January 9, 2009

Document of the World Bank

Report N

o. 47547-EG

Arab R

epublic of Egypt Linking Funding to O

utputs

Report No. 47547-EG

Arab Republic of EgyptLinking Funding to OutputsExpenditures of the Ministry of Agricultureand Land Reclamation

Sustainable DepartmentMiddle East and North Africa Region

Issues Paper

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IMF MAD MALR M C G MoED MOLD MoF MPWWR MSEA MWRI NASI NGOs NIB NLRP NWRC PBDAC PER SGB SIFs TOR TRIPS UN UNEP W B WFP WTO

International Monetary Fund Ministry o f Administrative Development Ministry o f Agriculture and Land Reclamation Management Consultancy Group Ministry o f Economic Development Ministry o f Local Development Ministry o f Finance Ministry o f Public Works and Water Resources Ministry o f State for Environmental Affairs Ministry o f Water Resources and Irrigation National Authority for Social Insurance Non-Governmental Organizations National Investment Bank New Lands Reclamation Program National Water Research Center Principal Bank for Development and Agriculture Credit Public Expenditure Review State General Budget Social Insurance Funds Terms o f Reference Trade Related Aspects o f Intellectual Property Rights United Nations United Nations Environment Program World Bank World Food Program World Trade Organization

Vice President Daniela Gressani Country Director Emmanuel Mbi Sector Director Laszlo Lovei Sector Manager Luis Constantino Task Team Leaders Ayat Soliman / Alexander Kremer

Acknowledgements

This i s one o f a number o f papers to be commissioned as part o f the Public Expenditure Review conducted by the World Bank under the auspices o f the Ministry o f Finance. This particular was prepared by the World Bank in response to a request from H.E. the Honourable Minister for Agriculture and Land Reclamation.

The team expresses i t s gratitude for the collaboration and support o f the Ministry o f Finance and the Ministry o f Agriculture and Land Reclamation (MALR). The study coordinator within the MALR was Dr. Saad Nassar, Advisor to the Minister. The study focal points were Dr. Adel Beltagy, Chairman o f the Agricultural Research and Development Council, Dr. Ayman Abu Hadid, President o f the Agricultural Research Centre, and Dr. Mohamed Abbas Mabrouk, Acting President o f the Desert Research Centre.

The study would not have been possible without funding from the Government o f the Netherlands and the support o f the Netherlands Embassy in Cairo.

The review was led by Ayat Soliman and Alex Kremer. Alex Kremer authored the review, drawing on papers by Lorenzo Marchesini (consultant), Jean-Marc Bisson (FA0 Technical Cooperation Programme), Taheya Sakr (consultant) and Adel Mostafa (consultant). The Peer Reviewers was Gershon Feder. Additional assistance and advice were provided by Luis Constantino, Mir ia Pigato, Radwan Shaban, S. Ramachandran, Santiago Herrera, Sudhir Chitale, Ahmed Shawky, Enas Shabaan Mahmoud and Rasha Debes.

TABLE OF CONTENTS

0 EXECUTIVE SUMMARY~....................................................,.,................................,..,.,,...,. 1 1 2

WHATIS THEREVIEWFOR ? ............................................................................................. 4 A CHANGING CONTEXT FOR THE MINISTRY OF AGRICUL TURE AND LAND

RECLAMATION.................... ...................................................................................................... 7 3 THE MALR AND ITSEXPENDITURES............................ .................................................. 13

3.1 Organisational profile ........................................................................................................ 13 3.2 EXPENDITURES OF THE M A L R ......................................................................................... 16

3.3 IMPROVING INVESTMENT EXPENDITURE: A QUESTION OF PROCESS .............................. 19

3.4 DUAL ACCOUNTABILITY IN THE GOVERNORATES ........................................................... 22 3.5 STRENGTHENING THE MALR'S MANAGEMENT SYSTEMS ............................................... 22

3.6 STAFFINC.............................................................................................................................~~ 4 FOCUS ON THE RESEARCH CENTRES ............................................................................... 26

4.1 Background ........................................................................................................................ 26 4.2 THE ARC ............................................................................................................................. 28 4.3 THE DRC ............................................................................................................................. 34 4.4 Conclusions for the research centres...................................,............................................37

CONCLUSIONS .' BUILD THE LINKBETWEENFUNDINGAND OUTPUTS.............................40 5 REFE~NcEs.................. ......................................................................................................... 44

0 EXECUTIVE SUMMARY

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This is a review o f the on-budget expenditure o f the Ministry o f Agriculture and Land Reclamation. I t s modest aim is to describe the broad outline o f the Ministry’s expenditure and to identify key themes and issues.

The MALR’s share o f total public expenditure nearly halved over the 5 years to 2006/7. H a l f o f the real terms cut in spending has been in the form o f an 80% cut in investment expenditure. The management information systems are not in place that would tell decision-makers how the investment expenditure cuts will affect the farm sector’s performance.

The post- 1984 hiring freeze has been implemented more completely in the MALR than in other departments. The result i s that 50% o f the Ministry’s staff will retire in the next 5 years. Reliance on temporary staff to fill the gaps will weaken the MALR’s morale, institutional memory and productivity.

Overall levels o f public spending on agriculture are not particularly l o w or particularly high by international standards. At LE 10,000, the average non-salary recurrent (Chapter 2) annual budget per employee appears adequate. So the main issue for the MALR i s more one o f expenditure allocation and efficiency than o f the overall budget envelope.

The MALR’s expenditures reflect the situation o f the 1950s and 1960s, when production was planned and the emphasis was o n traditional crops. Since then, the sector context has changed completely: the MALR’s aim i s to facilitate private sector production and the non-traditional crops are a major source o f growth. So the MALR needs to reallocate spending accordingly.

Within the MALR, public expenditure allocations are uncoordinated. The Diwan-e- Aam (or the Minister’s office) has the responsibility for co-ordinating the government’s support for agriculture. But it does not hold the basic information on expenditures, staffing, activities and outputs that would be required for oversight o f the sector. The rigid investment management procedures in place are not at al l conducive to a results-oriented investment planning.

Frontline fieldworkers in the governorates’ agriculture and livestock directorates are remunerated by the governorate but rely on the Diwan-e-Aam for supplies (Chapter 2) and investment (Chapter 6) funds. This two-fold accountability leads to unnecessary bureaucracy and delays.

The expenditures o f the Agricultural Research and Desert Research Centres (ARC and DRC) are a microcosm o f the MALR as a whole. Investment expenditures have fallen significantly, from 20% o f the budget in 2004/5 to 8% in 2006/7 and spending on supplies and services (Chapter 2) i s down to US$lO/person/year. This encourages

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the ARC to sh i f t its focus towards production for sale o n i t s 24,000 feddan o f prime land (approximately 100 h2).

So the MALR has become an “easy target” for expenditure cuts to achieve fiscal savings. The MALR will remain an “easy target” until it shows clearly and convincingly how it turns budgetary allocations into services for farmers. But reducing the MALR’ s expenditures indiscriminately r isks undermining i t s critical oversight, regulatory and knowledge-management functions.

The sector strategy which the MALR i s preparing will only become reality if the MALR has the necessary skilled staff, management systems and budgets in place. A strategy that proposes ambitious targets without planning the resources to achieve them i s incomplete.

To sum up the review in one phrase, the MALR must link funding to out suggestions in this direction are proposed below.

Ideas for consideration

A.l. Creating a Management Information System which will permit the Minister and senior officials oversight o f the Diwan-e-Aam, Service Authorities and Economic Authorities under their authority. I t would cover: the responsibilities o f each organizational unit (OU), targeted and actual outputs from each OU, staffing levels, and budgeted and actual expenditures. This MIS would provide the information to link expenditures with activities and results. As a subset o f the MIS, setting up a human resources management system, geared towards maximizing the competence and efficient use o f the staff.

A.2. Derive unit costs for the delivery o f standard agricultural service packages, as used in the health and education sectors. For example, how should it cost to deliver extension advice per farmer per year, pest management services per feddan per year or veterinary care per livestock unit per year ? U s e these as a basis for Chapter 1 and 2 budgeting.

A.3. Building on the recent restructuring study executed under the auspices o f the Ministry o f Human Resource Development, map the functions o f the various public organisations under the MALR’s responsibility. O n the basis o f this exercise it would be possible to identifl:

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opportunities for rationalisation and restructuring; skills gaps and key positions; a performance monitoring system, to be integrated into the MIS.

A consultancy company with international experience o f organisational development may be required to support this process.

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A.4. O n the basis o f the above, discussing with C A O A a staffing strategy to fill key vacancies with new hirings, whilst allowing the overall process o f staff reduction to continue. This may involve transferring the work done by key temporary staff into permanent positions.

B. 1. Ensuring that the Diwan-e-Aam’s Economic Affairs Department has the opportunity, s k i l l s and resources to perform economic investment appraisals.

B.2. Conducting priority ex-post economic evaluations for land reclamation and researcl- expenditures.

B.3. Create an expert committee with the trust both o f the M o E D and the MALR t c quality control the appraisal dossiers and makes appropriate recommendations.

B.4 O n this basis, developing a mutual understanding between the MALR and the MoEC that on the one hand investment proposals will be prioritized and on the other they will be considered for funding o n the basis o f their merits.

C . l Developing contract-programmes between the MALR and each o f the Service Authorities and Economic Authorities, with output indicators linked to budget inputs. I C.2. Deconcentrating non-staff operating budgets for Governorate staff to Governorate I level.

D. 1 Reorganization o f accounts and creation of an M I S system that relates financial inputs to service outputs.

priorities through bottom-up analysis o f farmer priorities (ii) allocating funds through (competitive) contract-programs;

D.4 Dividing the ARC and D R C each into three cost-centres: A core cost-centre: generating and disseminating knowledge for public goods (e.g. environment, on-farm water management, zoo noses) and social objectives (e.g. smallholder agriculture). This cost-centre would be funded through the MALR’s general budget, perhaps through a contract-programme arrangement. A production cost-centre: production for sale to farmers. This cost-centre

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I would be self-financing from sales revenues. 0 A partnerships cost-centre, which would conduct research and dissemination

activities commissioned by non-governmental entities, for example the private sector, international research bodies and donor organizations.

Each cost centre would bear i t s own variable costs and a share o f the centres’ fixed costs, based upon a transparent allocation formula. I 1 WHAT I S THE REVIEW FOR?

Rationale for the review

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Agriculture i s at the heart o f Egypt’s economic and social development. I t accounts for around 14% o f the Gross Domestic Product (GDP), 20% o f the total exports and 30% o f the labor force. Close to 60% o f the total population lives in rural areas and most o f them depend on agricultural activities for their livelihoods. In addition to providing the basic food needs o f the population, agriculture produces the raw materials required for agro-industry.

The Egyptian farmer has achieved great increases in land productivity. Wheat yields in the early 2000s reached 6.3 - 6.5 tonnes per hectare, among the highest in the world and up from 4.8 - 5.4 tonnes per hectare in the early 1990s. Yields overall increased by 23% over 1991-2003’.

Since the 1980s the agricultural sector has been - in the Ministry’s own words - “at the forefront o f other sectors o f the national economy in initiating liberalisation and privatisation reforms.” The philosophy has been that the private sector and free markets perform commercial activities more effectively than the state; the role o f the state is then to focus on providing public goods such as regulation, information and knowledge.

This raises the question o f how the Ministry o f Agriculture and Land Reclamation (MALR) should adapt to the new context. At the time o f writing the MALR i s undertaking a major strategic review, entitled, “Upgrading the Agricultural Strategy 2030.” The Agricultural Research and Development Council is co-ordinating the strategic review. 9 working groups have been established. Each has produced an analysis o f the current situation and listed objectives for the future and constraints upon development.

A condition for the success o f any strategy i s that resources should be focused upon priority objectives. This review o f the expenditures o f the MALR can therefore serve as an input into the MALR’s strategic planning.

I t has not always been easy for those working on agriculture to obtain a clear picture o f the MALR’s expenditures. At a time o f rapid change in the sector environment and

’ Staff calculation: weighting each crop by i ts value.

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budgetary envelopes it was felt that i t would be useful simply to set out the MALR’s main expenditure trends in a single profile. It i s therefore hoped that this review will support the annual budgeting work o f the Ministry o f Finance and the MALR. This would be achieved by providing an objective reference point o n key financial trends and issues.

7. It must be pointed out f rom the outset that the senior management o f the MALR is generally aware o f the issues raised in this review and would welcome the implementation o f any sound and long-term solutions, as soon as possible. However, several o f these issues are wider in scope than the MALR and many o f the possible solutions would require the intervention o f other public entities with broader mandates.

Definitions

> In this report “MALR” or “Ministry” means al l the entities dependent upon the Minister o f Agriculture and funded by the budget under his responsibility.

P “Diwan-e-Aam” refers to seven administrative sectors, sometimes known as the “Minister’s Office”.

P The Diwan-e-Aam plus the Service Authorities plus the Economic Authorities make the MALR.

Scope of the review

8. Public expenditure on the agricultural sector includes the fol lowing categories o f spending: (a) In the Ministry o f Agriculture’s budget and executed by the Diwan-e-Aam (e.g. the preparation o f new legislation); (b) In the Ministry o f Agriculture’s budget, but executed by a Service Authority or an Economic Authority (e.g. a research programme o f the Agricultural Research Centre (ARC); (c) In the budget o f a Governorate, and executed by the Governorate’s agricultural officers; (d) In the budget o f another Ministry (e.g. the construction, operation and maintenance o f public irrigation schemes); or (e) In the form o f off-budget deficits o f Economic Authorities under the Ministry o f MALR (e.g. any P B D A C deficits incurred in providing services to farmers, and covered by growth in i t s liabilities). ( f ) In the form o f trading deficits o f parastatals under other ministries providing services to farmers (e.g. losses incurred by the National Cotton Company and the National Sugar Company as a result o f their sales o f inputs to and purchases o f crops from farmers). This form o f expenditure could be quite important where inputs or outputs are subsidised, which i s the case for electricity and fuel, for example.

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This review covers only (a) and (b) above. A limited amount o f information will be presented on (c). For a more in-depth discussion o f public expenditures in the irrigation sector (d), the reader is referred to the note “Cost-Effectiveness and Equity in Egypt’s Water Sector” (World Bank, 2005), which is published o n the Ministry o f Finance’s website: www.mof.gov.eg .

9. The review’s modest objective i s to be an ‘‘issues paper”, in other words to outline the main features o f current expenditure trends and to identify key concerns and topics for possible future analysis. I t was fe l t that the MALR itself should have the opportunity f i rs t to consider the macro-level picture and thereafter identify any micro- level issues which would merit further analysis.

10. There were inconsistencies between expenditure data from different sources. The authors have made every endeavour to reconcile different sources. However, discrepancies between this review and other documents are inevitable.

11. A section o f the review focuses on the MALR’s research expenditures: mostly through the Agricultural Research Centre (ARC), but also through the Desert Research Centre (DRC). They are o f particular interest to the MALR, not only because o f their size, but also because they bring out the issues raised by the core and quasi-commercial activities o f the MALR. The review o f research expenditures i s an example o f the more micro-level approach which could be extended to other areas.

Outline of the review

12. The note i s organised into 5 chapters.

The Introduction describes the purpose and scope o f the review.

Chapter 2 explains how the context o f the agricultural sector has changed, and the adjustment challenge that such change poses for the MALR. It describes how the MALR i s thinking about the future.

Chapter 3 describes the structures o f the MALR and presents expenditure trends for the MALR down to Sector or Authority level. I t benchmarks Egypt’s public spending on agriculture against that o f other middle-income countries. It identifies some key issues to be addressed.

Chapter 4 zooms in on the research institutions o f the MALR, the Agricultural Research Centre and the Desert Research Centre.

Chapter 5 presents some ideas for senior decision-makers’ consideration.

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2 A CHANGING CONTEXT FOR THE MINISTRY OF AGRICULTURE AND LAND RECLAMATION

The context in which the MALR now works has changed greatly since the Ministry took shape. In brief, the MALR was structured to be an instrument o f socialist planning and job-creation and now finds itself charged with facilitating market-led growth. This trend has created new priorities for the MALR which in turn require a reallocation o f MALR expenditure.

Market reforms mean less expenditure needed on managing production

13. Until the 1980s the MALR had the responsibility o f planning and enforcing farmers’ cropping patterns. Preparing the land use plan, having i t approved, enforcing the plan and approving the quotas o f inputs, credit and output sales would have been the main day-to-day activity o f agriculture department staff. However, during the late 1980s cropping patterns were liberalised, except for cotton, rice and sugarcane. Currently the old controls only apply to rice, partly as a way o f managing the demand for irrigation water.

14. Managing the distribution o f subsidised inputs used to be a major activity o f the Ministry and its agencies in the field. But the government quickly withdrew from this function during the 1990s. Until 1991, the Principal Bank for Development and Agricultural Co-operatives (PBDAC), an Economic Authority under the Ministry o f Agriculture, had the monopoly o f fertiliser retailing. By 1994 i t s market share had fallen to lo%, while co-operatives handled 20% and private traders 70% (Saad, 2002). This naturally reduced the responsibilities o f the PBDAC, even though i t s employees s t i l l number around 70,0002.

15. The Government reduced its involvement in cotton production and marketing. Until the early 199Os, the public sector had a monopoly o f cotton marketing, which it used to tax farmers through l o w producer prices. By 1994, the private sector was allowed to trade between the farmer and the ginneries, although not to export cotton. By 1995/6 58% o f cotton was being delivered to gins by the private sector, and the share o f co-operatives had fallen f rom 85% the previous year to 17%. By 2001, 2 out o f 5 ginning companies had been privatised and 70% o f exports were in private sector hands (Mostafa and Holtzman, 2002). Until the 1990s the MALR had sold pesticide to farmers and performed in-field applications. By 2001, after providing training to pesticide companies and farmers, it had transferred these functions to the private sector, limiting i t s own role to regulation.

