Ahmed Dawoud

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Introduction

In this report, we follow up on the implications of the Covid-19 pandemic on the agricultural sector on the ground. The harvest season of major crops such as potatoes, beans, corn, rice and others have ended. The Central Agency for Public Mobilization and Statistics (CAPMAS) has issued the following bulletins: the monthly bulletin for foreign trade (July 2020), the monthly bulletin for consumer prices (August 2020), as well as the quarterly bulletin of the labor force survey for the second quarter of 2020. Through these bulletins, it is possible to follow up on the real impact of the pandemic on the agricultural sector.

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1. Assessing the published data and aspects of change on the ground

Several points should be taken into consideration before assessing any data related to the agricultural sector in Egypt and analyzing the sector’s position on the ground, namely:

• The prices of crops mentioned in this report differ from the official prices announced by CAPMAS, because the prices announced by CAPMAS are the final consumer prices that include the prices of imported products on the one hand, as well as the profits obtained by the chain of commercial intermediaries on the other hand. While the prices mentioned in this report are the prices of buying the crop from the land, and are more accurate to indicate the direct impact on the farmer.
• There are no official data announced by the Ministry of Agriculture regarding the actual impact of the pandemic on farmers in Egypt. CAPMAS relies in its data on foreign trade of agricultural crops on the Customs Authority and the General Organization for Export and Import Control—while such data are suitable for evaluating the external trade performance of the sector, they do not reflect in any way developments regarding farmers’ conditions on the ground.
• In its Foreign Trade Bulletin, CAPMAS provides foreign trade data for agricultural crops as a value in million dollars, but no quantities are provided, which prevents isolating the real impact of the crisis on imported or exported quantities from the nominal effect resulting from price changes, especially for commodities whose price is determined globally, such as grains.
• To deal with these problems of lack of data, the data and information contained in this report have been supplemented with direct communication with a representative geographical sample of farmers and traders of various sizes.

As for the actual assessment of the data published by the official authorities:

• Table 1 shows the big difference that is twice as large between the price a farmer actually gets and the final consumer price for a selected group of agricultural crops. This is partly due to the existence of a long chain of commercial intermediaries who get most of the profit on the one hand, and to the inefficiency of supply chains on the other hand. So, the merchant is forced to compensate for inefficiency in transportation, storage and distribution by raising the price, especially that we are talking here about reselling the product in its raw form without any value added.

Table (1). Land price versus final consumer prices for a selected group of crops (pounds / kilo)

Crop	Price to farmer *	Final consumer price **
Beans	15 – 17	31.79
Green beans	16 – 18	29.31
potato	1.3 – 2	8.77
tomatoes	2 – 3	6.74
the banana	7 – 8	15.07

In the “Views on the Crisis” report, Issue No. 14, on assessing the impact of the pandemic on the agricultural sector in Egypt, experts and exporters reported that the orange crop specifically benefited from the crisis because Spain, Egypt’s main competitor, did not export large quantities. In light of higher European consumer demand on oranges as a fruit that boosts immunity against viruses, the demand for Egyptian oranges increased and their prices doubled. On the other hand, CAPMAS data indicate that orange exports decreased in May, June and July 2020 by 52%, 87% and 79%, respectively, compared to the same month in 2019. This raises many questions about accuracy of the available data on the one hand, and about the actual export volume and whether exporters faced any obstacles that arose after the issuance of the ECES report.

2. The extent to which the data is consistent with previous trends and expectations

• Tables 2 and 3 present a brief summary of the expectations previously developed by ECES regarding the impact of the pandemic on the agricultural sector in Egypt versus what actually happened for each type of crop separately, as well as the impact of the crisis on agricultural labor, accompanied by a set of necessary clarifications.

Table 2. ECES expectations of the impact of the crisis on the various agricultural crops versus what actually happened so far

Table (3): Impact on agricultural employment

With reference to the “Views on the Crisis” report (Issue No. 14) on the effects of the pandemic on the agricultural sector during the successive phases of the crisis, ECES expectations were broadly consistent with what actually happened on the ground, as shown in Tables 2 and 3, despite lack of available data and ambiguity of general economic landscape at the time of writing the report.

