Political Economy of the Wheat Sector in Egypt Seed Systems, Varietal Adoption, and Impacts Editors: Zewdie Bishaw Yigezu A. Yigezu Moustafa A. Moustafa Political Economy of the Wheat Sector in Egypt Seed Systems, Varietal Adoption, and Impacts Editors: Zewdie Bishaw Yigezu A. Yigezu Moustafa A. Moustafa December 2024 i ISBN: 9789291275625 AGROVOC descriptors Egypt; wheat; durum wheat; bread wheat; varieties; high yielding varieties; released varieties; seed; breeder seed; basic seed; certified seed; seed demand; sectoral analysis; policies; agricultural policies; food security; seed security; institutions; research institutions; technology adoption; impact assessment; production costs; profit; yields; farm income. Citation Bishaw, Z., Yigezu, Y. A., Moustafa, M. A. (eds.). 2024. Political Economy of the Wheat Sector in Egypt: Seed Systems, Varietal Adoption, and Impacts. International Center for Agricultural Research in the Dry Areas, Beirut, Lebanon. 185 pp. About ICARDA Established in 1977, the International Center for Agricultural Research in the Dry Areas (ICARDA) is a non-profit, CGIAR Research Center that focusses on delivering innovative solutions for sustainable agricultural development in the non-tropical dry areas of the developing world. We provide innovative, science-based solutions to improve the livelihoods and resilience of resource-poor smallholder farmers. We do this through strategic partnerships, linking research to development, and capacity development and by taking into account gender equality and the role of youth in transforming the non-tropical dry areas. Address Dalia Building, Second Floor, Bashir El Kasser St, Verdun, Beirut, Lebanon 1108–2010. www.icarda.org Disclaimer The views expressed in this book are those of the authors, and not necessarily those of ICARDA. 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The work must be attributed, but not in any way that suggests endorsement by the publisher or the author(s). ii Contents Preface Endorsement Acknowledgements Contributing Authors List of Abbreviations Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 1.1 Background 1.1.1 Climate 1.1.2 Agroecological zones 1.1.3 Cropping seasons 1.2 Wheat Grain Sector 1.2.1 Wheat production 1.2.2 Wheat imports 1.2.3 Wheat consumption 1.2.4 Wheat utilization 1.2.5 Domestic wheat trade 1.2.6 Institutions 1.2.7 Wheat sector policy 1.2.8 Other policy directions 1.3 Wheat Seed Sector 1.3.1 Historical development 1.3.2 National Seed Policy 1.3.3 Seed Regulatory Frameworks 1.3.4 Institutional arrangements 1.3.5 South–South Collaboration 1.4 Challenges 1.5 Lessons Learned 1.6 Recommendations References Annexes Chapter 2: Variety Development and Evaluation 2.1 Introduction with Historical Context 2.2. Regulatory Frameworks 2.3 Institutional Arrangements 2.4 Technical Procedures 2.4.1 Breeding and variety development 2.4.2 Variety evaluation trials 2.4.3 Agronomic research 2.4.4 Technology transfer 2.5 Major Achievements 2.6 Key Challenges 2.7 Lessons Learned 2.8 Recommendations vi viii ix x xii 1 2 3 3 5 5 5 6 7 8 10 14 17 21 22 22 23 24 26 27 29 29 30 31 34 40 41 41 43 44 44 47 49 50 51 52 54 55 iii Contents 57 58 62 63 63 63 64 65 65 66 67 68 69 69 69 69 69 70 70 70 71 72 73 74 75 75 76 77 78 79 79 79 80 82 82 83 85 85 86 86 88 92 98 References Annexes Chapter 3: Variety Release and Protection 3.1 Variety Registration and Release 3.1.1 Introduction and historical context 3.1.2 Regulatory frameworks 3.1.3 Institutional arrangements 3.1.4 Technical procedures 3.1.4.1 Administrative procedures 3.1.4.2 Technical procedures 3.1.5. Major achievements 3.1.6 Key challenges 3.1.7 Lessons learned 3.1.8 Recommendations 3.2 Plant Variety Protection 3.2.1 Introduction with historical context 3.2.2 Regulatory frameworks 3.2.3 Institutional arrangements 3.2.4 Technical procedures 3.2.4.1 Administrative procedures 3.2.4.2 Technical procedures 3.2.5 Royalty collection 3.3 Major achievements 3.4 Key challenges 3.5 Lessons learned 3.6 Recommendations References Annexes Chapter 4: Seed Production and Commercialization 4.1 Seed Production 4.1.1 Introduction with historical context 4.1.2 Regulatory frameworks 4.1.3 Institutional arrangements 4.1.4 Technical procedures 4.1.4.1 Administrative procedures 4.1.4.2 