16. Egypt’s external trade environment also has implications for the role o f the MALR. The Ministry’s focus in the past was very much upon ensuring the production o f traditional crops through the planning system, but there is growing export potential for non-traditional crops. Egypt i s party to several international trade agreements under which agricultural trade liberalisation has been implemented during the last

Source: MALR

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decade: the World Trade Organisation (WTO), the Egypt-EU Association Agreement, the Greater Arab Free Trade Area (GAFTA), under which all inter-Arab trade was to be free by 2005, and the Common Market for Eastern and Southern Africa (COMESA)3. These international trade agreements have opened markets, particularly in the EU and the Gulf, to Egyptian exporters. We estimate, for example that 29% o f the EU’s MFN tariffs in 1995 for agricultural products were over 10%. By 2007, however, this had fallen to 3% under Egypt’s preferential trade agreement with the European Union4.

Trends in public administration

17. Although agricultural co-operatives used to be a big expenditure item for the MALR, they are now o f limited relevance. Following the introduction o f a centrally planned economy in the 1950s and 1960s, around 6,000 co-operatives were formed to serve as instruments o f the planning process: (i) directing and controlling agricultural production down to the individual farm level; (ii) providing farm inputs-including irrigation, pest control and extension services-to farmers at regulated and subsidized prices; (iii) purchasing farm products at fixed prices; and (iv) performing some other social and economic functions in the local community. With the planning approach now defunct, however, the co-operatives’ main activity i s fertilizer distribution. But it i s said that some 40,000 officers work as managers, clerks and accountants in the co- operatives with their salaries being paid by the state. Only an incentive payment i s drawn from the co-operatives (ibid.).

18. The MALR’s staff levels reflect Egypt’s old employment policies. During the 1970s and 1980s the Egyptian Government offered a guarantee o f public employment in the public service to university graduates and then to graduates o f vocational secondary schools and training institutes. It was also accepted that ministries had a social obligation to provide employment to some less skilled workers, even if their activities did not require it. The Ministry o f Agriculture provided tens o f thousands o f jobs during this period; there are now just over 20,000 staff in the Ministry proper, the diwan-el-aam, and around 34,000 in the Agricultural Research Centre, around 70,000 in the PBDAC and also around 20,000 temporary staff, After the balance o f payments crises o f the early 1 9 8 0 ~ ~ a hiring freeze was progressively enforced on the MALR from 1984.

19. Government i s committed to doubling civil servants’ salaries over 2005-2010 -- a commitment made at the start o f President Mubarak’s current term. Within this framework, the Government announced a 30 percent increase in base salaries in May 2008. Since the base wage i s about 30 percent o f the total take-home pay o f civil

On the imports side, there were significant reductions in the level o f bound tariffs, from an unweighted 3

average for agricultural products of 62% in the pre-Uruguay Round base period to around 28% by 2004 (FAO, 2000). The level o f applied tariffs has fallen more slowly: the unweighted average was 19% in 1998 (ibid.) and 16% in 2007 (IFPRI, 2007).

Agriculture method for calculating the ad valorem equivalent o f protection measures. Missing values for 2007 removed.

Source: author’s calculations using the TRAINS database, from the WITS application, with the WTO

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servants, the 30 percent base salary increase will increase the total wage bill by 10 percent in 2008. After 5 years, in 2013, al l allowances related to the base salary will have to reflect the 30 percent increase.

20. The evolution o f the MALR’s expenditures will also need to reflect a future emphasis on deconcentration and decentralisation o f government functions towards Governorate and District level. This direction was confirmed at the political level in the 2007 Party conference and i s being translated into an operational strategy by the Ministry o f Local Development.

The evolution of market conditions

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During the 1950s to the 1980s, the Ministry’s focus was upon planning smallholder/Old Lands production o f traditional bulk commodities. However, new market conditions for agricultural products are creating demand for a different kind o f agricultural service.

In the face o f high world commodity prices and tight international cereals markets, there is a political demand for larger commercial farms to raise Egypt’s self-sufficiency ratio in basic foodstuffs; Growing market opportunities for high-quality Egyptian fruit and vegetables call for quality-oriented supply chains.

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Self-sufficiency i s back on the political agenda. Food represents over 15% o f Egypt’s import bill (World Bank, 2008b). The country i s typically just over 50% self- sufficient in wheat and maize, and practically 100% self-sufficient in rice’. Domestic crop production is relatively stable from year to year because it i s nearly al l irrigated from the Nile.

23. The tightening o f food markets during 2006-8 i s a major concern for Egypt. For consumers, higher food prices are superimposed upon accelerating inflation. Overall inflation in Egypt was 11% in 2007 and 14% in early 2008 (World Bank, 2008b). Relative to overall inflation, the food price index increased by 3% in 2007 and 6%/year in early 2008. These increases are fe l t most keenly by the poorest 40% o f the population, for whom food represents 45%-50% o f consumption. The trade and industry minister and the agriculture minister met farmers and exporters in July 2008 to discuss how to stabilize prices and increase production. The food price increases also have a fiscal aspect: in 2007, food subsidies cost 4% o f the government budget. This cost increases as the gap between market procurement prices and subsidised consumer prices widens.

24. So the Government has announced i t s intention to raise Egypt’s self-sufficiency in wheat to 75%6. This i s to be achieved by a shift towards commercial cereals farming, through a one-sixth increase in the area under wheat, measures to encourage the consolidation o f smallholdings and accelerated yield increases.

FAOSTAT, 2003 data. Daily News - Egypt, August 1 1,2008 6

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25. There has also been rapid growth in demand for quality-differentiated fruit, vegetables and livestock products. This demand has come from the increasing numbers and purchasing power o f the Egyptian urban middle class, the tourist industry, and improved access to European and Gulf markets. Export growth for these commodities i s anticipated at 5 percent per year. From 1995 to 2003, the US$ value o f horticultural exports increased by about 27 percent, whereas the US$ value o f traditional agricultural exports declined by about 7 percent.

26. However, the lack o f adequate storage, transportation, and the lack o f processing and marketing infrastructure constrain horticulture development. Post-harvest losses are estimated for at 60 percent for tomatoes, 40 percent for vegetables and 20 percent o f f ru i ts (World Bank, 2006). The rapid rise o f supermarkets (Traill, 2006) and processed food products will increase the demand for fruit, vegetable and animal products that meet specific quality and timing characteristics.

27. As well as supporting the production o f bulk commodities, therefore, there i s an growing need for the MALR to support farmers with quality regulation and assurance, product innovation, marketing, advice on post-harvest issues and the integration o f smallholders into supply chains. These functions were not such high priorities when the ministry took shape in the 50s, 60s and 70s.

The evolution of resources and technologies on the supply side

28. Agriculture’s success will increasingly be measured in terms o f water-use efficiency. The current water availability o f about 5,000 m3 per feddan per year i s l ikely to drop to 4,000 m3 per feddan per year by 2025’ - a decrease by 20 percent. Irrigation water will therefore be increasingly scarce. So it i s imperative to increase value-added per cubic metre o f water, meaning a shift towards intensive (drip and sprinkler) irrigation and high-value cropping.

29. The growing importance o f the New Lands and improved irrigation technologies will reinforce the MALR’s focus on quality-based supply chains. The New Lands are now around 20% o f Egypt’s crop land. The MALR’s target i s to expand them by 150,000 feddan per year, thus doubling their area by 2017. Target areas are located in Upper Egypt and Oases (New Valley Governorates), East and Nor th o f the Suez Canal and in the South Valley. In the new lands, soils are mineral poor, sandy and calcareous, although well aerated and therefore unsuited to fieldcrop cultivation but highly suitable for the production o f horticulture crops. Irrigation schemes in the new lands are designed based on the understanding that farmers will use modern, high efficiency, irrigation technology (such as center pivots, linear move and drip irrigation). This level o f technology requires considerable on-farm investment.

30. One effect o f climate change will be to increase the focus on the New Lands relative to the O ld Lands. Sea-level r ise will significantly reduce land availability in the northern delta, through flooding (and salt-water intrusion.

7 Source: Rural Development Policy in Egypt towards 2025, Alterra-rapport 1526, I S S N 1566-7197 (2008)

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http://geology . com/sea-level-risehile-delta. shtml

31. Again, these supply-side trends mean that the MALR needs to reallocate funding to new priorities: horticulture, on-farm water management, and post-harvest supply chains.

The MALR ’s strategic priorities

32. Government’s strategy for agricultural development i s contained in a 2003 document titled: “The Strategy o f Agriculture Development in Egypt until the Year 2017”. MALR i s presently updating the 2017 strategy so as to extend i t s horizon to the year 2030, and to adjust i t s contents to the Socioeconomic Development 6th Five-Year Plan 2007/08-2011/12.

33. The specific objectives o f the 201 7 strategy are: (a) the expansion o f cultivated area by reclaiming new lands (horizontal

expansion) (b) to increase irrigation efficiency in the old lands, and yields in both the old

lands and the new lands (vertical expansion) (c) the increase in value added o f agricultural production (d) the promotion o f agricultural exports.

34. The instruments proposed to implement the 2017 strategy are very different from those o f the pre-reform period. The Ministry had once intervened by administering production plans, backed up by the distribution o f subsidised credit and inputs. As Table 1 shows, however, the activities proposed for 2003-2017 are focused regulation, information, knowledge and institutions, as well as public investment in irrigation. In other words the MALR wants to reposition i tse l f as a provider o f public

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goods, facilitating market-led growth, while farmers and other private operators make the production decisions.

Instruments

Objectives

Expansion o f cultivated area Increase irrigation efficiency Increase value- added of production Increase exports

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Table 1. The activities in the 2003-2017 strategy concentrate on facilitating private sector growth

Direct involvement in production

Facilitating the private sector

Provision Planned Public Regulation Technology Support Informatio Other o f inputs production physical and market development for farmer n services and investment reforms and transfer groupings subsidies

- - - - - - - - - - - 1 2 1

1 2 1 - - - - - -

- - - 3 2 2 1 2

2 1 - - - - - -

Conclusion

35. Agriculture is now operating in a new context, and the Ministry’s strategy has adapted to that context. The question for the expenditure review is: how can Government adapt the MALR’s expenditure patterns to the new strategy ?

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3 THE MALR AND ITS EXPENDITURES

3.1 Organisational profile

Figure 2. Pr. ipal agriculture expenditures in FY 2006/7

Minister of Agriculture

Economic Service Authorities Authorities Diwan-eAam 1 bn I LE6.0 bn 1 LE1.1bn I

j Development I I

Governorates

Administrative bodies

36. The core o f the MALR i s variously known as the “Diwan-e-Aam”, the “Minister’s Office”, the “Ministry” or the “7 Sectors”. I t s total on-budget expenditures in FY06/07 were LE 681 mil l ion. It consists o f the:

(a) Authorities Sector and Minister’s Office Affairs; (b) Economic Affairs Sector (c) Agricultural Guidance Sector; (d) Agricultural Services Sector; (e) Land Reclamation Sector; (f) Development o f Animal Wealth Sector, and, (g) Financial and Administrative Affairs Sector.

Each of the 7 MALR Sectors consists o f a varying number o f Central Departments (26 in total) and each Central Department i s composed o f several General Authorities (109 in total)’.

37. The Diwan-e-Aam employs around 20,000 permanent staff and represents the Ministry’s headquarters function. However, it also includes secondees to senior positions in agriculture Directorates at governorate level (normally one Under- secretary and two Deputy Under-secretaries per governorate). For historical reasons,

These General Authorities are sub-units o f the 7 Departments and should not be confused with the Service 8

Authorities or Economic Authorities, some of which are also titled ‘General Authorities’.

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the Desert Research Centre (DRC) i s usually listed together with the Diwan-e-Aam as another Administrative Body, even though it has more in common with Service Authorities such as the ARC. I t s on-budget expenditures in FY06/07 were LE 56 million.

Service and Economic Authorities

38. Two other categories o f organisation are included in the budget o f the MALR under the Minister’s responsibility: the Service Authorities and the Economic Authorities. Different documents sometimes name and group them differently. This review will refer to the fol lowing :

Service Authorities: (a) Agricultural Research Centre (ARC) (b) General Authority for Land Reform (GALR) (c) Fund for Cotton Improvement (FCI) (d) General Authority for Soil Improvement (GASI) (e) Fund for Agricultural Land (FAL) (f) General Authority for Price Stabilisation (GAPS) (8) General Authority for Veterinary Services (GAVS) (h) General Authority for Fisheries (GAF) (i) General Authority for Lake Nasser (GALN)

Economic Authorities (i) General Authority for Egyptian Agriculture (GAEA) (k) Principal Bank for Development and Agricultural Co-operatives

(1) General Authority for Construction and Development Projects (PBDAC)

(GACDP)

39. In terms o f staffing and expenditure, the Service and Economic Authorities are much larger than the Diwan-e-Aam. The total on-budget expenditures o f the service authorities were LE 1,098 mi l l ion in 2006/7. Those o f the economic authorities were LE 7,847 million. Using the average wages and compensation cost per employee for the Diwan-e-Aam’, one can estimate that the Service Authorities employ around 65,000 people in total and the Economic Authorities around 15,000 people. However, the Principal Bank for Development and Agricultural Co-operatives, an Economic Authority, i s said by senior MALR staff to have approximately 70,000 employees. This presumably includes a large number o f part-time co-operative employees.

Other entities

40. Three funds are mentioned as distinct entities in some documents, but their expenditures do not appear separately. These funds are the Cotton Insurance Fund, the Livestock Insurance Fund, and the Reclamation Land Fund.

LE 10,076 per person in FY 06/07.

14

41. Each Governorate has a budget for agriculture which lies outside the budget and responsibility o f the Minister o f Agriculture. (It belongs to the budget o f the Ministry o f Local Development - MOLD). Governorates’ total agricultural sector expenditure in FY 2006/7 was LE 1.3 billion. Another LE 0.3 bi l l ion was spent on the Governorates’ veterinary directorates. Assuming that average salary costs in the Governorates are the same as for the Diwan-e-Aam, total employment in Governorates’ agricultural and veterinary services would be no less than 29,000.

42. Other major expenditures on agriculture l i e outside the agriculture sector budget altogether. The subsidies o f the Ministry o f Water Resources and Irrigation (MWRI)” for irrigation amount to around LE 1.8 bi l l ion per annum (World Bank, 2007). Despite the liberalisation o f most agricultural markets, the Government still intervenes with support prices for wheat and administered prices for sugar (Casing et al., 2006). The cost to the budget o f price support varies f rom year to year, and has not been calculated for 2008. But with high world prices, the transfer from Government to farmers through price support i s l ikely to be low.

43. So, as Figure 3 shows, there are several different definitions o f “agriculture public expenditure”. The Diwan-e-Aam i s the focus o f the senior officials in Cairo headquarters, but it represents less than a tenth o f the MALR’s LE 7.8 bi l l ion spending; the vast majority belongs to the Service and Economic Authorities. Add in the agriculture and veterinary sectors in the Governorates and the total comes to LE 9.4 billion. Irrigation subsidies bring the total to around LE 11 billion.

Figure 3 , Four different definitions of public expenditure on agriculture

LE 681 million

Agriculhrre and Irrigation c. LE 11 billion

lo recurrent plus amortized capital expenditures on quasi-private goodshervices)

15

3.2 EXPENDITURES OF THE MALR

44. This section will see how Egypt’s spending through the MALR and Governorates’ agricultural and veterinary directorates matches up against other countries’ spending on agriculture. Then it will ask how spending i s changing over time, and see where i s the growth and where the decline in expenditure.

International comparisons

45. How does Egypt’s spending on agriculture match up against other countries’ ? A good indicator i s the value o f public spending on agriculture as a percentage o f the value o f agricultural GDP. We compared Egypt’s public spending on agriculture with that o f other middle-income countries with per capita GDP o f less than $10,000 per year. (Unfortunately the most recent data are from 199911.) Public spending on agriculture ranged from 1% o f agricultural GDP in the Philippines to 23% in Tunisia. Egypt was in the middle o f the range, at 11%. The reductions in public spending on agriculture since 1999 wi l l probably have pulled Egypt down, but it i s s t i l l within the normal range.

Figure 4. Public expenditure as a percentage o f agricultural value-added, 1999

20%

15%

10%

5%

0%

Note: middle-income countries with GDP per capita < $10,000. Source: World Bank Public Spending dataset

Trends in expenditure

46. The MALR’s share o f total public expenditure nearly halved over the 5 years to 2006/7. As Table 2 shows, the real expenditure o f the MALR and i t s Authorities (row 5) fe l l by 31% over 2001/2-2006/7. The MALR’s Diwan-e-Aam, i t s Service Authorities and the Economic Authorities all experienced expenditure cuts. Total

Source: World Bank Publ ic Spending Dataset 11

16

public ex enditure in Egypt, however, increased by 18% in real terms between 2001 and2006 . p2

200 112002 200512006 200612007

1. MALR Diwan-e-Aam 2. 9 Services Authorities plus DRC

3. Sub-total (1+2)

1,011.7 1,007.1

573.8 536.7 932.9 908.2

I 2,018.8 I 1,506.7 I 1,444.9 I 4. 3 Economic Authorities I 6,960.2 ~ - 1 4,418.4 I 4,737.0 I 5. Sub-total (3+4)

6. Governorates 7. Other en ti tie^'^ 8. Sub-total 111 (6+7)

Total (Sub-totals I+II+III)

no data available

47. Table 3, Table 4 and Table 5 show how the expenditures o f the Diwan-e-Aam, the Service Authorities and the Economic Authorities have changed over 200 1 /2-200617 in real terms, The striking point i s that the total expenditure o f the MALR has fallen by a third while staff expenditure (chapter 1) has been maintained and purchases o f goods and services (chapter 2) have only fallen slightly. This i s because investment expenditure i s now approximately 70%, 60% and 100% lower in real terms for the Diwan-e-Aam, Service Authorities and Economic Authorities respectively. The total o f investment expenditure in real terms fe l l by around 80%. Note that the years under comparison, 2001/2 and 2006/7, are five years apart, so this i s not the result o f variation in investment spending across the planning cycle.

