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Globalization Challenges to Egypt’s Production Sectorsthe rural poor. Non-farm income is a meansto reduce income inequality in a land-scarcesetting such as rural Egypt, which pushespoorer households out of agriculture andinto the non-farm sector.Table (3.5) shows the importance ofnon-farm income in total family incomeaccording to per capita income quintiles inrural Egypt. Sources of income shown in thetable are non-farm agriculture, transfers,livestock and rent. For the lowest quintile,non-farm income contributes about 59.0 percent of total income, while it is only 38.4per cent for the highest income quintile.Income from agricultural activitiescontributes only one third of total income.This shows the importance of non-farmincome in terms of its contribution topoverty alleviation and improvement in therural standard of living.Impact on Technology TransferAPR sought the exclusion of governmentfrom direct involvement in production,marketing and agribusiness activities. Thus,the Ministry of Agriculture (MOA) hasbecome responsible for just research andextension. The privatization process is partof the ERSAP, which aims to transformEgypt into a market economy. Thegovernment is keen, however, to protectpublic funds and workers’ rights. Theprivatization process is assumed to beconducive to technology transfer and theupgrading of management, as privateinvestors are supposed to use newtechnologies and to have better managementcapabilities (See Box 3.1)Most challenges confronting the agriculturalsector in Egypt may be attributed to limitedcultivated land, limited water resources (seeBox 3.2), and the rapidly growingpopulation. As a consequence, Egypt hasbeen facing a food gap for the last threedecades. Egypt needs to increase foodproduction vertically through appropriateagricultural technology, such as newvarieties of various field and horticulturalcrops. After APR, the MOA became mainlyconcerned with strengthening its integratedagricultural research and extension, inaddition to its responsibilities in the areas oflegal and regulatory quality control.Agricultural research in Egypt is supportedand financed through governmental andinternational organizations such as USAID,the EU, UNDP, FAO and by countries suchas Japan. This funding support has helpedEgypt strengthen its collaboration andQuintileLowestSecondThirdFourthHighestTotalTable (3.5)Sources of Income in Rural Egypt Ranked by Quintile onthe Basis of Total Per Capita Household Income (1997)Average PerIncome L.E.402.35615.52955.252455.28980.83Non-Farm Agricultural59.052.151.352.538.450.0Share in Per Capita Income(%)35.818.719.420.426.023.9Transfer2619.516.115.116.614.3Livestock5.48.310.68.28.68.3Rental(-2.8)1.42.63.910.43.5Box (3.1)Privatization Program of Agricultural CompaniesBy the end of 1998, the PrivatizationProgram (PP) included 119 companiesrepresenting 38 per cent of the 319 publicbusiness sector companies. In seventy-twocompanies, divestiture of public ownershipexceeded 51 per cent. Thirty-six of themwere sold in the stock market, ten to ananchor investor, and twenty-six to workers’unions. Under the PP, only one companyfrom the agriculture sector was privatized. In1999, the Ministry of Public Business Sector(MOPBS) announced the details of thesecond stage of the PP. This program coveredsixty-two companies for sale. In addition,twenty-eight companies were liquidated.Some of the agricultural companies, whichwere prepared for privatization in the first halfof 1999, were involved in direct agriculturalactivities, while the rest served the agriculturalsector or used agricultural raw materials. Theland owned by agricultural companies wassold to the private sector. In 2000, MOPBScompleted the 1999 privatization program andannounced a new program that included manyagricultural companies.Egypt Human Development Report 2000/2001 - 45