Evaluating the impact of economic agricultural policies during the reform era for major crops and crop rotations in Egypt : a policy analysis matrix approach
In 1986, Egypt implemented a succession of comprehensive economic reforms both in the agriculture sector and more generally such as the Economic Reform and Structural Adjustment Program (ERSAP) of 1991. Since then, the agricultural sector has been gradually transformed from one characterised by central planning and governmental controls to one that is more free market oriented. This study employs the Policy Analysis Matrix technique to evaluate the impacts of reform policies on eleven major crops (wheat, maize, sugar cane, soy bean, broad bean, cotton, rice, tomatoes, potatoes, long and short berseem) and their associated crop rotations (crop mix) during the period 1986-2000. The PAM offers six tools of economic indicators. The first (private Cost Ratio) is used to identify the competitiveness of crops domestically. The second (Domestic Resource Cost) is employed in an attempt to identify those commodities in which Egypt has a comparative advantage/disadvantage. The third (Nominal Protection Coefficient for inputs and outputs) is used to measure the divergences between the domestic and international prices for inputs and output. The fourth (Effective Protection Coefficient) reflects the complete pattern of incentives to farmers in the tradable commodities markets, combining the separate influences of polices represented by the NPCO and NPCI measures. The fifth and sixth (profitability Coefficient and Subsidy Ratio to Producers) estimates the net protection effects afforded to each of the major sectors by the whole range of policy intervention. The most important findings are that: (1) The Egyptian pricing policy in the reform era is still encouraging domestic production of importable products (by setting their prices above world prices) while export products are taxed relative to their equivalent world prices. (2) Cotton, the main historical export commodity, is shown to be grown with a comparative disadvantage since it receives the highest levels of subsidy. (3) On the other hand, wheat showed a remarkably positive example for the high response from farmers to the reformed pricing policies with an increase in its area and its productivity by 83% and 60% respectively. (4) There is a high response of change in planted area to water charges. The conclusion of these analyses is that the impact of policy changes has indeed been positive, especially in relation to areas of crop production. But many remains to be done, for example, growers' still face problems in marketing, accessing to inputs, processing and trade.