Agriculture remains one of Egypt’s most important sectors and continues to achieve steady growth rates of 3-4% per year.  The agriculture sector contributes roughly 16 percent to Egypt’s GDP, but this share has declined in the recent two decades and is expected to continue to fall in the future.  Similarly, the number of Egyptians employed in the sector has fallen from about a third of the labor force in the early 1990s to just over a quarter in 2006.  The challenge for Egypt is to maintain and expand agricultural production for domestic and export markets while at the same time adding value and employment through the development of more agriculture-based processing activities. 

Egyptian subsidies on agricultural production are modest and well below levels allowed under its WTO commitments.  The government still maintains price controls on a number of agricultural commodities including cotton, wheat and sugar cane.

Productivity gains since the mid-1980’s achieved through long-term government commitments to policy reform and liberalization, coupled with assistance from donors (particularly USAID), have helped sharply increase grain and vegetable production, closing the gap between domestic food supply and demand. Wheat production was 8 million tons and rice production was 6.3 million tons in 2005.  Egypt continues to encourage wheat production by paying high prices to local producers.  The 2006/07 wheat procurement price is LE 1,166/ ton ($204 per ton), compared to LE 1,100/ ton ($188 per ton) in 2005/06.  The total quantity of locally produced wheat sold to the Ministry of Supply in 2005/2006 was 2.5 million tons.  For the 2006/07 crop, the General Authority for Supply Commodities (GASC) plans to purchase 3 million tons. 

Egypt has one of the highest wheat per capita consumption levels in the world (180 kg). Total consumption of wheat in 2005/2006 is estimated at 13.9 million tons, including nearly 7 million tons of imported wheat.  In 2005/06, the Ministry of Trade and Industry (GASC) purchased 3.65 million tons of imported wheat and 2.5 million tons of locally produced wheat to produce 82 percent extraction flour used to make subsidized “baladi” bread.  The subsidy on “baladi” bread cost the government close to LE 3.8 billion last year. The private sector imports about 2 million tons of wheat annually, which is used more in the production of high quality flat bread and European type bread, pastries and pasta. Most of the domestic wheat crop is sold directly to consumers or retained by farmers for on-farm consumption.

Egypt is an important cotton producer, with output around 210,000 tons annually.

Egypt produces about 5.9 million tons of corn annually, and is expect to import about 4.5 million tons in 2006.  The majority of the local corn crop is utilized for animal feed (mostly consumed on farms), with about 1.5 million tons used for food purposes (either milled or consumed fresh).  Large commercial end-users and feed mills rely on imported yellow corn to meet requirements. About 500,000 tons of locally produced white corn is delivered to the Ministry of Supply for the production of subsidized baladi bread.

The South Valley Development or “Toshka” project, located in Egypt’s far south, aims to irrigate some 500,000 acres of arable arid soil with water from Lake Nasser. Since 1997, the government has been building a massive pumping station and irrigation canals to transport the water for the project. Construction on the project has slowed in the past 3 years, but President Mubarak inaugurated the pumping station in October 2002 and all of its 21 pumping units were installed and tested by the end of 2002. However, few are actually in operation as the water demand for cultivation is still not high. The main canal was completed in 2000. Construction is proceeding on four branch canals of 28 km each, with the first two nearly completed, the third about 50% complete and work on the fourth just begun. Saudi Prince Walid bin Talal’s Kingdom Agricultural Development Corporation (KADCO) owns 120,000 acres, to be managed by the U.S. firm Cadiz/Sun World (which has a 10% investment stake in the KADCO project), and is currently doing field tests on a portion of that land. This private sector project’s aim is to grow fresh fruits and vegetables for export to Europe in the winter months. No other major investors are yet involved, although several Egyptian government-sponsored entities are doing field tests in the Toshka region.