Technical procedures 4.2 Seed Commercialization 4.2.1 Introduction with historical context 4.2.2 Regulatory frameworks 4.2.3 Institutional arrangements 4.2.4 Technical procedures 4.3 Major Achievements 4.4 Key Challenges iv Contents 4.5 Lessons Learned 4.6 Recommendations References Annexes Chapter 5: Seed Quality Assurance and Certification 5.1 Introduction with Historical Context 5.2 Regulatory Frameworks 5.3 Institutional Arrangements 5.4 Technical Procedures 5.4.1 Administrative procedures 5.4.2 Technical procedures 5.4.3 Seed Certification 5.4.4 Market Control 5.5 Major Achievements 5.6 Key Challenges 5.7 Lessons Learned 5.8 Recommendations References Chapter 6: Adoption, Impacts, and Seed Dem and Analysis of Wheat Varieties 6.1. Background 6.2. Objective of the Study 6.3. Survey Design 6.3.1. Selection of governorates 6.3.2. Sample size 6.4. Methodology 6.4.1. Modeling adoption of technologies 6.4.2 Explaining farmers’ adoption decisions 6.4.3. Measuring the impacts of different wheat technologies 6.5 Results 6.5.1 Characteristics of sample households 6.5.2 Adoption rates and degrees of improved wheat varieties 6.5.2.1 Adoption rates 6.5.2.1.1 Adoption rate by variety 6.5.2.1.2 Adoption rate by governorate 6.5.2.1.3 Adoption rate—national level 6.5.2.1.4 Adoption rate by agroecological zones 6.5.2.1.5 Adoption rate—by wheat species 6.5.2.2 Adoption degree 6.5.2.2.1 Adoption degree by variety 6.5.2.2.2 Adoption degree by governorate 6.5.2.2.3 Adoption degree—national level 6.5.2.2.4 Adoption degree by agroecological zones 6.5.2.2.5 Adoption degree—by wheat species 100 101 102 104 106 107 108 108 109 110 111 116 116 116 117 118 118 119 120 121 122 123 123 124 124 124 125 127 129 129 130 130 130 131 131 133 133 136 136 137 138 138 139 v Contents 141 143 143 144 145 145 146 147 147 148 152 154 155 162 164 165 166 166 170 171 174 175 178 180 180 180 181 183 184 6.5.3 Factors affecting farmers’ decision and intensity of adoption 6.5.4 Impacts of improved wheat varieties 6.5.4.1 Impacts on yield 6.5.4.2 Impacts on gross margins 6.5.4.3 Impacts on consumption 6.5.4.4 National impacts at current adoption levels 6.5.4.5 Potential national impacts 6.5.5 Seed demand analysis 6.5.5.1 Amount of seed used by governorate 6.5.5.2 Quantity of seed used by variety and by source 6.6 Discussion 6.7 Conclusions and Way Forward References Annexes Chapter 7: The Wheat Sector in Egypt: Seed System, Varietal Adoption, and Impacts—a Synthesis 7.1 Motivation 7.2 Analysis of the wheat sector in Egypt 7.2.1 Trends, achievements, opportunities, and challenges 7.2.2 Varietal adoption and impacts 7.2.3 Seed production and seed demand 7.2.4 Policies and institutions 7.2.5 Variety development, release, and protection nexus 7.2.6 Seed quality assurance 7.2.7 The nexus between supply- and demand-side factors 7.3 Conclusions and the way forward 7.3.1 Retrospect 7.3.2 Prospect References Back cover vi Preface Wheat has been an important food staple in Egypt from time immemorial and remains one of the most (if not the single most) important food security crops in the country. Currently, wheat provides one-third (35 percent) of the typical Egyptian’s total daily calorie intake. On average, the crop represents about 10 percent of the total value of agricultural production and about 20 percent of all agricultural imports, which depicts the country’s insurmountable food security challenge. Over the last six decades, the wheat area in Egypt has been increasing from 0.58 million ha with a productivity of 2.5 tons ha-1 and production of 1.44. Million tons in 1961 to a high of 1.39 million ha, a productivity of 6.9 tons ha-1, and total production of 9.84 million tons in 2021. Despite these significant achievements in increasing domestic production, Egypt remains number one globally in terms of the volume and value of its wheat imports. The main drivers of the country’s increasing wheat dependency are rapid population growth, increased per-capita consumption, and other alternative uses of wheat. Cognizant of these facts, to date the debate on Egyptian agrifood systems still revolves around ‘wheat self-sufficiency’. In His book entitled “Egypt’s future depends on agriculture and wisdom”, Lowell N. Lewis quoted former president Mohamed Hosni Mubarak