The Impact of Economic Reform Policies on the Wheat Sector in Egypt

Abstract

This study aimed to identify the impact of some economic reform policies on the wheat sector in Egypt by examining production, import, consumption, and classification conditions. The goal was to study these variables simultaneously, considering their interconnected relationships and mutual influence. The study comprised six main chapters, in addition to references and appendices. Chapter One provided a literature review and theoretical framework. Chapter Two included a study of the economics of Egyptian wheat production. Chapter Three addressed the conditions of Egypt's foreign wheat trade in two sections. The first section examined indicators of the performance of Egypt's foreign wheat trade globally and locally, while the second section included the determinants of Egyptian demand for imported wheat and wheat flour from the most important global wheat markets to Egypt. Chapter Four included a study of the consumption capacity of Egyptian wheat. Chapter Five examined the economics of wheat milling and flour production in Egypt. Finally, Chapter Six presented an estimate of an econometric model for the wheat sector in Egypt, incorporating the variables discussed in the previous chapters The study explained that by examining the wheat supply response for the period (1982) (2004), it was found that increasing the wheat area for the previous season by 1000 feddans, the supply price by one pound per ton for the previous season, and the net return from wheat relative to local broad beans by 1% in the aforementioned previous season would lead to an increase in the wheat area in the following season by approximately 410, 1270, and 91200 feddans, while the economic reform policy did not have a significant impact on the area cultivated with wheat. When studying the Egyptian demand functions for wheat and imported flour from the most important exporting markets, it was found that the price elasticity coefficient was 0.46, 0.14, 1.8, and 0.51 for Egyptian demand for American, Australian, French, and Turkish wheat and flour, respectively However, when studying the expenditure and consumption expenditure functions for wheat and its products, the results showed that wheat and its main products—flour, baladi bread, and pasta—are essential goods, with expenditure elasticity reaching approximately 0.13 and 0.10 in rural and urban Egypt, respectively. When examining the impact of urbanization on these functions, it was found that all of them shifted upwards due to urbanization. When studying the short-run and long-run cost functions for both mills and bakeries in Cairo Governorate during the period (March 2004–May 2006), it was found that the optimal mill size is achieved at 106,250 tons annually, while the optimal bakery size is achieved at 41.7 million loaves annually. By estimating the current model for the wheat sector in Egypt and using it to predict the internal variables of the model, it was found that the total production volume and import volume were expected to reach approximately 8.99 and 6.47 million tons, respectively, and the area cultivated with wheat was expected to reach approximately 2,380,900 feddans in 2014. These results came from the interaction of all the variables that make up the current model, and therefore they can be used when formulating production, consumption, and import policies affecting the wheat sector in Egypt. When studying the impact of the self-sufficiency policy based on the results of the standard model for the wheat sector, it was found that achieving 60%, 70%, 80%, and 100% self-sufficiency means allocating the largest portion of agricultural land to wheat production only, excluding other major crops, which are concentrated in the required areas for fruits and vegetables. These are requirements that are difficult, if not impossible, to dispense with given the cropping patterns associated with the prevailing consumption patterns in both urban and rural Egypt.