MBtu in 2009-10, prices are still considered cheap by international standards. On the back of cheaper energy and good logistic connections, exports of Egyptian fertilizers have been rising. The country sold over $2.5 billion worth of fertilizer in 2007.