as saying “Whoever does not command the means to feed himself can neither feel freedom nor dignity”. This sentiment is shared by all who are in the leadership of Egypt. As a result, the government of Egypt has been working towards ensuring food security. According to Article 79 of the constitution, each citizen has the right to healthy and sufficient food and clean water. It also states that the State shall ensure food resources for all citizens, as well as sustainable food sovereignty and maintain agricultural biological diversity and types of local plants to safeguard the rights of future generations (Staple Security: Bread and Wheat in Egypt). Several strategies have been crafted to reduce dependency on imports of wheat anchored on three major pillars: (i) expansion of area under wheat production; (ii) increased productivity per unit area through the generation and dissemination of new wheat varieties and associated technologies and innovations; and iii) Reduction of demand for wheat by encouraging dietary diversification and replacing wheat with alternative grains in bread production. The Sustainable Agricultural Development Strategy Towards 2030 aspired to attain wheat self-sufficiency of 80.8 percent (i.e., wheat production of 15.1 million tons) by increasing wheat area to 1.76 million ha and productivity to 8.57 tons ha-1. Wheat self-sufficiency is a driving force shaping the future of wheat in Egypt. Against the backdrop of limited natural resources and climate change, it is imperative for the country to explore alternative options to achieving self- sufficiency in wheat. This book compiles several studies on different aspects of the Egyptian wheat sector. It focuses mainly on the seed value chain and covers the entire continuum from variety development– to seed production, marketing, and varietal adoption and impacts. The book is organized as follows: - Chapter 1 highlights the historical developments of the wheat value chain (for both grain and seed), including policy and regulatory frameworks. vii Preface - Chapter 2 presents the development of agricultural research institutes and hence, the generation of improved wheat technologies and innovations. - Chapter 3 focuses on procedures of varietal release, registration and protection by the national agricultural research system (NARS). - Chapter 4 presents the state of production and commercialization of early generation seed namely, breeder, and basic (foundation) seeds, primarily by NARS; and certified seed production by the public (Central Administration for Seed Production) and private seed companies. - Chapter 5 elaborates on seed quality assurance and certification by the Central Administration for Seed Testing and Certification. - Chapter 6 describes the level of adoption of improved wheat varieties, identifies its determinants, assesses their impacts, and provides estimates of annual provincial and national quantities of wheat seed use. - Chapter 7 provides a synthesis and draws conclusions and makes recommendations for the way forward by establishing links between the achievements, limitations, challenges, and opportunities documented in the preceding 6 chapters. Political Economy of the Wheat Sector in Egypt: Seed Systems, Varietal Adoption, and Impacts, is the fourth in a series of books where previous editions focused on Morocco, Turkey, and Uzbekistan. This comprehensive book, the first of its kind in the country, brings most of the available secondary information and data (published and unpublished) related to the wheat sector in Egypt which is complemented with rich primary data from nationally representative survey carried out in 2022 and 2023. We expect this book to be the ‘go-to’ reference material and an important resource for several years to come. We hope that the rich combined wealth of experiences of the authors and editors and the guidance and recommendations contained in this book will be useful for policymakers, academicians, researchers, farmers, private and public seed companies, and development practitioners in their effort to overcome major challenges and create a conducive environment for faster and more sustainable development of the wheat sector in Egypt. Editors viii Endorsement Wheat is the most important cereal