48. Within Chapter 1, the savings from retirements are being cancelled out by increases in salary bonuses. These were around 30% o f basic salary in FY 2006/7, 40% in FY 2007/8 and 60% in FY 2008/9. The MALR i s negotiating for 75% in FY 2009/10. These bonuses are officially described an incentive for extra work, but are applied to all staff. They are said to be usually higher in revenue-generating ministries than in service ministries such as the MALR, but this could not be verified.

49. The biggest single expenditure flow i s the Chapter 4 (subsidies, grants and social benefits) spending o f the General Authority for Construction and Development Projects (GACDP). This was LE 5.0 billion in 2001/2, LE 3.8 billion in 2005/6 and

General government final consumption expenditure (constant 2000 US$). Source: WB/GDI database. i.e. Protecting Biological Diversity and Nature Views & National Water Research Center

12

13

17

LE 5.0 bi l l ion in 2006/7. In 2006/7 this item was 64% o f the MALR’s entire expenditure and 7 times bigger than the Diwan-e-Aam’s expenditure.

FY 2001102 FY 2005106

50. The main job o f the GACDP i s to execute the non-irrigation components o f land development projects. This expenditure represents capital investment. However, since GACDP i s an Economic Authority, i t i s managed as a Chapter 4 subsidy to the GACDP rather than as a Chapter 3 public investment project. So it is not subject to the usual scrutiny and control o f the M o E D M A L R investment budgeting process.

FY 2006107

5 1. The MALR may therefore wish to conduct a detailed public expenditure review o f the GACDP, given the high volume o f expenditure. This review could examine the economic rate o f return o f land development spending, and the cost-efficiency o f the GACDP’s execution. It could also assess the procedures in use to identify, appraise and evaluate land development investments.

Table 3 Expenditures by budget chapter, in constant FY 200112 prices. MALR Diwan-e-Aam Ewenditures

Chapter 1 Chapter 2 Chapter 3 (old) Chapter 3 (new) Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8

- wages and compensation o f employees - purchase o f goods and services - investment - interest - subsidies, grants and social benefits - other current expenditures - investment - acquisition o f financial assets - Repayment o f loans

129.8 11 1.0 563.3

207.6

159.1 103.3

10.6 6.2 0.4

203.3 23.7 67.2

153.1 124.0

5.4 11.3 0.4

166.9 18.2 57.4

Total MALR Diwan-e-Aam in Constant PricesI4

Source: Basic data sourced in May 2008 from the MoF by the PER-Agriculture Issues Mission, CPI

Table 4. Nine Services Authorities and DRC. Expenditures by Budget Chapter, in Constant FY 2001/02 Prices

all values in LE million I Expenditures I I FY2001102 I FY2005106 I FY2006/07 I

Chapter 1 Chapter 2 Chapter 3 (old) - investment

- wages and compensation o f employees - purchase o f goods and services

475.8 161.6 286.3

547.9 98.9

540.6 120.3

The correction factor applied to nominal values so as to obtain the values in constant prices of FY 2001/02 is based on the consumer price index (CPI). FY 2001/02 = 1.0000, FY 2005/06 = 1.143, FY 2006107 = 1.269.

14

18

Exoenditures

Chapter 3 (new) - interest Chapter 4 Chapter 5 Chapter 6 - investment

Chapter 8

- subsidies, grants and social benefits - other current expenditures

Chapter 7 - acquisition o f financial assets - Repayment o f loans

I all values in LE mil l ion

0.3 0.3 83.4 28.4 62.1

70.8 76.7 177.6 105.3

4.8 0.0 4.0 3.1

~

FY 2001/02 I FY 2005/06 I FY 2006107

Total Services Authorities in Constant Prices

I Source: Basic data sourced in May 2008 from the MoF by the PER-Agriculture Issues Mission, CPI I

Table 5 Expenditures by budget chapter, in constant FY 2001/2 prices. MALR Economic Authorities

all values in LE million

Chapter 1 Chapter 2 Chapter 3 - investment (OW Chapter 3 - interest (new) Chapter 4 Chapter 5 Chapter 6 - investment Chapter 7 Chapter 8

- wages and compensation of employees - purchase of goods and services

- subsidies, grants and social benefits - other current expenditures

- acquisition of financial assets - Repayment of loans

FY 2001/02

86.5

Expenditures

FY 2005/06 FY2006/07

118.1

Total Economic Authorities in Constant Prices

Source: Reworked constant prices, other data sourced in May 2008 from the MoF by the PER-Agriculture Issues Mission

3.3 IMPROVING INVESTMENT EXPENDITURE: A QUESTION OF PROCESS

52. The investment expenditures o f the MALR have decreased much faster than those o f the Egyptian Government overall. The investment expenditures o f the Egyptian Government overall rose from LE 19.8 billion in FY 2001/2 to LE 23.8 billion in FY 20O6/7ls, a decline in real terms o f only 5%.

53. The largest source o f savings within the MALR has come from requiring the Economic Authorities to finance any investment from their own resources. The

Is Purchase o f non-financial assets. http://www.mo f.gov. eg/English/publications/Reports+and+Indicators~gyptian+Economic+Monitor+- +March2008.htm

19

ending o f the Economic Authorities’ budgetary investment spending accounted for 49% o f the fall in the MALR’s investment expenditure o f this, 85% was due to the General Authority for Construction and Development Projects (GACDP) and the remainder to PBDAC. The cut in budgetary funding for PBDAC investments i s in l ine with the idea o f the bank as a (potentially) commercial operation. The GACDP cut represents a shift away from public infrastructure investment through this entity.

54. The cut in public investment through the MALR i s part o f a broader trend, in which private investment in the sector, though low, i s beginning to fill the gap. Agriculture attracted 5.0 percent o f total investments in FY 2006/0716, which i s relatively low compared to the sector’s contribution to GDP. In FY 2006/07 total investment in agriculture amounted to LE 7.8 billion, a value that has remained essentially constant (in nominal terms) since FY 2004/05. Public investment in agriculture, estimated at LE 2.4 billion in FY 2006/07, has declined since FY 2000/01 when it was LE 2.9 billion; private investment increased from LE 4.3 billion in FY 2004/05 to 5.4 billion in FY 2006/07.”

55. The investment budgeting and planning process i s such that one cannot say whether the investment cuts wi l l significantly affect the agriculture sector’s performance. The MALR responds to the MoED’s circular with a long-list o f investments proposed by Diwan-e-Aam sectors and aggregated by the Economic Affairs Sector. The MoED responds with a lower budget envelope. The MALR’s second-round proposal i s lower than the initial proposal, the reductions usually being achieved by cutting the cost o f individual projects rather than eliminating projects altogether. The MOED then determines the final l i s t o f approved investment projects. The MALR may make within-year reallocations o f up between projects o f up to 20% o f the project value. Any greater reallocation requires written approval o f the MoED.

56. The MoED’s counter-proposals are usually much lower than the MALR’s initial proposal. For example the MALR’s request for 2007/8 was for LE 2.6 billion, and the MoED’s counter-proposal was LE 0.8 billion. Perhaps the most striking feature o f the investment planning process i s that l i t t le if any analysis o f the rationale and economic justification for the projects i s shared either within the MALR or between the MALR and the MoED. The process therefore seems l ike “bargaining” rather than a collaborative effort to focus public resources on productive investment. It i s nobody’s fault; all those involved are doing their jobs to the best o f their abilities given the procedures in place.

57. Such a budgeting process systematically weakens the quality o f investments. It discourages the MALR from being realistic and selective in i t s initial proposal. I t gives the MoED an argument for cutting MALR investment budgets. I t encourages the MALR to spread i t s budget thinly over a number o f projects because unfinished projects wi l l have a priority claim on funding the following year. The MALR does

Source: Egypt State Information Service (2008) and the Egyptian Economic Monitor (March 2008).

Source: Review of the Public expenditures for Agricultural Research in the Ministry of Agriculture and Land Reclamation, Table 1 Annex, FA0 Report (2008).

16

17

20

not have the authority to reallocate funding between projects or to create a reserve, so budget i s tied up in problem projects while successful projects run out o f funds. The outcome i s weak prioritisation, high administrative costs, a breakdown o f t rust within the administration, slow investment implementation and a large amount o f costly capital tied up in incomplete investments. Construction projects tie up funds in unusable incomplete facilities. Research programs, which by their nature require 4-5 years’ continuous funding, are interrupted before they can deliver conclusions.

58. I t should be emphasised that these problems are common to many l ine ministries. Indeed, one o f the perceived advantages o f the new block grants f rom the Ministry o f Local Development to Governorates i s that it gives local government the resources to complete unfinished line ministry investments.

Box: Balouza

The unpredictability o f investment allocations creates inefficiency and waste. The difficulty o f reallocating allocations adds to the problem. The Balouza Research Station o f the Desert Research Center (DRC) i s a single illustration o f a broader malaise.

Between Port Said and Lake Ardabil in North’Sinai, the Balouza Research Station i s intended to provide cropping models for settler beneficiaries o f the nearby land development “mega-project”. In fiscal year 2007/8, LE 11 mi l l ion were allocated under Chapter 6 to begin construction o f the station. In FY 2008/9, however, only LE 1 mi l l ion were allocated, bringing construction to a halt. The result i s that significant costs have been spent, zero benefits are being generated, and line ministry officials are discouraged from putting effort into rational investment planning in future.

59. A strengthening o f the investment budgeting process could involve: 0 Ensuring that the Diwan-e-Aam’s Economic Affairs Sector has the appropriate

skil ls, resources and opportunity to be involved in the preparation o f economic investment appraisals. This should apply to the projects o f the Service and Economic Authorities as wel l as o f the Diwan-e-Aam. Priority economic evaluations being conducted for land reclamation and agricultural research activities. Both land reclamation and agricultural research will be at the heart o f the MALR’s two-pronged strategy o f “horizontal” and “vertical” expansion. Bo th will be key components o f any strategy to increase food self-sufficiency. In both cases the required data from past years are available and major expenditures are being discussed for the future. Ensuring that a party who has the trust both o f the M o E D and the MALR vets the appraisal dossiers and make appropriate recommendations; O n this basis, developing a mutual understanding between the MALR and the M o E D that investment proposals will be prioritised on the one hand and considered according to their merits on the other; and that proposals to reallocate funds between projects will normally be approved quickly.

The current investment planning process makes it difficult to judge whether the cuts in MALR investment funding are justified. The MALR has ambitious goals for agriculture.

21

I t i s therefore recommended that the MALR strengthen the rationale and economic justification for its investment plans.

3.4 DUAL ACCOUNTABILITY I N THE GOVERNORATES

60. An important question for further study i s whether budgets for purchases o f goods and services (chapter 2) are reaching front-line staff in the Governorates. Many developing countries’ agriculture ministries have a very l o w ratio o f goods and service expenditure to staff numbers. This means that front-line staff cannot serve farmers effectively, for lack o f fuel etc.. In Egypt, the basic ratio o f chapter 2 spending per employee seems to be o f the order o f LE 10,000 or $1,850 / person / year. At f i rs t sight this does not appear unreasonable, especially when one considers that there i s not enough work for al l these employees.

61. In the Governorates’, however, agriculture units 97.7% o f 2006/7 spending was for salaries (chapter 1). In their veterinary units 94.8% was on salaries. The ratio o f salary (chapter 1) to goods and services (chapter 2) expenditure i s at least 20 times higher in the Governorates than in the Diwan-e-Aam. With almost no access to non- staff budgets, Governorate staff would be dependent upon the Diwan-e-Aam for any fuel, equipment and supplies that they need to serve farmers in the field. This i s a serious problem for their effectiveness.

62. The agriculture and veterinary sector employees o f the Governorates have technical accountability to the MALR, through the MALR’s Diwan-e-Aam’s secondees to Governorate level. They depend on the MALR for supplies (Chapter 2 funds) and most investment resources. However, the agriculture staff o f the Governorates have administrative accountability to the Governor. This two-fold accountability reduces their effectiveness; i t creates more paperwork and delay and i s said to create opportunities for i l l ic i t personal gain. According to the MOLD, the Government’s intention i s to increase the Governor’s responsibility for supplies and investment funds, so that agricultural services can be co-ordinated at the Governorate level.

63. As noted above, improving on-farm water-use efficiency i s a precondition for future agricultural growth. This requires close co-ordination between MALR and MWRI officers in the field. The ministries’ vertical, centralised command structures currently impedes their collaboration. The deconcentration o f Chapter 2 and 6 budgets to Governorate level would therefore make it easier for the field staff o f the two ministries to work together effectively.

3.5 STRENGTHENING THE MALR’S MANAGEMENT SYSTEMS

64. As noted above, the MALR i s currently undertaking a large-scale strategic planning exercise to the year 2030. Thematic working groups have submitted proposals for sector growth based on am ambitious expansion o f the Ministry’s activities. However, a strategy can obviously only succeed to the extent that the Ministry has the management processes to implement it.

22

65. First, the Diwan-e-Aam does not hold basic information o n the Service and Economic authorities for which it i s responsible, or the sector units in the Governorates. The Diwan-e-Aam’s Directorate-General for Finance and Administration i s only responsible for the expenditures and staff o f the Diwan-e-Aam itself. Breakdowns o f staffing and expenditures o f a Service or Economic Authority are only held within that authority. There i s no single document which sets out the roles and responsibilities o f each component o f the public agricultural “complex”.

66. Second, complete information on revenues retained by the Service and Economic authorities may or may not be held by the Ministry o f Finance, but are not held by the Diwan-e-Aam. Most Service and Economic authorities use their own resources and full information on these resources i s often not shared. Economic and some Service Authorities are not obliged to involve the Diwan-e-Aam in their budget negotiations with the Ministry o f Finance. There are indications that the MALR budget replenishes their accounts when needed with the result that these transfers are not recurrent and do not appear in every budget exercise.

67. Third, there are no visible measures o f the MALR’s outputs. One can get a rough impression o f other ministries’ performance by observing standard development indicators such as school attendance, class size, immunisation rates, under-five and maternal mortality, investment approvals, water connections, sanitation coverage, irrigated area and so on. But the Diwan-e-Aam has no such framework by which to oversee the performance o f public agricultural institutions. Without a clear definition o f the MALR’s outputs, it i s also hard to make a case for increased funding.

68. In such circumstances it is difficult for the Diwan-e-Aam to ensure consistency and co-ordination in the MALR’s activities, staffing and expenditures. N o t only does this reduce the MALR’s day-to-day effectiveness; it also reduces the likelihood o f the current Strategic Planning exercise being translated into real organisational change. Finally, the Diwan-e-Aam’s l imited oversight o f the overall resourcing o f public agricultural services is l ikely to make it dif f icult to have an objective discussion o f appropriate levels o f funding with the Ministry o f Finance.

69. I t is therefore recommended that the Diwan-e-Aam should equip i t se l f with a Management Information System (MIS). The purpose o f the MIS would to provide the standard information required for the Minister and senior officials to oversee the activities for which the Diwan-e-Aam i s responsible. As a f i rs t step, i t would cover, preferably in real time :

0

0

0

0

The responsibilities o f each organisational unit; Staffing levels by organisational unit, function and grade; The expenditures o f each organisational unit. The outputs o f each organisational unit. Linking expenditures to outputs i s essential to ensure internal performance management and to justify the MALR’s staffing and financial resources18.

A nationwide exercise to set up performance monitoring for researchers i s ongoing. Implementing these 18

recommendations would give this exercise some real impact within the MALR.

23

70. Around August 2008, an organisation study o f the MALR was completed under the auspices o f the Ministry o f Human Resource Development (MHRD). Building on this exercise, the MALR should not be in a position to identify:

0

0 sk i l ls gaps; 0

opportunities for rationalisation and restructuring;

a performance monitoring system, to be integrated into the MIS. If required, the MALR may enl ist the support o f a consultancy company with international experience o f organisational development to support this exercise.

3.6 STAFFING

71. I t i s well understood that the employment policies o f the 1960s and 1970s have le f t the MALR with more employees than it needs, creating excessive Chapter 1 expenses. Making staff redundant i s politically impossible. The total value o f chapter 1 expenditures does not therefore indicate the MALR’s human resource capacity. What matters i s the MALR’s ability to place staff with appropriate sk i l ls in key technical and managerial positions.

72. As will be seen below, the current hiring freeze and natural retirements will reduce the MALR’s staff numbers rapidly. The focus should therefore be on ensuring that any attempt that the MALR makes to redynamise i t s operations should be backed by adequate skilled and motivated staff in key positions.

73. Egyptian ministries usually circumvent the hiring freeze by hiring temporary staff. Across the public service, there are about 300,000 temporary employees out o f a total workforce o f about 1,800,000 (World Bank, 2008). Temporaries now number around 20,000 on the MALR’s budget, o f which around 1,360 are within the Diwan-e-Aam. They are on renewable contracts o f up to one year. The growing number o f temporary staff i s said to affect the morale o f permanent staff, who may be receiving lower remuneration for similar work. It also affects continuity and institutional memory.

