An Economic Analysis of The Impact of Some Trade Policies on Egypt’s Imports of Levantine Maize

Abstract

Maize is an important agricultural and economic crop, being one of the key strategic commodities in the national economy. It is noted that maize consumption in Egypt has been increasing significantly, while local production fails to meet the growing demand. This has led to an increasing need for imports, with Egypt’s maize imports estimated at 8.01 million tons valued at 2.77 billion USD during the period 2019–2023. The research problem lies in the rapid and significant increase in maize demand in Egypt at a time when the cultivated area has declined by 2.112 million feddans, which has reduced local production capacity to meet domestic needs. Consequently, Egypt relies on imports to fill a 47% deficiency in maize supply. The study aims to identify the impact of certain trade policies on Egypt’s maize imports by analyzing trends in maize imports and assessing the effect of price policies on maize production and consumption using a partial equilibrium model. The main findings of the research are as follows: The average maize imports amounted to 7.1 million tons per year, valued at 2,124 million USD, with the average import price rising to 297 USD/ton. Maize accounted for 44%of the total value of grain imports in Egypt, second only to wheat, which represented 50%. Regarding production and consumption, the local production increased after the currency exchange liberalization (2017–2023) to 7.96 million tons, compared to 7.76 million tons before liberalization. Domestic consumption rose to 16.5 million tons, which widened the food gap between production and consumption. The local price was influenced by global prices, with an average of 3,198 EGP/ton, compared to 322 USD/ton internationally. As for the price policy and the protection coefficient, the nominal protection coefficient before exchange rate liberalization was 1.146, indicating producer support. After liberalization, it dropped to 0.57, implying implicit taxation on producers and a decline in support. Using the partial equilibrium model for maize, the average net economic loss in production was 764 million EGP per year. The net economic loss in consumption was about 327 million EGP per year. Producer surplus decreased by an average loss of 6.8 billion EGP, while consumer surplus increased with gains of 27.3 billion EGP. Government revenue declined by 15.8 billion EGP annually, resulting in a net total economic loss of 1.1 billion EGP per year. Economic scenario analysis showed that increasing the local price, production, or consumption by 10% would improve the net economic impact by 11–24%. The results indicate that improving prices and local production can enhance economic efficiency and reduce dependence on imports.