crop in Egypt as it provides more than 30 percent of the caloric intake for the Egyptians. Egypt produces about nine million tons of wheat grain while the local consumption is about 20 million tons making the country heavily dependent on wheat imports. The wheat research program at the Agricultural Research Center (ARC) has developed and scaled several varieties, together with good agricultural practices to maximize grain yield during the last three decades. As a result, the national average productivity in wheat fields has increased from 2.9 tons ha-1 to 6.7 tons ha-1. ARC and its affiliated institutes along with other national and international partners are working together on wheat variety development, release and registration; wheat seed production and supply; wheat production, storage, flour milling, and food processing, all the way to marketing. This is achieved with full involvement of all stakeholders in all nodes of the wheat value chain from farm to fork. This book entitled “Political Economy of the Wheat Sector in Egypt”, documented the achievements and challenges in the wheat sector in Egypt and offers recommendations for the way forward. It also compiled a lot of information, including some which are otherwise publicly unavailable, making it a useful document and reference material for the near future. I highly appreciate the long-term collaboration between ICARDA and ARC, which started back in 1981 and continues to bear much fruit including the joint publication of this important book. I am sure that all stakeholders in the wheat sector and the policy makers in the country will benefit from all the results of the different studies and important information contained in this valuable book. Prof. Shireen Assem Vice President, for Scientific Research Affairs Agricultural Research Center, Egypt ix Acknowledgements The publication of this book and the studies contained in it were made possible thanks to the financial support from the One CGIAR Regional Integrated Initiatives (Fragility to Resilience-Central and West Asia and North Africa - F2R-CWANARII) and the Innovative Agriculture for Smallholder Resilience (iNASHR) project supported by GIZ and implemented by ICARDA and ARC. The authors would also like to thank the Ministry of Agriculture and Land Reform (MoALR) and its affiliated departments, such as the Agricultural Research Center (ARC), Central Administration for Seed Production (CASP), Central Administration for Seed Testing and Certification (CASC), Agricultural Economics Research Institute (AERI), and several other institutions in Egypt whose staff not only provided essential and valuable information but also participated in writing the book. Special appreciation is due to ARC which led the overall coordination of the project and assembly of all secondary data through Dr Moustafa Azab Moustafa from Wheat Research Department of the Field Crops Research Institute. Big thanks are also due to Dr. Shaban Salem, Mr. Wael Zayed, and Mr. Khaled Ahmed El-Sayed in the Economic Affairs Sector (EAS), who spearheaded the implementation of a large survey for the collection of primary data from farmers and digitization of the survey data that was used for estimation of adoption, impacts, and seed use in this book. Special thanks also go to the PhD and MSc students who managed the surveys, the enumerators from the ten survey governorates, Mr. Innocent Bikara who designed the ODK tool for electronic data collection and provided training to all enumerators, and Dr. Mohie Omar and Dr. Samar Attar for their technical and professional support for the data collection. Finally, special thanks go to the kind and generous Egyptian wheat farmers who willingly committed their precious time, and provided information without which we couldn’t have produced this book. x Contributing Authors (in descending alphabetical order of their last names) Yousef, Diaa, Central Administration for Seed Production (CASP), 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee-Giza, Egypt; email: diaa@casp.gov.eg Yigezu, Yigezu Atnafe, International Center for Agricultural Research in the Dry Areas (ICARDA), P.O. Box 950764, 11195, Cairo, Egypt; email: y.yigezu@cgiar.org Rehan, Amged Ahmed Essa, Central Administration for Seed