74. A very high retirement rate provides an opportunity to rebuild the MALR with a streamlined structure and appropriate sk i l ls mix. The hiring freeze has l e f t the MALR with an ageing and shrinking workforce (Table A.8). The median age o f Diwan-e- Aam employees i s 55, meaning that half the workforce will retire in the next five years, by 2013. In ten years, by 2018, 70% o f the workforce will have retired. Only 7% o f the Diwan-e-Aam’s staff were born in 1969 or later. In 2006, the reduction in staff amounted to 3,025 people, and in 2007 to 2,949 people (Unfortunately it was not possible to obtain information o n the ages o f MALR staff outside the Diwan-e-Aam.).

75. The age profile o f the MALR’s Diwan-e-Aam i s very different from that o f the public service as a whole. The median government employee i s in the 40-44 year-old range, about 13 years younger than the MALR Diwan-e-Aam’s median employee. The MALR’s staff numbers peak just before retirement age whereas the overall public service spreads smoothly across the age range. This means that the hiring freeze has been applied much more completely in the MALR since the 1980s than elsewhere.

24

Figure 5. The staff of the MALR’s Diwan-e-Aam are older than those of the public service overall

50.0 n m . . 40.0

Q)

p 30.0 E 5 20.0 $ rc 10.0

0.0 0

-+- Owrall - -t - MALR

Source: MALR, Central Authority for Administration and Organisation

76. This lack o f a persuasive organisational vision may be why the MALR has been unable to make a case for new hirings as other ministries have. I t i s therefore recommended that the MALR should include an exercise to identify key staffing requirements as part o f any organisational restructuring and strategic planning process. Such a framework o f activity targets could be used to identify key skill requirements and justify new hirings and/or retraining programs.

Staff grading

77. The MALR’s staff i s classified according to 7 grades. The top grade i s referred to as “high”, and the other 6 grades are ranked, from the highest to the lowest level, as grade first to grade sixth. The distribution o f MALR Diwan-e-Aam staff by grade i s skewed towards the higher grades. About 20 percent o f the staff falls in the lower grades, sixth, fifth or fourth, while top grades (high and first grade) account for about 33 percent o f the staff (Le,, on average, one top grade manages two lower grade staff). Another 33 percent fal l in the third grade.

78. Within the Diwan-e-Aam there appear to be some imbalances between sectors. The Minister’s Office i s in terms o f staff numbers the most endowed MALR Sector, accounting for 25 percent o f total staff employed by the Diwan-e-Aam. However, the Animal Wealth Sector accounts for only 1.1 per cent o f MALR staff. This figure raises a concern, as: (i) it i s low in absolute terms; (ii) it i s in sharp contrast with the important role livestock plays in the Egyptian agricultural economy; (iii) it i s at odds with the objectives o f the 20 17 agricultural strategy, with particular reference to the promotion o f the livestock sub-sector and poultry, not to mention development o f the fisheries sub-sector (iv) good animal health and meat processing i s critical for human health, and strong co-ordination o f veterinary services i s crucial for dealing with epidemics such as avian influenza. The Economic Affairs Sector, accounting for about 9.5 percent o f the total staff, also appears somewhat understaffed, particularly if one considers the importance, under the new role envisaged for MALR, o f policy

25

definition, strategy setting and project and program design, supervision, monitoring and evaluation.

79. Overall, the distribution o f the Diwan-e-Aam’s staff by profession does not raise any particular concern. Office, administrative and finance/accounting staff make up about 30 percent o f the total, which does not appear at al l to be excessive; staff with a technical degreehackground (agriculture, engineering, and technicians) accounts for about 47 percent o f the total.

4 FOCUS ON THE RESEARCH CENTRES

80. Agricultural research can yield high economic returns. The box shows estimated economic rates o f return for blocks o f countries. Given i t s natural and human resources, Egypt should be able to attain higher rates than the median for Africa, perhaps 40% and more.

Estimated Economic Rates o f Return (ERRs) for applied research Region No. o f ERRs reported Estimated median ERRs Afr ica 44 3 7% Asia 120 67% Lat in America 80 47% OECD 146 40%

Source: Economic impacts o f agricultural research and extension. Handbook o f agricultural economics. Evenson (200 1)

8 1. Between them the Agricultural Research Centre and the Desert Research Centre employ around 36,000 people, nearly twice as many as the Diwan-e-Aam. The Ministry specifically requested that this review should pay particular attention to these organisations. Many o f the themes discussed above for the MALR as a whole apply to the A R C and DRC.

82. The lack o f suitable information/data was a major limitation to the scope and progress o f the review. Nevertheless, although incomplete and sometimes from conflicting sources, the data assembled are sufficient for the purpose o f assessing the overall financial situation in both research centers and identifying the main issues and challenges facing them.

4.1 Background

83. As noted above, Egypt plans to increase agricultural production by reclaiming and exploiting new lands (“horizontal expansion”) as well as by increasing productivity (“vertical expansion”). Agricultural research i s meant to contribute to the latter, essentially by developing improvedhew crop varieties (higher yielding, less water demanding and more stress resistant) as wel l as by actively promoting livestock development (cattle and small ruminants, poultry and fisheries). The ARC i s focusing its activities on the cropped (mainly irrigated) areas whereas the DRC i s covering the

26

desert regions constituting more than 95% o f the country’s territory. Through their own extension workforce (see later), the centers are also expected to lead the process o f transferring improvedhew technologies and practices to farmers and livestock owners.

’ Total public expenditure Public investment in agriculture Private investment in agriculture

84. As Table 6 indicates, the total public expenditures for the ARC and DRC have declined in real terms, as a share o f public expenditure and as a share o f agriculture’s contribution to GDP.

Table 6. Declining public funding for the MALR’s research institutions

I 2000/1 2004/5 2005/6 2006/7 Billion LE, current

prices

Gross Domestic Product g Agricultural GDP z/ Part of agriculture in GDP

Million LE, current prices

332.54 506.51 58.4 75.29 18% 15%

96.1 162.5 2.9 3.2

4.3

Public funding of : ARC DRC

Public funding of ARC and DRC - as share of agricultural GDP - as share of total public expenditure

407.57 49.88 457.45 0.61 % 2.82%

581.14 81.77 14%

201.7 2.8 5.2

392.76 57

449.76 0.55% 2.23%

684.43 94.75 14%

234.9 2.4 5.4

390.9 45.37 436.27 0.46% 1.86%

- 11 At factor cost. - 21 Including forestry and fisheries.

Source : Central Agency for Public Mobilization and Statistics, Ministry of Finance, Central Bank of Egypt, Ministry of Economic Development, ARC and DRC.

85. How does funding for the ARC and DRC match up against the situation in other countries? Comparisons could be misleading since the two centers are not the only organizations carrying out agricultural research in Egypt. For instance, there i s the Water Research Center under the aegis o f the Ministry o f Public Works and Water Resources and also, reportedly, other research activities being carried out in the fields o f forestry and fisheries. On the other hand the expenditures o f the ARC and DRC include non-research activities such as production and extension. Therefore, the level o f 0.46% o f agricultural GDP in Table 1 should be seen as an approximation. It i s nevertheless encouraging when compared to the average o f 0.53% in Year 2000 for

27

all public agricultural R&D spending ’in the developing world (including Brazil, China and India)lg. Private funding for agricultural research in Egypt i s said to be l imited for n o w and most o f it (strictly speaking) consists o f investments in quality control systems for the exportation o f agricultural products.

86. Because o f the staf fs age structure in the ARC (inverted pyramid) and to a lesser extent in the DRC, it i s said that several senior researchers will be leaving over the coming years and very few will be replaced due to the hiring freeze. Without new recruitments, the staf f actual skills mix could become increasingly unsuitable. Particularly for knowledge based organizations such as the centers, an effective human resources strategy accompany efficient financial management.

4.2 THEARC

87. The ARC was set up in the 1970s and i t s official objectives are to “increase crop productivity and quality for ensuring food security, optimize the use o f land and water, promote up-to-date technologies to reduce input costs and increase net returns to farmers”. These objectives should essentially be achieved by: “(i) developing and releasing new high-yielding early maturing varieties and hybrids, also resistant to pests and tolerant to adverse conditions, (ii) producing high quality breeder and foundation seeds to cover farmers’ needs, (iii) developing improved cultural practices for the new varieties and hybrids, and (iv) carrying out extension and training programs in collaboration with the MALR to transfer improved technologies to farmers.”

88. The ARC i s not able to track the allocation o f expenditures between research themes. Linking expenditures to research activities is essential to ensure the allocation o f resources in l ine with the sector’s strategic priorities. For example, the traditional emphasis on germplasm and yield improvements may need to be shared with new priorities: post-harvest issues, product quality and on-farm water-management. An MIS that l i n k s spending to research themes would be a powerful tool for managing such a shift.

89. There are three vice-presidencies: for research, production and extensiodtraining.

0

0

The center’s 16 institutes and 12 laboratories are under “research” 46 regional and f ield stations are under “production” and provide most o f the plant materials and services for sale (more on this subject later); The “extensiodtraining” vice-presidency has an extension workforce composed

o f 628 extension specialists: slightly more than hal f in the center’s central administration for extension and the rest in the regions. In l ine with the center’s responsibility in terms o f technology transfer to the farmers, these specialists are primarily in charge o f organizing and monitoring the activities o f the MALR’s extension agents. In support to this, one o f the institutes (agricultural extension. and rural development) i s meant to develop improved methodological tools for extension work.

l 9 See the CGIAR’s Agricultural Science and Technology Indicators database.

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The MALR i s has stated that i t will place al l extension services under the ARC. The details remain to be clarified. The A R C has a board o f directors chaired by the Minister o f the MALR and also composed o f key persons in the center, the Advisor to the Minister as wel l as representatives from the DRC, the Academy o f Scientific Research and Technology, state universities and the private sector. The composition o f the board i s therefore weighted towards the A R C i t s e l f and the MALR. Increased representation o f outside interests (e.g. farmer organizations, business associations) generally improves the accountability and performance o f public agricultural research institutions.

ible 7. Expenditures and staffing of the ARC LE millions, current

prices Actual (200617) Staff I 1

Crop productionlprotection Horticultural Crops Institute Plant Protection Institute Field Crops Institute Cotton Crops Institute Plant Pathology Institute Agr. Pesticides Lab Sugar Crops Institute Gene Bank Agr.Genetic Engineering Institute Date Palm Lab

Food processing Food Technology Institute Quality Control Institute Food & Feed Lab

Livestock development Animal Production Institute Animal Health Institute Vet. Serums & Vaccines Institute Animal Reproduction Institute Veterinary Control Lab Poultry Production Lab

Soil and water developmentlconservation Soil, Water and Environment Institute

Agricultural extension Central administration for agr sxtension 4gr. Extension & Rural DeveloDment Institute

115.19 30.39 28.99 17.22 12.86 8.76 6.71 6.42 1.68 1.63 0.53

18.51 13.20 2.97 2.34

80.94 33.71 28.28 12.41 5.09 1.05 0.40

14.96

14.96

18.25

11.47

18.4% 10341 2580 2688 1965 1170 584 608 552 20 174

2.9% 1283 968 50

265

12.9% 6022 2516 2255 789 381 81

2.4% 1962

1962

2.9% 1397

830

567

30.1%

3.7%

17.5%

5.7%

4.1%

29

I C ’I LE millions, current ’ prices . Actual

(200617) staff I/

Fishery development Aquaculture Lab

Farming systems development Central administration for agr. engineering Agr. Engineering Institute Agr. Systems Lab Experimental green houses

Socio-economy Agr. Economics Institute Design & Statistical Analysis Lab

Climate change Agr. Climate Lab

Administration of research stations

General Administration

Total

3.50 3.50

42.50

29.02 7.77 4.16 1.55

6.34 4.74 1.60

0.17 0.17

66.45

260.77

627.58

- 11 Including the researchers, assistants and support staff.

Source : Agricultural Research Center.

0.6% 144 144

6.8% 3131

2359 714 58

1.0% 692 692

0.0% 30 30

10.6% 3394

41.6% 5973

100.0% 34369

0.4%

9.1%

2.0%

0.1%

9.9%

17.4%

100.0%

90. Table 7 gives a picture (as complete as possible) o f the center’s expenditures and staffing in Fiscal Year 2006/7. The main items are for general administration which accounts for 42% o f the expenditures and 17% o f the staff, crop productiodprotection with 18% o f the expenditures and 30% o f the staff, and livestock development with 13% o f the expenditures and 18% o f the staff. The expenditures associated with the research stations could not be broken down by subject-matters but it i s assumed that crop productiodprotection and livestock development would constitute the bulk o f their activities.

91. At f i rs t glance, it seems that the general administration - composed o f the general office plus the central administration for activities in “experimentation” (including agricultural machinery) and extensiodtraining, have a disproportionate share o f the total expenditures given that most o f the center’s activities should be in the field.

92. Table 8 presents the overall revenues and expenditures for selected years. The decline in public funding has been more than compensated - in terms o f source o f funds - by

30

the proceeds from the sales (examples: foundation seeds and vaccines) and services provided (example: lab testing and technical advice in horticulture). In fact, the saledservices accounted for 36% o f the total revenues in 2006/7 (LE 224.67 mi l l ion or around US$ 42 million) compared to 27% in 2004/5. This substantial increase in saledservices encourages a shift towards activities directly linked to “production” as opposed to research work2’. There is the real possibility that the A R C becomes a production rather than a research center.

93. The expenditure on goods and services (Chapter 2) per employee i s o f the order o f LE 1 ,OOO/persodyear, a tenth o f that in the Diwan-e-Aam. At around $1 O/persodmonth, this appears inadequate for applied research. But given the history o f over- recruitment, it is probably unrealistic to expect al l 36,000 staff to be meaningfully employed. Also, as noted below, some o f the ARC’S revenues come from production and sales.

Table 8 R

Resources Public funding 11 407.57 392.76 390.9 Saleslsenrices 21 160.83 168.74 224.67 Others - 31 16.98 10.32 12.01

Total resources Part of sales in total

585.38 571.82 627.58 27% 30% 36%

- 11 Ministry of Finance and National Investment Bank. - 21 From seeds, vaccines, lab tests, etc. (25% to MoF, 75% to ARC). 31 Grants and external loans. Note : Proceeds from sales of agricultural produce goes entirely to the MoF.

Expenditures Investments 41 116.19 Operations 469.19

- others 21 135.67 Total expenditures 585.38

- salarieslcompensations 333.53

Part of investments in total Part of salaries in total expenditures

20% 57%

57.38 514.44 402.35 112.09

571.82

10% 70%

47.97 579.61 438.47 141.14

627.58

8% 70%

Buildings, vehicles, equipmentlmaterials, etc. - 51 O&M, agricultural inputs, interest on loans, etc. Source : Agricultural Research Center.

*’ This i s exacerbated by the fact that some o f the proceeds are used for financial incentives to the staff involved in production.

31

94. The share o f investment in the center’s total budget has also declined from 20% in 2004/5 to 8% in 2006/7 (LE 47.97 million or around US$ 9 million. Moreover, the part o f salaries/compensations in the total expenditures has increased from 57% to 70% over the same period. This situation reduces the margin for financial management by the center’s authorities.

95. The investment funds available for the 6th Plan represent only around one quarter o f those approved for the 5th Plan. All institutes are allocated less investment funds except the animal health institute and the veterinary serums/vaccines institute as well as a newly created gene bank for crops. Livestock development as a whole i s allocated 40% o f the funds in the 6th Plan compared to 17% in the 5th Plan. This comparatively larger allocation i s reportedly because o f the growing needs to buy feeddconcentrates for the animals on station. Climate change has been eliminated from the 6th Plan. The criteria for allocating the funds could not be determined clearly.

96. The ARC owns and operates 24,000 feddan (around 100 km2) o f prime agricultural land. This i s about 0.3% o f Egypt’s cultivated land area. The ARC reports that it generates revenues o f around LE 16 million per year, o f which LE 14 million i s retained by the ARC. The ARC’s revenues work out at LE 580 per feddan owned per year. Average agricultural value-added per cultivated feddw in Egypt in 2005 was LE 4000. The MALR should therefore study what land area i s required for core research purposes, and whether the economic return on the remainder could be improved by some other arrangement.

97. The ARC’s information/data systems have been set up for traditional public finance administration and are not really suited for planninghudgeting by priorities and objectives. Most o f the data are collected and kept manually, and salaries/compensation are treated separately from other expenditures. The result i s that simple tables showing the total amount o f money budgeted and spent annually by each institute and laboratory are not readily available21. Furthermore and probably as a consequence o f this situation, very few output targets and practically no impact targets are set against the annual funds allocated to each institute. In these conditions, it i s difficult for the management to carry out any form o f results oriented planning/budgeting. The Ministry o f Administrative Development has agreed to assist soon in upgrading the center’s systems. It i s hoped that the goal wi l l be to restructure the systems and not simply to “computerize” the existing ones.

98. There are very few data available for assessing the ARC’s benefits to agriculture in quantitative terms. Yield improvements are often mentioned as possible indicators. But, according to the figures provided by the Field Crops Institute, the average yields for important crops such as wheat, sorghum and barley have not increased since 2002

21 The preparation o f Table 8 proved to be quite difficult and lengthy, and i s still incomplete.

32

(2.7, 2.4 and 1.2 tons per feddan respectively 22) whereas the yields for rice and corn have increased by less than 10% 23, For livestock, average milk/meat yields are said to be lower than possible due to suboptimal animal feeding. But, in any event, yield improvements would not only be due to research; they also depend on the extension workforce deployed on the ground - most o f i t being in the MALR - and the climatic conditions, even perhaps better credit facilities. In addition, using the market value o f any additional production as indicator would be highly questionable since prices fluctuate quite independently o f research. O n the other hand, it i s l ikely that a non- negligible part o f the center’s benefits i s derived from genetic improvements that prevent yield declines over the years as opposed to creating increases - for example: the development o f more stress resistant crop varieties and animal breeds. Furthermore, it i s likely that the centers’ extension workforce, under the present circumstances, amplifies the positive impacts o f the research work by helping improve the adoption rates - by farmers and livestock owners - o f the better technologies/practices developed. The ARC is also responsible for the quality control o f food products (bread/bakery, meat/dairy, processed horticulture) and agricultural inputs (fertilizers, seeds, animal feed). These additional activities result in other benefits to the food industry and consumers (essentially better quality o f basic food, at lower prices) as wel l as to the environment. A systematic/complete evaluation o f al l these benefits will almost certainly be required for justifying the wide-ranging support now needed.

