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

The IFAD country representative is well placed to engage in high-level policy dialogue with
professional associations, farmer associations and the government to move this issue forward and
coordinate inputs from experts to assist in formulating the legal framework.
Land tenure. Current land rental charges are determined according to the value of the crops being
produced. This exploits those farmers who are taking additional risks to produce high-value crops.
This is particularly harmful to landless smallholders, who often do not have any income-generating
alternative other than rented land. Such tenants often choose labour-intensive crops with high
returns, maximizing the use of household labour, which is a sensible choice, but, because of the
payment structure, it is costly for the tenant.
To protect tenants, particularly landless smallholders, it is important that a land rental system
be developed based on the productivity of the land and not on the effort and risk taken by tenants
in growing high-value crops, which are also associated with high risks. The system should also
ensure that tenants can rent the land for several years rather than the current system in which
landlords can terminate lease agreements after only one season.
The IFAD country representative should approach the relevant Government authority to offer
assistance in preparing a technical study to be used in high-level policy dialogue with Government
policymakers. The study should use a consultative process that involves workshops for relevant
stakeholders. At the workshops, findings and recommendations could be discussed and agreed
upon. Finally, the technical study should be presented to a broader forum, including
parliamentarians and policymakers in the executive branch. Based on the outcome of the broader
consultation, IFAD should assist the Government in drafting the necessary legal document for
parliamentary and governmental deliberations.
Air cargo-handling. The current framework for horticulture cargo-handling at Cairo International
Airport has reached its limit in export volumes. Meanwhile, stakeholders believe that air freight is
30-50 per cent more expensive at the airport relative to fees in competing countries. Only one
company is licensed to handle horticultural produce. This is thought to be the main cause of the
relatively high freight costs. The cargo space on passenger planes out of Cairo airport is fully
utilized, and there are restrictions on exporters hiring cargo planes directly. These are the limiting
factors on the volumes being exported from Cairo airport.
IFAD should champion a study on the economic implications for the horticulture sector if the
competition in cargo-handling is improved and exporters are allowed to charter cargo planes
directly that have landing rights at Cairo airport. If the findings of the study support the suggested
improvements, a policy paper on the issue should be prepared and subsequently used to engage in
policy dialogue to promote the necessary changes.
Investment incentive system. The enormous post-harvest losses of horticultural produce amount
to the equivalent of 11 per cent of Egypt’s total plant production. To reduce these losses, it is
recommended that IFAD offer to assist the Government in developing a tax incentive package that
encourages businesses to invest in cold chains for horticultural produce. The tax incentives should
favour investments situated within the rural area where the horticultural commodities are
produced and produced, and aim to improve the possibility for smallholders to participate in
supplying the domestic and export value chains.
Government involvement in professional associations. The Government and international
donors have provided significant technical support to a number of professional horticulture
associations in Egypt. Despite their youth, these associations have been influential in developing
the sector. However, the Government’s support for the Union of Producers and Exporters of
Horticultural Crops is viewed as a conflict of interest because the union is perceived as a
Government apex institution for all horticulture professional associations, as well as for farmers,
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