Testing and Certification (CASC), 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee, Giza, Egypt; email: amgadrehan27@ gmail.com Odam ,Ahmed Mohammed, Head of Agricultural Services and Follow-up Sector, Ministry of Agriculture and Land Reclamation . email: ahmedidam500@gmail.com Moustafa, Moustafa Azab, Field Crops Research Institute, (FCRI), Agricultural Research Center (ARC), 9 El-Gamaa St., Giza, 12619 Cairo, Egypt; email: m.azab.nwrp@hotmail.com Maamoun, Amira Ali, CASP, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee, Giza, Egypt; email: amira.khatab912@gmail.com Hammad, Hosny, Agricultural Economics Research Institute (AERI), 7 Nadi El Said Street, Agencies and Companies Building, Dokki, Cairo, Egypt; email: hsnfegypt@yahoo.com Gad, Mahasen Fawaz, CASC, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee, Giza, Egypt; email: mahasen.f.gad@gmali.com El-Shater, Tamer, Consultant, ICARDA, P.O. Box 5644, Aleppo, Syria; email: tamer_149@hotmail. com El Deeb, Samy Hamed, CASC, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee-Giza, Giza, Egypt; email: sllamsamy@yahoo.com Dekhil, Maha Abdel Fattah Ibrahim, CASC, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee, Giza, Egypt; email: mdekhil@gmail.com Bishaw, Zewdie, ICARDA, ILRI Campus, P.O. Box 5689, Addis Ababa, Ethiopia; email: z.bishaw@ cgiar.org Aly, Hatem Ibrahim, CASP, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee, Giza, Egypt. email: hatem.ali69@yahoo.com Ahmed, Marwa Hassan Said, CASC, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee-Giza, Giza, Egypt; email: marwahassan074@gmail.com Aboshosha, Shymaa Zoheir, CASC, 8 Gamaa Street, P.O. Box 237, 12211 Rabee EL Gezee-Giza, Giza, Egypt; email: sh_z9@hotmail.com Abdel Aleem, Moss'ad Mohamed, FCRI, ARC, 9 El-Gamaa St., Giza, 12619 Cairo, Egypt; email: mossad_abdelaleem@hotmail.com. Abbas, Enas, AERI, 7 Nadi El Said Street, Agencies and Companies Building, Dokki, Cairo, Egypt; email: enas_abbas_saleh@yahoo.com xi List of Abbreviations 2SLS ABE APRP ARC CAPMAS CASC CASP CIMMYT COMESA DH DUS EAA EAO EGASEED EHCSS FCRI FIHC GACA GAM GASC GCSS GCSTL GoE GTZ ICARDA IPR ISTA IV MD MEC MoALR MoA MoSIT NSC NWRP OECD Two-stage least squares Agricultural Bank of Egypt Agricultural Policy Reforms Program Agricultural Research Center Central Agency for Public Mobilization and Statistics Central Administration for Seed Testing and Certification Central Administration for Seed Production International Center for Maize and Wheat Improvement Common Market for Eastern and Southern Africa double hurdle Distinctness, Uniformity, and Stability Egyptian Agricultural Authority Egyptian Agriculture Organization Egyptian Agricultural Company for Production of Seeds Egyptian Holding Company for Silos and Storage Field Crops Research Institute Food Industries Holding Company General Administration of Commercial Affairs General Administration of Marketing General Authority for Supply Commodities General Company for Silos and Storage Giza Central Seed Testing Laboratory Government of Egypt Duetsche Gessellschaft fur Technische Zusammenarbeit International Center of Agricultural Research in Dry Areas Intellectual property rights International Seed Testing Association Instrumental variables Ministerial Decree Middle Egypt Company for Seed Production Ministry of Agriculture and Land Reclamation Ministry of Agriculture Ministry of Supply and Internal Trade National Seed Council National Wheat Research Program (coordinated by WRD) Organization of Economic Cooperation and Development xii List of Abbreviations PBDAC PPRIa PPRIb PVP PVPO SADS TSP TPSGMS UPOV VRC VCU WRD WTO Principal Bank for Development and Agricultural Credit Plant Pathology Research Institute Plant Protection Research Institute Plant Variety Protection Plant Variety Protection Office Sustainable Agricultural Development Strategy Towards 2030 Triple superphosphate Thermo photo synthetic genic male sterile International Union for the Protection of New Varieties of Plants Variety Registration Committee Value for Cultivation and Use Wheat Research Department World Trade Organization CHAPTER I THE WHEAT SECTOR IN EGYPT: HISTORY, ORGANIZATION, AND CHARACTERIZATION Moustafa Azab Moustafa, Moss’ad Mohamed Abdel Aleem, Enas Abbas, Hammad