99. The potential benefit o f placing extension services under the ARC i s that it will strengthen research-extension linkages. However, there i s a risk o f over-centralization that should be addressed when the restructuring i s being implemented.

I t i s important for efficiency and local co-ordination that administrative and financial deconcentration o f agricultural services towards Governorates should continue. Since the ARC i s not represented in Governorates, there i s a risk that the shift o f responsibility could lead to re-centralization. The function o f the ARC should therefore be to provide f ield agents with information, training and professional development; administrative and financial management o f extension services should take place at the Governorate level. There i s a risk o f an ARC-led extension service becoming top-down. As noted above, the governance structures o f the A R C are somewhat inward-looking. I t s workforce and organizational culture is more scientific than socio-economic or farmer-driven. I t i s therefore essential that the A R C should develop management systems that elicit and respond to farmer demand and priorities. The ARC should reflect on h o w it can boost i t s socio-economic capacity, base its work program on bottom-up assessments of farmer priorities, and involve farmers in the execution o f on-farm research.

’* Some 6.58, 5.8 and 3.0 tons per ha respectively. 23 Field crops cover more than 70% o f the cropped areas.

33

4.3 THEDRC

100. The DRC became a separate organization, under the aegis o f the MALR, in 1990. Its general mandate i s to carry out research for developing Egyptian deserts and newly reclaimed areas 24 and its main objectives are “to : (i) investigate desert potential for agricultural development, (ii) carry out studies on behalf o f government institutions, societies and small landholders, and (iii) prepare postgraduate research assistants and scholars for higher studies in the f ield o f scientific research.” There are two vice-presidencies, for projects and scientific studies, a general administration for training/extension, four research divisions with field experimental stations and specialized laboratories. The board o f directors i s chaired by the center’s President and also composed o f the two vice-presidents, the heads o f the four divisions as wel l as representatives f rom the ARC, MALR and the private sector.

101. The DRC has at various times been attached to the Ministry o f Construction and Development, the Academy o f Science and the Ministry o f Land Reclamation. I t became part o f the MALR when the Ministry o f Land Reclamation merged with the Ministry o f Agriculture. (This contrasts with the ARC, which was always part o f the Ministry o f Agriculture). There i s concern within the D R C that its institutional history and small size make it particularly vulnerable to investment budget cuts.

24 More than 90% o f the country’s population live in the N i l e Valley and the Delta.

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Divisions I 1 27.33 54.9% 920 42.2% -Water Resources and Desert

Soils 10.81 342 - Ecology and Dryland

Ag ricu I tu re 9.81 319 - Animal and Poultry

Production 4.12 152 - Socioeconomic Studies 2.59 107

Experimental Stations 13.87 27.8% 488 22.4%

Administration and Finance - 21 8.62 17.3% 773 35.4%

Total 49.82 100.0% 21 81 100.0% - I / Expenditures and staff for the divisions include the corresponding laboratories. Staff Includes researchers, technicians/assistants (permanent and on fixed terms).

- 2/ Including for train ing/extension .

Source : Desert Research Center.

Note : The expenditures include investments as well as operation costs comprising salaries (see Table 81.

102. Table 9 gives a picture (as complete as possible) o f the center’s expenditures in 2006/7 as well as the staffing. The total expenditures (investments and operation costs including salaries) are estimated at LE 49.82 million (around US$ 9 million) and the number o f staff at 2,18 1 (including researchers, assistants). The four divisions account for 55% o f the expenditures and 42% o f the staff, with “water resources and desert soils” and “ecology and dryland agriculture” representing more than 70% o f the total. The former i s specifically in charge o f groundwater resources development and soil evaluation in deserts and newly reclaimed lands, and the latter o f developing environment friendly agricultural technologies and practices. The expenditures associated with the experimental stations could not be broken down by subject- matters but it i s assumed that the bulk o f their activities would relate to the two divisions just mentioned. Similarly to the ARC, the DRC has a general administration for training/extension.

35

rable 10. Revenues and ExDenditures of DRC (LE millions)

Resources

Public funding I/ Saleslservices 21

Total resources Part of sales in total

49.88 57 3.78 2

53.66 59 7% 3%

- 11 Ministry of Finance. - 21 Lab testing, sales of animals and vegetal materials, etc.

Expenditures

Investments z/ Operations

- others 41 salariedcompensations

Total expenditures

26.14 29.36 27.52 29.64 24.88 27 2.64 2.64 53.66 59

Part of investments in total 49% 50% Part of salaries in total expenditures 46% 46%

45.37 4.45

49.82 9%

14.05 35.77 31.37 4.4

49.82

28% 63%

- 31 Buildings, vehicles, equipment and materials (including temporary workers). - 41 Mainly O&M and agricultural inputs.

Source : Desert Research Center.

103. Table 9 presents the overall revenues and expenditures for selected years. The public funding o f the center has slightly declined since 2004/5, to reach LE 45.37 million (around US$ 8 million) in 2006/7. This has not been totally compensated by the proceeds from the sales and services provided, which amounts to LE 4.45 million (around US$ 0.8 million) or 9% o f the total budget in 2006/7. The share o f investments in the center’s total budget has substantially declined, from 49% in 2004/5 to 28% in 2006/7 (LE 14.05 million or around US$ 2.6 million). Also, the share o f salaries/compensations (mostly fixed costs) in the total expenditures has increased from 46% to 63% over the same period. Similarly to the ARC but to a lesser extent, the DRC’s authorities have therefore limited room for financial management. It i s worth pointing out that the DRC’s public funding and staff size represent respectively 12% and 6% o f ARC’S.

104. The DRC’s informatioddata systems are computerized although, as in the case o f the ARC, they are set up for traditional bookkeeping and not for management

36

accounting. The management, well aware o f this constraint, i s in the process- o f reorganizing data processing. As for the ARC, there are very few data available for assessing the center’s benefits in quantitative terms. For instance, research against desertification constitutes an important part o f the center’s work program and the results - through biological as well as mechanical means - are obviously documented. However, the final benefits to agricultural development and the environment remain to be analyzed.

4.4 Conclusions f o r the research centres

105. The A R C and D R C are involved in genetic improvement (plant and animal) with seemingly great potential in terms o f yield increases, stress resistance and adaptability. For instance, the Horticultural Crops Institute reportedly i s producing virus-free seedlings and propagating superior strains as well as new nonLtraditiona1 fruit and vegetable materials, using tissue culture. This results in increased crop production, which are also more diversified and stable25, and lower production costs. Similarly, crossbreeding livestock strains which are better adapted to small-farmer and/or to desert conditions will create numerous benefits.

106. Both centers’ ini t ial response to the financial constraints has been to expand the proceeds from sales/services, particularly in the case o f the ARC. These proceeds serve to supplement the non-staff budget and also to provide pay incentives to the staff involved in production activities. Commercial production i s not necessarily wrong, but there i s a real danger that the staff focuses i t s attention more and more on production-oriented activities at the expense o f research. And a proper balance between the two types o f activities can only be maintained if there i s efficient monitoring, based on measurable indicators. The existing informatioddata systems - s t i l l mostly manual in the case o f the A R C - is not designed for this purpose.

107. More flexible procedures can make expenditure more productive. Research i s a creative process with uncertain outcomes. Management must be able to systematically reallocate the funds available (and staff if possible) according to the progression o f the various activities being carried out. The MALR Diwan-e-Aam can attach measurable research objectives to funding “blocks” to be granted annually to the centers ; in effect, setting up a mechanism o f contract-programs with output and impact indicators. This would necessitate that the centers upgrade their informatioddata systems and start planning/budgeting by objectives. As in many other countries, the MALR’s funding research centers could be awarded through a competitive grants scheme to encourage relevance and efficiency.

108. Rationalizing the respective responsibilities and activities between both centers would also improve cost effectiveness. Synergies and economies o f scale are probably being missed by not working more closely together. For example, both centers are active in the fields o f livestock and crop production development. It i s recognized that the two centers cover different agro-ecological systems (essentially

’’ Stable meaning less subject t o y ie ld declines due to stress (pests, heat, salinity, etc.).

37

deserts versus crop lands26)., it i s quite possible that the two could make substantial gains in money and time by, for instance, pooling skilled staff, facilities and equipment in plant and animal breeding. Savings could also be achieved by sharing a number o f their general administration services, starting with accounting.

109. However, it i s clear that the division o f labor between the A R C and the D R C i s not 100% clear, and that this i s a cause for concern on both sides. Before the merger o f the Ministry o f Agriculture, which controlled the A R C and the Ministry o f Land Reclamation, which managed the DRC, the overlaps my have been less apparent. Also growing importance o f the New Lands means that the traditional distinction between D R C themes (sandy soil, groundwater, land reclamation, salinification) and ARC themes (alluvial soil, agricultural production, livestock production) no longer holds up. It i s therefore increasingly necessary to clarify the centers’ respective roles.

110. The ARC-DRC division o f labor is o f course part o f a bigger issue: how to co- ordinate Egypt’s many agricultural research organizations: the ARC, the DRC, the Universities, the National Research Center and the Water Research Center. The Council for Agricultural Research and Development has a co-ordination role, but lacks institutional status and authority. Also, the modalities for funding and allocating the newly-decreed Fund for Agricultural Research and Development remain to be clarified. Effective co-ordination and demand-led resource-allocation are needed to ensure that research funds are spent efficiently and without duplication.

111. Finding alternative (sustainable and long-term) sources of funding would obviously alleviate the financial constraints. So far, private f i r m s have been buying goods (plant materials, etc.) and services (lab testing, etc.) from the two research centers, as well as investing on their own in quality control for export (even hiring specialists from importing countries). There i s now a need to see to what extent private companies and/or their associations are prepared to enter into more progressive and durable relationships with the centers - for example: co-funding o f multi-year research programs or even jo int ventures; in genetic improvement, seed production, etc.. Other forms o f partnerships could also help. These could be at the national level (non-governmental and c iv i l society organizations, public and private universities, as well as at the international level (with CGIAR research centers and international organizations such as the Food and Agriculture Organization, the International Fund for Agricultural Development and the International Food Policy Research Institute). Universities should be involved since they prepare the next generation o f scientists. They can provide senior students with relevant knowledge who can normally handle (at modest costs) the first phases o f some o f the research work and thereby acquire useful practical experience for later. Furthermore, farmers and livestock owners should be represented on the governing boards o f the organizations involved since they are the ultimate beneficiaries and their guidance i s indispensable for setting research priorities.

On the livestock side, for example, the ARC tends to focus on cattle and buffaloes, and on meat and milk 26

production, while the DRC’s emphasis i s more on small ruminant and camel breeding.

38

112. Most countries now separate agricultural research from production for sale. This confers a number o f advantages. Production is subject to market discipline, so land and other resources are used more efficiently. Also public expenditures on research are more transparent once the cross-subsidies are eliminated. And once public expenditures become more transparent, they can be linked to outputs and thus controlled more effectively.

113. A less challenging option would be to re-configure the accounting and funding arrangements for the ARC and D R C into three overall cost-centres for each entity: 0 A core public cost-centre: generating and disseminating knowledge for public

goods (e.g. environment, on-farm water management, zoonoses) and social objectives (e.g. smallholder agriculture). This cost-centre would be funded through the MALR’s general budget, perhaps through a contract-programme arrangement. A production cost-centre: production for sale to farmers. This cost-centre would be self-financing from sales revenues. A partnerships cost-centre, which would conduct research and dissemination activities commissioned by non-governmental entities, for example the private sector, international research bodies and donor organizations.

Each cost centre would bear i t s own variable costs and a share o f the centres’ fixed costs, based upon a transparent allocation formula. The advantages o f this arrangement would be many. First, the MALR Diwan-e-Aam, the Ministry o f Finance and the M o E D would see clearly what are the outputs o f the financial contributions to the ARC and DRC. This would strengthen the research centres’ position in budget discussions. Second, the research centres would be able to perform their commercial activities on a commercial basis, without the current unknown cross-subsidy to research. Third, the research centres’ management would have much greater ability to allocate resources effectively within their institutions.

0

0

114. However, a disadvantage o f cost-center accounting i s that it gives management discretion over the allocation o f fixed costs between research and production. Cross-subsidies and poor financial transparency could therefore persist.

115. 0

The research centers need to make a stronger case for their budget. A robust economic evaluation o f their impact could be commissioned from an organization with the t rust o f the MALR, the M o F and the MoED. The current estimates do not have official status, and make the unrealistic assumption that al l yield increases can be attributed to research. There are established methodologies for attributing agricultural growth to research. The International Center for Agricultural Research in the Dry Areas (ICARDA), for example, has experience o f these analytical techniques. Re-organization o f the accounts and creation of an MIS system could show more clearly the relationship between financial inputs and service outputs. (At the moment this relationship i s quite obscure to those outside the centres, which may explain the fal l in funding.) For the ARC, ensure that the assistance now being planned by the Ministry o f Administrative Development i s not only about

39

computerizing the existing systems but also about restructuring them to allow planning/budgeting by objectives. For the DRC, provide similar assistance to help the center restructure i t s existing systems (already computerized). A research strategy document for the MARL 27, which should set clear priorities for research in the ministry, on the basis o f quantifiable criteria and measurable indicators

5 CONCLUSIONS : BUILD THE LINK BETWEEN FUNDING AND OUTPUTS

116. The MALR’s resources are shrinking rapidly. Investment expenditure is in free-fall. Unless hiring policies are changed, i t s staffing levels will drop dramatically over the next 5 years.

117. From a macro-perspective, this i s easy to understand. At a time o f growing fiscal pressures, price subsidies and public service pay increases, al l public expenditure comes under tight scrutiny. Any expenditure that cannot demonstrate a clear social, political or economic benefit i s vulnerable. In these circumstances, the MALR i s an easy target for expenditure cuts. Everybody agrees that the MALR i s s t i l l overstaffed, and its outputs are less visible than, say, the schools, health facilities, roads, canals and water supply systems o f other ministries.

118. But from a sectoral perspective, the MALR i s increasingly called on to deliver support for productivity increases, extension o f the cropped area and high-value supply chains. This comes at a fiscal cost: if the argument for funding i s not proven, the default option at a time o f fiscal stress is rightly to cut funding. The challenge for the MALR i s therefore to demonstrate how it can turn public funding into service outputs for farming. This i s a matter o f strengthening internal management systems. Until the link between funding and outputs i s better understood, nobody can judge whether the current expenditure allocations are too high or too low. This goes for the MALR as a whole or for any sub-unit o f the MALR.

119. The MALR i s preparing a new agricultural sector strategy to the year 2030. I t sets ambitious goals for the sector. But unless it also shows how the MALR’s systems, staff and budgets will be used to deliver such goals, it i s incomplete; it gives the targets but not the means to achieve them. The present review o f public expenditure in agriculture should therefore be seen as an input into the agricultural sector strategy.

120. This report has considered the MALR overall, and the ARC and DRC in a l i t t l e more detail. On the basis o f the above, i t s central recommendation i s to build the link between funding and outputs.

121. The Government has significantly liberalized the agriculture sector environment since the early 1990s. The MALR’s role i s now seen as facilitating

’’ An all-inclusive agricultural research strategy for the country would be larger in scope (see paragraph 85).

40

market-led growth, rather than directing production and the strategy to 2017 fully reflects this. The ongoing work to update the strategy for agriculture to 2030 focuses on ambitious product-by-product growth outcomes. (The aim to become 75% self- sufficient in wheat i s one o f them.) The next step i s to define what the Government will deliver in terms o f outputs to make these outcomes possible; and then to make a case for the resources needed to deliver those outputs (Figure 6).

Figure 6. Output targets are the link between planned outcomes and budgeting

EXECUTION

MF/MED FUNDING OUTCOMES

PLANNING

122. Clearly a brief and broad review like this one cannot be expected to develop precise, recommendations on such complex and important issues. A detailed plan of action should be adopted after consultation between al l the departments concerned and after taking appropriate advice f rom experts with international experience in organizational development. However, the matrix below (Table 1 1) contains some ideas which may merit consideration.

Table 11 Ideas for consideration

A. 1. Creating a Management Information System which will permit the Minister and senior officials oversight o f the Diwan-e-Aam , Service Authorities and Economic Authorities under their authority. I t would cover: the responsibilities o f each organizational unit (OU), targeted and actual outputs from each OU, staffing levels, and budgeted and actual expenditures. This MIS would provide the information to link expenditures with activities and results. As a subset o f the MIS, setting up a human resources management system, geared towards maximizing the competence and efficient use o f the staff. I

41

A.2. Derive unit costs for the delivery o f standard agricultural service packages, as used in the health and education sectors. For example, how should it cost to deliver extension advice per farmer per year, pest management services per feddan per year or veterinary care per livestock unit per year ? U s e these as a basis for Chapter 1 and 2 budgeting.

A.3. Building on the recent restructuring study executed under the auspices o f the Ministry o f Human Resource Development, map the functions o f the various public organisations under the MALR’s responsibility. O n the basis o f this exercise it would be possible to identify:

0

0

opportunities for rationalisation and restructuring; sk i l ls gaps and key positions; a performance monitoring system, to be integrated into the MIS.

