Egypt: Smallholder contract farming for high-value and ... - IFAD

exporters hiring cargo planes. At Luxor airport, a platform similar to the one at Cairo airport is
under construction and was expected to become operational during 2008.
Sea transport has also improved due to increased export volumes. This has enticed some shipping
lines to make Alexandria the last port of call before European ports, reducing the time of sea transport
from two weeks, when other ports outside Europe were visited after Alexandria, to three or four days.
Contract enforcement
The Egyptian judicial system functions extremely slowly, and court cases can often remain in the
system for several years, making it financially impossible for smallholders to file court cases of any
sort. This situation is well known to any party who does not wish to honour a contract. Therefore,
written contracts between two parties often favour the economically strongest party, making
smallholders hesitant to enter into contract-farming arrangements.
Tariffs
In 2005, tariffs on automotive manufacturing components were reduced from 5-12 per cent to
2-5 per cent. The improved tariff structure allowed cheaper imports of equipment and machinery
for exporters, processors and transporters of horticultural produce by improving returns on
investment and by increasing competitiveness.
Foreign-exchange controls
In January 2003, a more flexible exchange rate policy was implemented. Subsequently, there was a
25-30 per cent depreciation of the Egyptian pound against the dollar. By late 2004, Egypt’s foreignexchange
regime had stabilized and the parallel market had disappeared. The currency has
remained stable in relation to the international market, and, as of late 2006, the Central Bank of
Egypt had accumulated US$24,064.91 billion in net international reserves. The adjustment of the
exchange rate has had a positive impact on horticulture exports.
Development activities
The Agricultural Exports and Rural Incomes Project is a four-year US$57.3 million project funded
by USAID. It was launched in the last quarter of 2003 to help tackle three key issues in Upper Egypt:
high unemployment, low rural household incomes and underdeveloped agricultural export
potential. The overall goal of the project is to increase on-farm and agribusiness jobs that will raise
rural household incomes. Increased rural incomes will be accomplished by strengthening the
competitiveness of Egypt’s horticulture and livestock sectors in the global economy by expanding the
access of farmers and agribusiness firms to knowledge, technology, markets, and institutions that are
key ingredients for success. Five activities have been implemented in pursuit of this goal:
• a grant programme for groups of smallholder farmers in Upper Egypt;
• grants and training for agricultural trade organizations;
• support for smallholder horticulture and livestock producers;
• strengthening international links between Egypt’s smallholders and international markets for
their products; and
• design of a legacy programme for sustainable smallholder market development. As a part of
the project, CARE Egypt is working under a grant to improve horticulture marketing in seven
governorates in Upper Egypt (Aswan, Beni Suef, Fayoum, Giza, Luxor, Qena and Sohag). The
goal is to enhance rural household incomes through smallholder horticulture activities. They
are working with four subcontractors: University of California–Davis, the Nile Valley Group,
ACDI/VOCA and Environmental Quality International.
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