3. Future expectations for the coming period

• All expectations indicate that a second wave of the pandemic will be more violent than the first wave in parallel with the advent of winter. This wave has already started in Europe, and comes in parallel with the start of a new agricultural cycle for strategic crops such as green beans, winter potatoes, strawberries and others. Hence, we are expected to a large extent to witness the same scenarios that were previously prepared by ECES in its original report for each crop. The following are detailed future projections of the most important strategic crops in the current agricultural cycle:

• Potatoes: It is likely that we will witness the same scenario that occurred during the last summer cycle (Summer 2020) again in terms of an increase in supply compared to demand and then a decline in prices and an exacerbation of farmers’ losses due to:
  • Decline in the domestic demand for potatoes despite the drop in their prices, and despite the return of the restaurant sector to operation. This is due to the suspension of the tourism and hotel sector, which represented about 20% of the total domestic consumption of agricultural crops in general in Egypt.
  • A large percentage of farmers, especially small ones, continues to cultivate the usual areas annually despite the heavy losses they witnessed during the summer cycle, which can be explained by the following:
    1. Farmers, especially small ones, mistakenly believe that the pandemic has ended or is over, while expectations indicate that a second wave will be more violent than the first in the coming months.
    2. High risks associated with all agricultural crops in general, and potatoes in particular, which prompts farmers to diversify the area planted between potatoes and winter beans or other crops to reduce the possibility of loss
    3. The almost complete absence of the agricultural extension role, in addition to the limited information available regarding the markets and their future trends, which limits the farmer’s ability to make sound production decisions.
  • However, losses are likely to be generally less than those experienced by farmers during the summer cycle, due to:
    1. Experience gained to better respond to a crisis if it recurs.
    2. The tendency of owners of medium and large areas to reduce the cultivated area of potatoes in favor of other alternative crops.
    3. There is a shortage in the Russian market of potatoes, and it is possible that there will be an increase in demand there for Egyptian potatoes during the current cycle, especially that their needs from the European market will not be met in light of the Russian-European boycott at the present time.
• Green beans: The good performance of the beans crop will continue during the current winter season, because it is still excluded from the decision to ban the export of legumes on the one hand, and the great demand for them in the Arab markets on the other hand, especially since the beans are not easily damaged and thus are more capable to withstand shipping and storage conditions for longer periods compared to other crops.
• As for fruits, they are expected to witness lower rates of loss, due to the lower possibility of crop damage in winter compared to summer. It is expected that the demand externally and locally for citrus fruits will increase, as a fruit that enhances immunity against viruses. However, the increase in fruit exports in general depends on effectively solving shipping problems:
  1. Air transport costs doubled after the crisis, which prompted many importers abroad to cancel import orders in protest of the price hike.
  2. There is a shortage of reefer containers.
  3. The existence of many obstacles related to road transport between Egypt and the Arab countries in particular, including not allowing Egyptian drivers to pass through the Jordanian borders, for example, for fear of the Coronavirus, which requires unloading and re-charging the cargo, implying high costs, late delivery times and an increase in losses.

4. Proposals to alleviate the severity of the crisis for workers in the agricultural sector

• Promptly activate the marketing and informational role of agricultural cooperatives and agricultural extension.

• Activate the role of commercial representation offices in importing countries to provide accurate and up-to-date information on the differences in precautionary measures between countries, so that Egyptian exporters are not surprised by these measures after actually traveling long distances with the crop, which forces them to take more distant routes, involving additional cost and high losses.

• Prompt customs clearance for all agricultural crops, especially perishable vegetables and fruits, and exempting importers and exporters from paying any storage fees as long as the cause of delay is beyond their control.

• Dedicating air freight lines for perishable crops at subsidized prices until the end of the crisis and shipping costs return to normal levels.

• Writing off the debts of all defaulters in the agricultural sector, especially small farmers, and enabling workers to benefit from the initiatives of the Central Bank in this regard.

• Exceptionally subsidize agricultural production inputs, and compensate those badly affected by low prices until the end of the pandemic.