A consultancy company with international experience o f organisational development may be required to support this process.

A.4. On the basis o f the above, discussing with C A O A a staffing strategy to fill key vacancies with new hirings, whilst allowing the overall process o f staff reduction to continue. This may involve transferring the work done by key temporary staff into permanent positions.

B. 1. Ensuring that the Diwan-e-Aam’s Economic Affairs Department has the opportunity, s k i l l s and resources to perform economic investment appraisals.

B.2. Conducting priority ex-post economic evaluations for land reclamation and research expenditures.

B.3. Create an expert committee with the trust both o f the M o E D and the MALR to quality control the appraisal dossiers and makes appropriate recommendations.

I B.4 On this basis, developing a mutual understanding between the MALR and the M o E D that on the one hand investment proposals will be prioritized and on the other they will be considered for funding o n the basis o f their merits.

I C . l Developing contract-programmes between the MALR and each o f the Service Authorities and Economic Authorities, with output indicators linked to budget inputs. I (2.2. Deconcentrating non-staff operating budgets for Governorate staff to Governorate level.

42

I D.l Reorganization o f accounts and creation o f an M I S system that relates financial I inputs to service outputs.

D.2 Formulating and implementing a results-based research strategy: (i) identifying priorities through bottom-up analysis o f farmer priorities (ii) allocating funds through (competitive) contract-programs;

I I D.3 Performing an economic evaluation o f the centres’ impact (see above).

D.4 Dividing the ARC and D R C each into three cost-centres: 0 A core cost-centre: generating and disseminating knowledge for public goods

(e.g. environment, on-farm water management, zoonoses) and social objectives (e.g. smallholder agriculture). This cost-centre would be funded through the MALR’s general budget, perhaps through a contract-programme arrangement. A production cost-centre: production for sale to fanners. This cost-centre would be self-financing from sales revenues. A partnerships cost-centre, which would conduct research and dissemination activities commissioned by non-governmental entities, for example the private sector, international research bodies and donor organisations.

Each cost centre would bear i t s own variable costs and a share o f the centres’ fixed costs, based upon a transparent allocation formula.

0

0

123. These recommendations define some priority areas for future expenditure analysis. These are: 0 To develop a system o f management accounting linking outputs with

expenditures, beginning perhaps with the Diwan-e-Aam, the ARC and the GACDP. To do an in-depth public expenditure review o f the GACDP (land reclamation). To identify critical staffing/skills requirements and the Chapter 1 budgetary cost implications. To estimate unit costs for the provision o f standard agricultural services, to estimate appropriate Chapter 2 budget allocations. To estimate ex-post and ex-ante the economic return on ARC, D R C and land reclamation activities.

0

0

0

0

124. Facing rural poverty and now soaring food prices, Egypt i s counting on i t s farmers to solve i t s most pressing development challenges. I t is essential that they should be backed by an efficient and adequately funded agriculture ministry. It i s hoped that this review will make a small contribution to the discussion among Egyptian decision-makers o f how to achieve such an important goal.

43

REFERENCES

Cassing J., Nassar S., and Siam G. (2006) Distortions to Agricultural Incentives in Egypt. Agricultural Distortions Research Project Working Paper 36, December 2006

FA0 (2000) Agriculture, trade and food security issues and options in the WTO negotiations from the perspective o f developing countries. Volume 2, chapter 4.

IFPRI (2007) Impact o f Trade Liberalization on Agriculture in the Near East and North Africa.

Mostafa A. and Holtzman J. (2002) The impact o f policy reform on the cottodtextile sub- sector. In: The impact o f the agricultural policy reform program in Egypt 1996-2002 - conference proceedings. htt~://www.abtassociates.com/reports/IA3 O.pdf

MALR (2003) The strategy o f agricultural development in Egypt until the year 20 17

Omran M. (2002) History o f agricultural policy reform in Egypt. In: The impact o f the agricultural policy reform program in Egypt 1995-2002 - conference proceedings. http://www.abtassociates.com/reports/IA3 O.pdf

Pohlmeier L. (2002) Promotion o f agricultural co-operatives services : a review o f project activities and lessons learnt. Volume 1. Main report.

Saad A. (2002) Fertiliser production and marketing in Egypt. In : The impact o f the agricultural policy reform program in Egypt 1996-2002 - conference proceedings. http://www.abtassociates.com/reports/IA3 O.pdf

Trail1 W. B. (2006) The rapid rise o f supermarkets. Development Policy Review 24:2, 163- 174.

World Bank (2005) Cost-effectiveness and equity in Egypt’s water sector. Egypt Public Expenditure Review. http://www.mof.g;ov.eg;/En~lish/Main%2OTopics/Public%2OExpenditure%2OReview%2O- %20Policv%20Notes. Accessed 13 August 2008.

World Bank (2006) Upper Egypt - Challenges and Priorities for Rural Development. Report no. 36432

World Bank (2007) Arab Republic o f Egypt Public Expenditure Review : Water Sector Note #2. The Efficiency and Equity o f Water Subsidies: Spending Less for Better Water Services. Report no. 40 1 19.

World Bank (2008) Egypt: Government Employment and Wage Policy, June 2008,

44

World Bank (2008b) MENA Economic Developments and Prospects 2008: regional integration for global competitiveness.

45

STATISTICAL ANNEX

46

crop

wheat rice summer maize Nile maize barley sugarcane sugarbeet cotton flax soybean groundnuts sesame sunflower oranges lemons mandarins grapes mangoes bananas apples peaches plums figs guava pomegranate apricot pears olives potatoes tomatoes squash green beans dry-beans sweet potatoes garlic watermelons melons cantaloupes strawberries green-peas cowpeas artichokes eggplants okra cabbages spinaches cauliflowers

Table A. 1 Review of Public Expenditure in Agriculture Issues Paper

Egypt's Cropping Pattern

area in feddan

2,985,286 1,459,534 1,940,261

317,109 147,217 321,383 167,327 656,586

16,345 20,084

148,234 67,742 35,022

224,404 39,913 95,861

160,005 139,433

51,165 65,441 79,399

2,725 78,370 37,850

5,399 20,491

8,394 118,382 300,662 495,381

95,736 52,028 45,165 27,201 26,028

168,995 19,895 60,343 12,032 58,306 15,616 19,268

109,822 16,827 42,942

5,897 11,375

production in tons

8,140,962 6,125,311 6,866,525

83 1 , 509 167,024

16,317,317 3,429,565

0 69,094 25,831

199,558 306,434

34,477 1,940,422

334,435 7 11,464

1,391,749 416,951 922,592 578,249 409,651

13,657 192,253 283,685

27,196 105,901 40,498

314,450 3,167,430 8,391,223

729,772 245,905

52,284 318,933 242,495

1,874,105 262,403 625,187 157,279 245,183

60,222 181,928

1,155,919 113,490 515,477

49,277 113,562

2005f06 yi

tonsffeddan

2.7 4.2 3.5 2.6 1.1

50.8 20.5 0.0 4.2 1.3 1.3 4.5 1 .o 8.6 8.4 7.4 8.7 3.0

18.0 8.8 5.2 5.0 2.5 7.5 5.0 5.2 4.8 2.7

10.5 16.9 7.6 4.7 1.2

11.7 9.3

11.1 13.2 10.4 13.1 4.2 3.9 9.4

10.5 6.7

12.0 8.4

10.0

--- table continues on the next page ---

-I

tonsfha

6.8 10.5 8.8 6.6 2.8

126.9 51.2 0.0

10.6 3.2 3.4

11.3 2.5

21.6 20.9 18.6 21.7

7.5 45.1 22.1 12.9 12.5 6.1

18.7 12.6 12.9 12.1 6.6

26.3 42.3 19.1 11.8 2.9

29.3 23.3 27.7 33.0 25.9 32.7 10.5 9.6

23.6 26.3 16.9 30.0 20.9 25.0

area as a percentage of

total

43.2 21.1 28.1 4.6 2.1 4.6 2.4 9.5 0.2 0.3 2.1 1 .o 0.5 3.2 0.6 1.4 2.3 2.0 0.7 0.9 1.1 0.0 1.1 0.5 0.1 0.3 0.1 1.7 4.3 7.2 1.4 0.8 0.7 0.4 0.4 2.4 0.3 0.9 0.2 0.8 0.2 0.3 1.6 0.2 0.6 0.1 0.2

47

crop

Year

2000 FY 2005106

cucu m bers peppers onions camomille marjoram fennel aromatic plants caraway spear mint pepper mint hibiscus basil coriander anise cumin

cropping index

cropped area cultivated area cropping index

11.2 8.1 138 14.9 8.5 175

Total (**)

Table A.1 (continued) Review of Public Expenditure in Agriculture Issues Paper

Egypt's Cropping Pattern

2005106

area in feddan

70,680 80,370

156,335 9,483 3,569 2,207 3,306 3,564 2,677

420 9,186 5,302

14,455 2,216 5,142

6,916,973 I

production in tons

650,350 543,341

1,925,159 7,935 6,357 3,394

69,943 3,086 4,854

997 5,031

13,599 12,966

1,313 2,722

yi tonslfedda n

9.2 6.8

12.3 0.8 1.8 1.5

21.2 0.9 1.8 2.4 0.5 2.6 0.9 0.6 0.5

j

tons/ha (*)

23.0 16.9 30.8

2.1 4.5 3.8

52.9 2.2 4.5 5.9 1.4 6.4 2.2 1.5 1.3

area as a percentage of

total

1.0 1.2 2.3 0.1 0.1 0.0 0.0 0.1 0.0 0.0 0.1 0.1 0.2 0.0 0.1

I 100.0

Note: (*) 1 feddan = approx. 1 acre = approx. 0.4 ha; (**) berseem is not included in the list of crops.

Source: Rural Development Policy in Egypt towards 2025, Alterra-rapport 1526, ISSN 1566-7197

48

Table A.3 Review of Public Expenditure in Agriculture Issues Paper

Nile Water Use I n Egypt in billion m3

Ag ricu I tu re Municipal Industry

Navigation Total

Total available water Excess

2007 2017

58.0 64.0 5.4 6.6 5.5 8.5 0.2 0.2

69.1 79.3 71.2 76.6 2.1 -3.3

I I

Source: Ministry of Agriculture and Land Reclamation, Upgrading the Agricultural Strategy to 2030 (2008, power point presentation, unpublished).

Table A.4 Review of Public Expenditure in Agriculture Issues Paper Budget Chapters by Old and New Classification Method

Chapter 1

Chapter 2 Chapter 3 Chapter 4

Chapter 1

Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8

Old Classification in Budget Chapters

wages and compensation of employees

purchase of goods and services investment subsidies, grants, social benefits

= current expenditures for salaries & wages of staff and temporary employees, including consultancy services

= all other current expenditures

New Classification in Budget Chapters

wages and compensation of employees

purchase of goods and services interest subsidies, grants, social benefits other current expenditures investments acquisition of financial assets repayment of domestic and foreign loans

= current expenditures for salaries & wages of permanent

= all other current expenditures = interest on domestic and foreign loans

= current expenditures for traveling, representation, etc.

and temporary staff, including consultancy services

Relationship between Old and New Classification in Budget Chapters

Old Chapter 1 Old Chapter 2 Old Chapter 3 Old Chapter 4

- - New Chapter 1 New Chapter 2

- - New Chapter 6 - - New Chapter 3 + New Chapter 4 +

New Chapter 5 + New Chapter 7 + New Chapter 8

- -

49

Table A.5 Review of Public Expenditure in Agriculture Issues Paper

Exports of Selected Agricultural Produce

' 1995

Exports of Selected Crops

2003 Tq-xF US$ x million

increase/ decrease

as a O/O of total value

traditional crops

barley cotton lint maize rice sorghum sugarcane sugar, refined wheat

sub-total traditional crops

2,810.2 10,148.1 10,880.7 7,474.2

830.8 3.3

6,556.4 16,855.6

2,931.4 8,058.3

11,137.4 7,075.9

726.0 3.6

5,784.6 16,015.2

4.3% -20.6% 2.4% - 5.3% - 1 2.6% 9 .1 Yo

- 1 1 .8% - 5.0%

-6.9%

4.1% 14.8% 15.8% 10.9% 1.2% 0.0% 9.5%

24.5 O/o

80.9 O/o

4.3% 11.8% 16.3 O/o 10 -4% 1 -1 Yo 0.0% 8.5%

23.5%

7 5.9% 55,559.3 51,732.4

non-traditional crops

grapes lemons & limes mangoes olives beans, dry

60.6 O/O

3 0.9% 92.2% 23.0%

24.7 O/o 60.3 O/o 11.9% 50.2% 16.7 O/o

51.5% - 20.5 '/o

-8.1%

2.8% 1 ,1 Yo 0.4% 0.0% 1.8% 0.6% 0.6% 1.8% 0.2% 0.0% 4.1% 3.4%

4.6% 1.4% 0.8% 0.1% 1.7% 0.8% 0.9% 2.0% 0.3% 0.0% 6.2% 2.7%

1,952.4 739.6 291.5

28.2 1,264.6

418.8 390.0

1,219.9 151.7

1.8 2,799.5 2,329.2

11,587.2

3,134.7 967.8 560.4

34.7 1,162.3

522.4 625.0

1,365.6 227.8

2.1 4,241.9 1,851.5

14,696.2

cabbages garlic onions eggplant okra tomatoes potatoes

sub-total on-traditional crops 26.8% 16.9% 21.6%

aromatic, medicinal and oil plants sesame seed sunflower seed

497.4 1,039.4

541.8 1,156.7

8.9% 11.3%

0.8% 1.7%

1,536.8 1,698.5 10.5% 2.2% 2.5% sub-total aromatic, medicinal & oil plants

68,683.3 68,127.1 -0.8% 100.0% 100.0% total

Source: World Bank Report No. 36432-EG - Arab Republic of Egypt, Upper Egypt - Challenges and Priorities for Rural Development, Policy Note (June 15, 2006)

50

Table A.6.1 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Financial and Administrative Sector of MALR by Grade and Profession

occupational profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition

and Lab Technicians

Technical Engineering

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture

and Nutrition

Artisanal Occupations for

Machines and Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services

total

High

1

0

0

32

45

0

0

17

0

13

0

0

0

0

106

0

0

0

0

0

0

214

First

2

0

0

46

84

5

0

26

0

18

0

0

2

16

242

6

0

1

0

0

0

448

Second

1

0

0

84

8 1

4

0

42

0

10

0

0

1

25

306

13

0

0

0

0

3

570

Grade

Third

1

0

0

62

77

11

23

71

0

17

0

2

3

14

559

16

0

2

0

0

138

996

Fourth

0

0

0

0

0

0

0

0

0

0

0

3

4

6

209

9

0

7

0

0

101

339

Fifth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

95

5

0

5

0

0

128

233

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1

0

0

0

96

97

total

5

0

0

224

287

20

23

156

0

58

0

5

10

61

1,517

49

1

15

0

0

466

2,897

Source: Data collected in May/lune, 2008 from the MALR during the Ag-PER Issues Paper Mission

51

Table A.6.2 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Animal Wealth Sector of the MALR by Grade and Profession

occupational profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medica I

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Off ice

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services

total

High

9

0

0

2

2

0

0

0

0

0

0

0

0

0

30

0

0

0

0

0

0

43

First

14

0

0

3

7

0

0

0

0

0

0

0

1

0

18

0

0

0

0

0

0

43

Second

8

0

0

9

5

0

0

0

0

0

0

2

1

0

24

0

0

2

1

0

0

52

Grade

Third

15

0

0

5

6

0

1

0

0

0

0

9

3

0

25

0

0

2

2

0

5

73

Fourth

0

0

0

0

0

0

0

0

0

0

0

0

2

0

6

0

0

1

4

0

3

16

Fifth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

3

0

0

3

0

0

5

11

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1

0

3

4

total

46

0

0

19

20

0

1

0

0

0

0

11

7

0

106

0

0

8

8

0

16

242

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

52

Table A.6.3 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Land Reclamation Sector of the MALR by Grade and Profession

occupational profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security Occupations

Agriculture, Nutrition and Lab

Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services

total

High

100

2

1

14

14

0

0

0

0

3

0

64

3

0

27

0

0

0

0

0

0

228

First

108

2

3

28

44

1

0

0

0

5

0

47

27

0

79

0

0

2

7

3

0

356 -

Second

42

5

4

30

26

1

2

0

0

2

0

39

14

0

122

0

0

8

14

7

0

316

grade

Third

290

2

7

18

42

0

12

0

0

8

0

94

94

0

201

0

0

11

10

12

63

864

Fourth

0

0

0

0

0

0

0

0

0

0

0

208

77

0

125

0

0

35

25

7

27

504

Fifth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

10

0

0

46

13

3

18

90

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

10

14

5

25

54

total

540

11

15

90

126

2

14

0

0

18

0

452

215

0

564

0

0

2

83

37

133

1

2,412

Source: Data collected in May/June, 2008 f rom the MALR during the Ag-PER Issues Paper Mission

53

Table A.6.4 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Agricultural Services Sector of MALR by Grade and Profession

occupational profession

Agricul t u rat

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab

Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Works hops

Artisanal for Transportation

Artisanal for A r t and Architecture

Supporting Services

total

High

395

7

0

27

25

0

0

0

0

1

0

193

17

0

46

0

0

0

0

0

0

711

First

417

8

10

24

37

2

0

0

0

2

0

317

20

0

98

0

6

20

10

2

0

973

Second

195

15

12

53

31

3

0

0

0

1

0

206

11

0

124

5

10

12

20

3

0

701

grade

Third

535

6

19

15

35

0

8

0

0

2

0

230

102

0

392

2

8

15

23

13

120

1525

Fourth

0

0

0

0

0

0

0

0

0

0

0

410

48

0

80

0

10

40

38

8

42

676

Fifth

0

0

0

0

0

0

0

0

0

0

0

5

0

0

15

0

1

38

10

5

95

169

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

3

25

12

5

47

92

total

1,542

36

41

119

128

5

8

0

0

6

0

1,361

198

0

755

7

38

150

113

36

304

4,847

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

54

Table A.6.5 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Agricultural Guidance Sector of the MALR by Grade and Profession

grade

Fourth Fifth Sixth total High First Second Third profession

Agricu Itu ra I

Engineering

Law

Administrative Development

305

4

0

4

18

4

5

0

0

0

0

165

4

0

22

0

0

0

0

0

0

298

3

0

8

38

9

24

0

0

0

0

70

9

0

77

0

19

5

28

21

0

103

13

0

38

22

10

21

0

0

0

0

89

4

0

98

0

103

15

45

47

0

467

3

2

16 40

8

28

0

0

2

0

81

56

0

239

0

192

14

50

58

85

0

0

0

0

0

0

0

0

0

0

0

132

50

0

40

0

145

19

75

35

33

0

0

0

0

0

0

0

0

0

0

0

0

0

0

8

0

9 1

29

42

39

67

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

47

15

21

13

29

1,173

23

2

66

118

31

78

0

0

2

0

537

123

0

484

0

597

97

261

213

214

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and

Tech n icia n s Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services

531 609 608 1341 529 276 125 4,019 total

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

55

Table A.6.6 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Minister's Office Affairs Sector of MALR by Grade and Profession

profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab

Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services Occupations

total

High

546

18

11

20

39

12

49

0

0

6

0

96

31

0

88

0

0

0

0

0

0

916

First

512

16

18

26

59

8

43

0

0

7

6

277

35

0

196

1

0

46

35

15

0

1,300

Second

217

25

19

76

47

7

30

0

0

4

5

56

19

0

220

2

7

30

74

28

0

866

grade

Third

312

19

25

17

52

1

, 36

0

0

12

0

127

84

0

458

1

7

35

86

30

102

1,404

Fourth

0

0

0

0

0

0

0

0

0

0

0

146

68

0

132

1

9

58

102

59

77

652

Fifth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

57

0

6

63

37

36

86

285

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

38

36

10

75

159

total

1,587

78

73

139

197

28

158

0

0

29

11

702

237

0

1,151

5

29

270

370

178

340

5,582

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

56

Table A.6.7 Review of Public Expenditure in Agriculture Issues Paper

Number of Employees in Economic Affairs Sector of MALR by Grade and Profession

profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab

Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Workshops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services Occupations

total

High

212

0

0

8

12

0

0

0

0

0

0

49

2

0

25

0

0

0

0

0

0

308

First

209

3

0

14

28

1

0

0

0

1

0

26

3

0

64

0

0

2

2

0

0

353

Second

98

2

0

24

25

1

0

0

0

1

0

17

6

0

107

0

0

3

10

0

0

294

grade

Third

783

1

3

8

31

0

5

0

0

1

0

63

47

0

155

0

0

2

5

0

27

1,131

Fourth

0

0

0

0

0

0

0

0

0

0

0

103

23

0

55

0

1

' 5

10

0

18

215

Fifth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

7

0

0

11

3

0

13

34

Sixth

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

4

0

21

25

total

1,302

6

3

54

96

2

5

0

0

3

0

258

81

0

413

0

1

23

34

0

79

2,360

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

57

Table A.7.1 Review of Public Expenditure in Agriculture Issues Paper

Total employees at MALR by Grade and Profession

I profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

A r t and Media

Medica I

grade

High First Second Third Fourth Fifth Sixth total

1,568

31

12

107

155

16

54

17

0

23

0

567

57

0

344

0

0

0

0

0

0

1,560

32

31

149

297

26

67

26

0

33

6

737

97

16

774

7

25

76

82

41

0

664

60

35

314

237

26

53

42

0

18

5

409

56

25

1,001

20

120

70

164

85

3

2,403

31

56

141

283

20

113

71

0

42

0

606

389

14

2,029

19

207

81

176

113

540

0

0

0

0

0

0

0

0

0

0

0

1,002

272

6

647

10

165

165

254

109

301

0

0

0

0

0

0

0

0

0

0

0

5

0

0

195

5

98

195

105

83

412

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

51

88

88

33

296

6,195

154

134

711

972

88

287

156

0

116

11

3,326

871

61

4,990

61

666

675

869

464

1,552

2,951 4,082 3,407 7,334 22,359 total 1,098 2,931 556

Source: Data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

58

Table A.7.2 Review of Public Expenditure in Agriculture Issues Paper

Percent Distribution of Employees by Grade and Profession in MALR

High First Second Third Fourth Drofession

Fifth Sixth total

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab

Technicians

Technical Engineering Assistance

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Works hops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services Occupations

13.2% 18.3% 15.2% 32.8% total 13.1% 4.9% 2.5% 100.0%

10.7 O/o

0.1%

0.3%

0.6%

1.3%

0.1%

0.5%

0.3%

0.0%

0.2%

0.0%

2.7%

1.7%

0.1%

9 .1 010

0.1%

0.9%

0.4%

0.8%

0.5%

2.4%

7.0%

0.1 010

0.1%

0.5%

0.7%

0.1%

0.2%

0.1%

0.0%

0.1%

0.0%

2.5%

0.3%

0.0%

1.5%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

7.0%

0 -1 010

0.1%

0.7%

1.3%

0 . 1 Yo

0.3%

0 .1 010

0.0%

0 -1 010

0.0%

3.3%

0.4%

0.1%

3.5%

0.0%

0.1 Yo

0.3%

0.4%

0.2%

0.0%

3.0%

0.3%

0.2%

1.4%

1 .1 010

0.1 010

0.2%

0.2%

0.0%

0 * 1 010

0.0%

1.8%

0.3%

0 -1 Yo

4.5%

0.1%

0.5%

0.3%

0.7%

0.4%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

4.5%

1.2%

0.0%

2.9%

0.0%

0.7%

0.7%

1.1%

0.5%

1.3%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0 * 0%

0.0%

0.0%

0.9%

0.0%

0.4%

0.9%

0.5%

0.4%

1.8%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.2%

0.4%

0.4%

0 . 1 Yo

1.3%

27.7 O/o

0.7%

0.6%

3.2%

4.3%

0.4%

1.3%

0.7%

0.0%

0.5%

0.0%

14.9%

3.9%

0.3%

2 2.3%

0.3%

3.0%

3.0%

3.9%

2 .1 010

6.9%

Note: Reworked based on data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

59

Table A.7.3 Review of Public Expenditure in Agriculture Issues Paper

Percent Distribution by Grade at MALR by Grade and Profession

Agricultural

Engineering

Law

Administrative Development

Finance and Accountancy

Libraries and Documents

Art and Media

Medical

Pharmaceutical

Social Services

Security

Agriculture, Nutrition and Lab

Technicians

Technical Engineering

Nursing and Public Health

Office

Unqualified Office

Artisanal for Agriculture and

Nutrition

Artisanal for Machines and

Works hops

Artisanal for Transportation

Artisanal for Art and Architecture

Supporting Services

High

2 5.3 O/o

20.1%

9.0%

15.0%

15.9%

1 8.2%

18.8 O/O

10.9%

0.0%

19.8 O/o

0 * 0%

17.0%

6.5%

0.0%

6.9%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

First

2 5.2%

20.8%

23.1 O/o

21.0%

3 0.6%

29.5%

2 3.3%

16.7%

0.0%

28.4%

54.5 O/o

22.2%

1 1 -1 Yo

26.2%

15.5%

1 1 .5%

3.8%

11.3%

9.4%

8.8%

0.0%

Second

10.7%

39.0%

26.1 O/o

44.2 O/o

24.4%

29.5%

1 8.5%

26.9%

0.0%

1 5.5%

45.5 O/o

12.3%

6.4%

41.0%

20.1%

3 2.8 O/o

18.0 O/o

10.4%

1 8.9%

18.3 O/o

0.2%

grade

Third

3 8.8 O/o

20.1%

41.8%

19.8 O/o

29.1%

22.7 O/o

3 9.4%

45.5%

0.0%

3 6.2 O/o

0.0%

18.2 O/o

44.7 O/o

2 3.0%

40.7 O/o

3 1 -1 o/o

3 1 -1 010

12 .O%

20.3 O/o

24.4%

34.8 O/o

Fourth

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

30.1%

31.2%

9.8%

13.0%

16.4%

24.8 O/o

24.4%

29.2 O/o

23.5%

19.4%

Fifth

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.2%

0.0%

0.0%

3.9%

8.2%

14.7 O/o

28.9%

12.1%

17.9%

26.5%

Sixth

0.0%

0.0%

0.0%

0.0%

0 * 0%

0.0%

0 * 0%

0.0%

0.0%

0.0%

0.0%

0 * 0%

0.0%

0.0%

0.0%

0.0%

7.7%

13.0%

10.1 Yo

7.1%

1 9 . 1 o/o

total

100.0%

100 .O%

100 .O%

100.0%

100.0%

1 00.0%

100.0%

100.0%

0.0%

1 00.0%

100.0%

1 00.0%

100.0%

100.0%

100.0%

100 * 0%

100.0%

100.0%

100.0%

100 .O%

1 00 * 0%

Note: Reworked based on data collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

60

Year of Birth

1948

1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966

su b-total

Table A.8 Review of Public Expenditure in Agriculture Issues Paper Number of Employees in MALR according to Date of Birth

Number of Employees

1,222

2,416 2,724 2,395 1,103 538 487 580 672 608 802 806 344 333 594 41 1 440 456 565

17,496

Year of Birth

1967

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

total 19,909

Number of Employees

43 1

338 286 177 211 173 193 127 117 117 80 46 55 30 8 11 3 4 6

2413

Note: Same source states the total number at 22,359

Source: collected in May/June, 2008 from the MALR during the Ag-PER Issues Paper Mission

61

VI W Y .- .- b 5 2 .- 8 2

5

a, VI a,

U C m m

0 h 0 0 N

\

t: e m

L

u VI

b 3 Y U

U .- a a n 3 - ?

0 0 0 0 0 0 0 0

VI W

0 % - a E Lc 0 C 0 zl C a, a

8 E -0 C m In a, m m L

VI

.- 8 E 3 U C m VI U 0 0

0

m r

3

m Lc

3 P a

VI

K W X W

ar 0

3 a

L

5

VI Y

VI m m U C 0 C c L 0 C 0 Y

3 - .-

.- VI a

m

.- B

VI Y C W

5 m a s! C m 0 -

LL 0 II W

3 0 VI

*. P

Y

LL 0 E a,

3 0 vr

.. t!

.- M b 5 2 91 'E

Y .-

0, v) 0,

U c m c 0

5

.- U

U VI

c

'0

e

E a m

5 r?5 ? - a s aJG n e m u + .E

c E U a e s

.-

.-

- U

aJ

-

.-

- U C

aJ

r 9 U c m aJ a m r U r 9

3 Y 73 c aJ a X w

5

L

U

e!

W 0 b 0 0 N

\

2 P m z L

(c 0

m 2

LL 0 E a,

3 0 vr

.. t!

Table A . lO . l Review of Public Expenditure in Agriculture Issues Paper

Administrative Bodies, Services and Economic Authorities Expenditures by Budget Chapter .

25.1 266.6

PI 2001/2002

21.5 56.7 I 83.4 I 966.0

expenditures

Chapter 3

8.0 457.1

Chapter 1

2.1 I 158.9

Chapter 2

559.3

1,408.9

Chapter 4

5,550.1 6,960.2

5,841.2 8,979.1

LE x million

wages and compensation of employees

purchase of goods and services

subsidies, grants, social

benefits

total investment

- Administrative Bodies: MALR stricto sensu DRC

Sub-total Administrative Bodies

- Services Authorities: ARC GALR FCI GAS1 FAL GAPS GAVS GAF GALN

Sub-total Services Authorities

- Economic Authorities:

563.3 19.7

583.0

207.6 0.0

207.7

1,011.7 41.1

1.052.9

129.8 18.7

148.5

294.4 100.7

1.1 19.2 0.1 1.4

14.9 17.3

111.0 2.7

113.7

74.5 5.9 6.1 0.6 5.7 0.1

39.8 24.1

98.8 5.2 0.0

69.5 0.0 3.7

27.4 36.9

15.4 4.4 0.0

11.4 18.7 0.2 2.6 9.2

483.1 116.2

7.2 100.7 24.5

5.4 84.7 87.5

4.7 62.5 19.3

0.3 85.8

473.2

12.3 495.5

5,042.3

GAEA PBDAC GACDP

28.2 343.4 392.7

45.5 987.2

5,927.5

86.5 I 764.3 Sub-total Economic Authorities

692.J 1 1,036.9 Grand Total

Source: Data sourced in May 2008 from the MoF by Ms. Taheya Sakr, consultant for PER-Agriculture Issues Mission

64

N ? L D r l L n W LD

$ 2 h

1 9 h 0 N

g g g z g m m N

" 9 0 0

VI P a

z '1 aJ P X .u 1 N

h 0

1 9 clo

9 9 9 ? 4 ? 9 9 9 ' 0 0 0 0 0 0 0 o o c

o?J?$ CON

T - m Y

B -

OD L

3 n m r U

- h L

3 n m 6 -

a b Y n (0 r U

-

v) L

p! 0 m r U

-

t L

p! n m r U

- m

n L

Y al

m 6 - N L al Y 0 m r V

-

rl L

p! n m 6

-

8

9 9 9 9 9 9 9 ? ? * 0 0 0 0 0 0 0 0 0 0

y e " ! 1 -r I

VI al U 0

aJ > m

.- m

.- c1

X w J

n C C n

C C n

. I-

2

-

w W cn U 3

W m

5

er a tu c U C

'c

L 0

Y

E U VI W > C

W CI

5 e 8

L

C (0 C

Y- O VI W

a 0 "

E

P

9 9 9 9 9 9 9 9 9 ? 0 0 0 0 0 0 0 0 0 0

? ? ? ? 9 9 9 9 9 h 4 0 0 0 0 0 0 0 0 .-.I

9 9 9 9 9 9 9 c9'4 cq N O o o o o o mro 2

9 9 9 9 9 9 h L " ? h R o o o o O N m r l d rc N

9 "! 9 ? ? 9 1 hP? '4 m m 0 0 o o w b o o

N

VI a!

t "!a? o m m h c o d

Table A.12 Review of Public Expenditure in Agriculture Issues Paper

Agriculture Expenditure 2006107

Purchase Goods

and Services

Others investment t 109,500

Total Budget Change

All values in LE Thousand Wages Interest Subsidy 2006-2007 2005-2006 2006-2007 over

2005-2006

1. Protecting Biological Diversity and Nature Lands Protecting Biological Diversity and Nature Views

17,222 7,411 0 19 134,185 101,246 32.5% 32,939

32,939 - 5,793

50,458 3,839

60,090

-16,852

-16,852

1,051 2,733

5,402

8,872

11,619

5,394

8,062

1,574

1,649

386

9,381 765

17,222 7,411 19 134,185 101,246 32.5% 33 I 109,500 Total 1 0 - 42

467 0

509

2. Research and Development

Desert Research Centre Agricultural Research Center Water Research Center

Total 2

10,000 19,480 38,100 2,846 17,000 4 22,363 65,100

31,728

31,728

15.4% 12.5% 8.7%

29,961 353,000 26,096

37,578 403,246

44,229

485,053

3,170 23,859

2,105

29,134

161 18,798

21

18,980

43,371 453,704

48,068

545,143 409,057 12.4%

-5.7%

. -5.7%

3. Agriculture and Irrigation

3.1 Agriculture

Ministry of Agriculture Main O f k e

196,464 8,425 279,347

279,347

296,199

296,199

34,941

34,941

7,161

7,161 196,464 8,425

10 40

65

106

150

70

110

20

17

1

83 5

Sub-total 3.1

3.2 Agricultural Directorate at Governorate level

1 Cairo 2 Geza

3 Calubea

4 Garbea

5 Mnofea

6 Kafer AI-Sheek

7 Dakhalea

9 Deemyat

3 ACEskandarea

10 Mattroh

11 Beherra 12 Por-said

8.1%

9.5%

9.3%

8.2%

9.6%

8.1%

7.3%

8.4%

5.9%

9.8%

9.0% 10.6%

13,797 31,209

63,138

117,134

132,040

71,447

117,603

20,237

29,257

3,706

112,598 7,862

224 320

365

452

601

685

51 7

158

480

61 3

670 137

0 0

0

0

0

0

0

0

0 0

0 0

0 0

0

0

0

0

0

0

0

0

0 0

14,03 31,576

63,576

117,708

132,806

72,229

11 8,253

20,422

29,763

4,325

11 3,394 8,006

12,983 28,843

58,174

108,836

121,187

66,835

110,191

18,848

28,114

3,939

104,013 7,241

3 7

8

16

15

27

23

7

9

5

43 2

68

Table A.12 (continued) Review of Public Expenditure in Agriculture Issues Paper

Budget Agriculture Sector by Governorates 20 0 610 7

Total Budget Change Purchase Goods

and Services

194

124

674

74 1

302

553

343

333

550

3,352

1,315

4,120

5,276

4,334

559

All values in LE Thousand investment Wages

29,612

5,568

3,062

11,071

2,897

104,584

37,200

60,980

58,390

69,870

7,301

53,180

36,716

24,290

4,318

Interest

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Subsidy

15

2

1

5

5

76

25

45

60

40

27

45

25

25

6

Others

6

4

5

4

4

52

26

17

30

33

3

30

10

8

4

2006-2007 over 2005-2006 2005-2006

26,679

5,172

3,307

10,551

2,865

93,365

33,708

55,568

53,282

66,175

7,921

52,795

39,074

24,823

4,448

2006-2007

29,827

5,698

3,742

11,821

3,208

105,265

37,594

61,375

59,030

73,295

8,646

57,375

42,027

28,657

4,887

3,148

526

435

1,270

343

11,900

3,886

5,807

5,748

7,120

725

4,580

2,953

3,834

439

13 AI-lssmaelea

14 AI-Soweess

15 AI-Baher AI-Ahmarr

16 Shemal Saynai

17 Ganob Saynai

18 AI-Sharkea

19 AI-Faumm

20 Banne-Suwef

21 AI-Menea

22 Asuott

23 AI-Wadde AI-Jaded

24 Sohag

25 Kana

26 Aswan

27 Ai-Akssoor City

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

11.8%

10.2%

13.2%

12.0%

12.0%

12.7%

11.5%

10.5%

10.8%

10.8%

9.2%

8.7%

7.6%

15.4%

9.9%

1,229,067 27,992 1,079 -

655 4,658

6

15 12,611

17,945

401 -

450 5

24

22,511 1

22,991

1,258,539 1,148,937 109,602 9.5% Sub-total 3.2 0

0 0

0

0 0

0

0

5,900 0

15,000

0 1,500

22,400

3.3. Others

Agrarian Reform Commission Improving Cotton Quality Fund Staff for Land Improving Project Agricultural Land Fund Agricultural Budget Fund

6.1%

0.0%

-31.5%

111.3% -8.0%

-0.1%

5,300 97

1,350

145 74

6,966

136,855 6,155

40,373

22,785 16,385

222,553

129,037 6,155

58,905

10,785 17,803

222,685

7,818 0.00

-18,532

12,000 -1,418

-1 32

124,550 1,395

23,993

114 2,199

152,251 Sub-total 3.3

69,899 7,161 -

0 0

0

0

0

27,449 -

54 13

8 12

16

24,020 -

31 8 5

529

3

257

54,128 1,760,439 1,667,821 92,618 5.6% -

9.6% 9.9%

7.3%

11.3%

9.2%

Total 3

4. Livestock

4.1 Veterinary Directorate

1 Cairo

2 Geza

3 Calubea

4 Garbea 5 Dakhalea

in the Governorate

12,789 11,070

11,516

23,642

17,676

960 146

644

151

485

14,121 1 1,234

12,697

23,808

18,434

12,888 10,220

11,828

21,398

16,887

1,233 1,014

869

2,410

1,547

Table A.12 (continued) Review of Public Expenditure in Agriculture Issues Paper

Budget Agriculture Sector including the Governorates 2006/07

Total Budget Change Purchase

Services All values in LE Thousand Wages Subsidy Others investment

2006-2007 over 2005-2006 2005-2006 2006-2007

6 Mnofea

7 Kafer AI-Sheek

8 Deemyat

9 AI-Eskandarea

10 Mattroh

11 Beherra

12 Por-said

13 AI-lssmaelea

14 AI-Soweess

15 At-Baher AI-Ahmarr

16 Shemal Saynai

17 Ganob Saynai

18 AI-Sharkea

19 AI-Faumm

20 Banne-Suwef

21 At-Menea

22 Asuott

23 AI-Wadde At-Jaded

24 Sohag

25 Kana

26 Aswan

27 AI-Akssoor City

Sub-total 4.1

4.2 Others Veterinary Services Commission

Sub-total 4.2

Total 4

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

13

11

5

38

2

8

2

6

1

2

1

2

21

7

10

9

5

2

8

3

5

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

9.3%

9.0%

8.0%

11.2%

11.0%

23.1%

8.2%

12.1%

9.5%

13.6%

10.9%

12.5%

11.1%

7.6%

13.3%

10.6%

6.9%

12.6%

6.6%

6.9%

16.6%

7.9%

18,585

14,140

4,992

5,058

1,633

9,822

2,367

4,994

1,489

1,143

2,171

1,231

22,542

9,479

12,874

10,227

13,786

2,478

9,424

5,868

4,330

1,271

233,125

352

166

44

294

10

644

2

58

5

22

2

2

6

10

9

4

10

1

9

3

5

2

2,772 - 10,015

10,015

12,787 -

20,305

15,418

5,392

5,624

1,812

12,095

2,562

5,597

1,630

1,298

2,408

1,385

25,035

10,201

14,583

1 1,306

14,741

2,791

10,046

6,274

5,047

1,372

257,216

1,720

1,278

400

566

179

2,273

195

603

141

155

237

154

2,493

722

1,709

1,079

955

31 3

622

406

717

101

24,091 - 17,112

17,112

41,203 -

19,595

14,855

5,146

4.718

1,517

10,936

2,473

5,389

1,518

1,044

2,189

1,196

24,768

9,993

14,235

11,135

13,984

2,269

9,250

5,366

4,253

1,200

243,722

345

386

197

574

283

507

85

144

106

230

216

185

240

191

329

158

742

519

779

902

784

169

265 P

844

0 10.3% - 22.4%

22.4%

13.3% -

21,452 20,588

20,588

93,373

93,373

76,261

76,261 844 21,452

264,310 1,109 21,452 350,589 309,386

70

Table A.12 (continued) Review of Public Expenditure in Agriculture Issues Paper

Budget Agriculture Sector by Governorates 2006107

Interest

87

0

Change

2006-2007 Subsidy Others investment

124 2,122 38,000

122 2,088 10,000

Purchase Goods

and Services

87

87

Total Budget

246 4,210 48,000

246 4,210 48,000

All values in LE Thousand

0.3%

98,267

90,510

Wages

1.6% 2.2% 10.2%

___----- .____--______-_------ . - - - - - - - - - - - -

48,153 95,361 1,431,960

350 31,948 1,133,780

100.0%

_ _ _ _ _ _ _ _ _ _ _ 5,375,981

2,443,150

_ _ _ _ _ _ _ _ _ _ _ _ 5,174,297

2,452,335

5. Fisheries

18,724

17,342

5.1 Others

Fishing and Hunting Fish Production Development Commission

Sub-total 5.1

28,106

25,760

-14,027

-1,954

-13.9%

-3.4% 55,312 57,266

53,866 36,066 -1 5,981 -10.1%

-10.1%

7.7%

53,866 36,066 142,475 1 158,456 -15,981 Total 5

2,322,237 193,441 7,757 1 47,803 I 63,413 1 298,180 2,932,831 2,721,962 210,869 6. Grand Total (1 to 5)

79.2%

- - - - - - - - - - .

2,701,738

379.501

6.6%

__________. 1,000,502

807,061

. . . . . . . . . . . . . . . . . . . . . . . . . . 7. Grand total

according to table received from MALR

8. Difference between Grand Total 7 and 6

Source: Mr. Alex Kremer, WB-Headquarters, Senior Sector Economist, Middle East and North Africa Economic Support Unit, May 2008

71

Table A.13 Review of Public Expenditure in Agriculture Issues Paper

Summary Agriculture Expenditure for Selected Fiscal Years ~ ~ ~~

All values in LE million Summary of agriculture expenditures I I

A. MALR stricto sensu - wages and compensation of employees - purchase of goods and services Sub-total wages plus goods and services - investment - others

129.8 (12.8%)

240.8 (23.8%) 563.3 (55.7%) 207.6 (20.5%)

111.0 (11.0%) 181.9 (27.8%) 194.3 (28.6%) ---I- 123.7 (18.6%) 117.7 (17.1%)

118.1 18.0% 157.5 23.1% 300.0 (45.7%) 351.8 (51.7%) 232.5 (35.5%) 211.9 (31.2%)

Total MALR stricto sensu I 1,011.7 (100%) I 656.2 ( 100%) I 681.4 (100%) I B. 9 Services Authorities + DRC

- wages and compensation of employees - purchase of goods and services Sub-total wages plus goods and services - investment - others

Total 9 Services Authorities + DRC C. 3 Economic Authorities

- wages and compensation of employees - purchase of goods and services

- investment - others

Sub-total wages plus goods and services

Total 3 Economic Authorities D. 27 Governorates

- wages and compensation of employees - purchase of goods and services

- investment - others

Sub-total wages plus goods and services

Total 27 Governorates E. Other Entities

- wages and compensation of employees - purchase of goods and services

- investment - others

Sub-total wages plus goods and services

Total Other Entities F. = A.+ B.+D.+ E.

- wages and compensation of employees - purchase of goods and services

- investment - others

Sub-total wages plus goods and services

Total F = A,+ B.+D.+ E.

72

Table A.14 Review of Public Expenditure in Agriculture Issues Paper

Organizational Set-up Ministry of Agriculture and Land Reclamation

Sector One : Authorities Sector and Minister's Office Affairs

One 1: Central Department for Minister's Office Affairs

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

General Authority for Technical Office Affairs General Authority for the Cabinet and Communications General Authority for Security General Authority for Field Follow-up and Monitor General Authority for Public Relations and Rural Media General Authority for Citizens Services General Authority for People's Assembly and Shoura Council Affairs General Authority for Legal Affairs General Authority for Monitoring Financial and Administrative Affairs General Authority for Analyzing and Responding t o the Central Agency for Auditing Reports

One 2: Central Department for Engineering Affairs

11. General Authority for Projects' Engineering Planning 12. General Authority for Agricultural Machines 13. General Authority for Work Shops and Technical Affairs 14. General Authority for Electrical and Mechanical Projects 15. General Authority for Coordinating Projects and Agricultural Affairs in COMESA Member

One 3: Central Department for Training

16. General Authority for Training Planning 17. General Authority for Agricultural Statistics 18. General Authority for Follow-up and Monitor 19. General Authority for Implementing Agricultural Training 20. General Authority for International Training Center and Development in Mariout

One 4: Central Department for Information and Supporting and

21. General Authority for Computers 22. General Authority for Libraries and Documentation and Micro-film 23. General Authority for Information Center 24. General Authority for Publishing and Translation 25. General Authority for Supporting Decision Making

One 5 : Central Department for Directorates' Affairs

26. General Authority for Agricultural Legislations 27. General Authority for Agricultural Affairs

One 6: Central Department for Agricultural External Relations

28. General Authority for Agricultural International Egyptian Center 29. General Authority for International Studies 30. General Authority for International Organizations and Conferences 31. General Authority for International Relations

Documenting Decision Making

73

Sector Two : Economical Affairs Sector

Two 1: Central Department for Agricultural Economics

1. General Authority for Agricultural Census 2. General Authority for Agricultural Statistics 3. General Authority for Food Security 4. General Authority for Statistical Estimations by Samples

Two 2: Central Department for Agricultural Planning

5. General Authority for Planning Agricultural Investment Projects 6. General Authority for Agricultural Economic Resources 7. General Authority for Agricultural Policies

Sector Three : Aaricultural Guidance Sector

Three 1: Central Department for Agricultural and Environmental Guidance

1. General Authority for Guidance and Developing Agricultural Crops 2. General Authority for Agricultural Culture 3. General Authority for Agricultural Museums and Fairs 4. General Authority for Training and Youth Employment and Rural Development

Three 2: Central Department for Horticulture and Agricultural Crops

5. General Authority for Fruits 6. General Authority for Vegetables 7. General Authority for Medical Plant and Perfumes Production 8. General Authority for Palm Cultivation

Three 3: Central Department for Land and Water

9. General Authority for Water on Field Level 10. General Authority for Fertilization and Soil Improvement

Three 4: Central Department for Plant Protection

11. General Authority for Combating Insecticides 12. General Authority for Grass Hopper 13. General Authority for Mice 14. General Authority for Combating Insecticides and Protecting Plants in North Delta 15. General Authority for Combating Insecticides and Protecting Plants in South Delta 16. General Authority for Combating Insecticides and Protecting Plants in East Delta 17. General Authority for Combating Insecticides and Protecting Plants in Canal and Sinai 18. General Authority for Combating Insecticides and Protecting Plants in North of Upper Egypt 19. General Authority for Combating Insecticides and Protecting Plants in South o f Upper Egypt

Three 5: Central Department for Tree Plantation and Green House and Environment

20. General Authority for Tree Plantation 21. General Authority for Green House

74

Sector Four : Aaricultural Services Sector

Four 1: Central Department for Land Protection

1. General Authority for Trespassing and Public Services Projects 2. General Authority for Protecting Agricultural Land in Governorates 3. General Authority for Project Implementation on Desert and Reclaimed Land

Four 2: Central Department for Seeds Production

4. General Authority for Screening Stations 5. General Authority for Marketing and Seeds Distribution 6. General Authority for Commercial Affairs 7. General Authority for Seeds Production Affairs in Governorates

Four 3: Central Department for Examining and Approving Seeds

8. General Authority for Plant Protection Office 9. General Authority for Developing Seeds 10. General Authority for Field Inspection 11. General Authority for Gin-mill 12. General Authority for Approving Seeds 13. General Authority for Seed Detection Affairs in Governorates

Four 4: Central Department for Agricultural Detention

14. General Authority for Agricultural Detention in Cairo Sea and Cargo Village 15. General Authority for Agricultural Detention in Port Said and North Sinai 16. General Authority for Agricultural Detention in Suez and South Sinai 17. General Authority for Agricultural Detention in Cairo and South of the Valley 18. General Authority for Agricultural Detention in Alexandria and near the Delta

Four 5: Central Department for Agricultural Cooperation

19. General Authority for Direction and Cooperation 20. General Authority for Financial and Cooperative Follow-up 21. General Authority for Cooperative Marketing

Sector Five : Land Reclamation Sector

Five 1: Central Department for Horizontal Expansion

1. General Authority for Planning and Evaluating Land Reclamation Projects 2. General Authority for Follow-up on Implementation o f Land Reclamation Projects

Five 2: Central Department for Settlements

3. General Authority for Examination and Distribution 4. General Authority for Fresh Graduates and Small Producers Settlements 5. General Authority for Engineering Affairs 6. General Authority for Agricultural Affairs for Land Reclamation

Five 3: Central Department for Development of New Lands

7 . General Authority for Development in East of the Delta and Sinai 8. General Authority for Development in West of the Delta and Matrouh 9. General Authority for Development in Upper Egypt and New Valley 10. General Authority for Social and Environmental Affairs

75

Sector Six : Develomnent of Animal Wealth Sector

Six 1: Central Department for Animal Production

1. General Authority for Genetic Improvement 2. General Authority for Animal Wealth 3. General Authority for Poultry 4. General Authority for Fishery Wealth Data

Six 2: Central Department for Agro-processing Industries and Production Inputs

5. General Authority for Fodder 6. General Authority for Agro-processing Industries 7. General Authority for Agriculture Support Services

Sector Seven : a Seven 1: Central Department for Financial Affairs

1. General Authority for Budget 2. General Authority for General Minister's Office (Dewan) Accounts 3. General Authority for Purchases and Inventories 4. General Authority for Financial Analysis and Final Accounts 5. General Authority for Local and Foreign Finance

Seven 2: Central Department for Administrative Affairs

6. General Authority for Administrative Regulations 7. General Authority for Administrative Training 8 . General Authority for Employees' Affairs 9. General Authority for Accruals 10. General Authority for Administrative Affairs

Seven 3: Central Department for Medical Services

11. General Authority for Medical Affairs 12. General Authority for Treatment Affairs

Ministry of Agriculture stricto sensu

Total 7 Sectors

Total 26 Central Departments

Total 109 General Authorities

76

Table A.15 Review of Public Expenditure in Agriculture Issues Paper

Governorates: Population, Areas and Capital Cities

Governorate

Ad Daqahiiyah AI Bahr al Ahrnar AI Buhayrah AI FayyOrn AI Gharbiyah AI Iskandariyah AI Isma' iliyah AI Jizah AI MinOfiyah AI Minya AI Qahirah AI QalyObiyah AI Uqsur AI Wadi al Jadid Ash Sharqiyah As Suways Aswan AsyOt Bani Suwayf BOr Sa'id Durnyat Helwan 3anOb Sin# Kafr ash Shaykh MatrOh Qina Sharnai Sinal 6th of October SOhaj

29 Governorates

Population

4,985,187 288,233

4,737,129 2,512,792 4,010,298 4,110,015

942,832 6,272,571 3,270,404 4,179,309 7,786,640 4,237,003

451,318 187,256

5,340,058 510,935

1,184,432 3,441,597 2,290,527

570,768 1,092,3 16

149,335 2,618,111

322,341 3,001,494

339,752

3,746,377

Area (krn.2)

3,471 203,685

10,129 1,827 1,942 2,679 1,442

85,105 1,532 2,262

214 1,001

55 376,505

4,180 17,840

679 1,553 1,322

72 589

33,140 3,437

212,112 1,796

27,574

1,547

72,579,030 I 997,690

Area

1,340 78,643

3,911 705 750

1,035 557

32,859 592 873

83 387

21 145,369

1,614 6,888

262 600 510

28 227

12,795 1,327

81,897 693

10,646

597

385,210

Capital

AI MansOrah AI Ghurdaqah Darnan hOr AI FayyOrn Tanta AI Iskandariyah AI Isma'i l iyah AI l iza h Shibin al Kawm AI Minya AI Qahirah Banha AI Uqsur AI Kharijah Az Zaqaziq As Suways Aswan AsyOt Bani Suwayf BOr Sa' i d Durnyat Helwan At Tur Kafr ash Shaykh Marsa MatrOh Qina AI 'Arish 6th of October City Suhaj

Source httD://www.statoids.com/uea.htrnl (Last updated: 2008-04-30)

Population: 2006-11-11 Census (no data for Helwan and 6th of October Governorates)

77