Hosny, Hatem Ibrahim Aly, Diaa Yousef, Zewdie Bishaw, and Yigezu A. Yigezu Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 2 1.1 Background With a total area of 100 million hectares, Egypt lies within 21–31°N and 25–35°E in the north-eastern African region. Egypt is one of the oldest agricultural civilizations, with the Nile River allowing a sedentary agrarian society to develop more than 7,000 years ago. Out of the total population of 104 million in 2022, which grew at 2 percent annually, the majority (about 58 percent) still lived in rural areas (CAPMAS, 2024). Administratively the country is divided into 27 governorates1 , which are further divided into districts as the lowest administrative units (CAPMAS, 2023). Egypt is predominantly desert with large arid and semiarid rangelands constituting 96 percent of the total land area. The rangelands are divided into four major physical regions: Nile Valley and Delta, Western Desert, Eastern Desert, and Sinai Peninsula. The total agricultural land in 2022 was about 4.06 million ha (MoALR, 2025), representing about 4 percent of the total area of the country. There is no effective rainfall except in the narrow strip along the northern coast of the country. Consequently, Egyptian agriculture is almost entirely dependent on irrigation from the Nile River. However, recent government reclamation in West Delta and Upper Egypt desert lands depends on underground water. Consequently, of the total agricultural land, about 3.3 million ha was located within the Nile Basin and Delta and the remaining 0.76 million ha was located either in irrigated oases or rainfed areas in Mediterranean coastal areas and the Sinai Peninsula. Of the total area of the Nile Basin and Delta, about 2.51 million ha is called “old land” which has been cultivated in varying intensities for thousands of years, while the remaining 1.56 million ha is newly reclaimed land (MoALR, 2025). To cope with the growing food demand driven by the growing population, the Government of Egypt (GoE) is currently implementing a new initiative the “Reclamation of 1.5 million Feddans Project,” which aims at cultivating 630,000 ha of additional land in the desert and West and South Delta. Reclamation started in 2017 and about 250,000 ha are now under cultivation. Crop production in the newly expanded areas depends on underground water using modern irrigation systems including drip, sprinkler, and pivot irrigation. Agriculture is a key sector of the economy and food security. However, the contribution of agriculture to GDP and employment has declined. According to Kassim et al. (2018), its contribution to GDP declined from 58 percent in 1960 to 34 percent in 1990 and further decreased to an average of 13.2 percent during 2000–2017, while employment in agriculture averaged 29 percent over the same period. They also indicated that the share of agriculture in total employment and GDP varies considerably among governorates. Currently, agriculture contributes 13.6 and 29.2 percent to GDP and employment, respectively (Abdelgawwad and Moustafa, 2023). 1  The 27 governorates currently include Alexandria, Aswan, Assiut, Beheira, Beni Suef, Cairo, Dakahlia, Damietta, Fayoum, Gharbia, Giza, Ismailia, Kafr El-Sheikh, Luxor, Matrouh, Menia, Menofia, New Valley, North Sinai, Port Said, Qalubia, Qena, Red Sea, Sharqia, Sohag, South Sinai, and Suez. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 3 It is noteworthy that the agricultural sector’s development in general and that of the wheat sector in particular are shaped by several factors. Richards (1982) presented the policy and technical changes that shaped the development of the agricultural sector in Egypt. TRD (1994) provided detailed analysis on the evolution and impacts of government policy on agriculture from 1950 up to 1990 including the Agricultural Development Systems-Egypt project (1978-1983) which is the basis for the APRP and NARP projects. These and other projects made significant impacts in modernizing the agricultural sector and laid the foundation in terms of research for technology generation and transfer and strengthening the country in terms of human resources and physical infrastructure. 1.1.1 Climate Dominated by deserts, Egypt’s climate is dry and hot. It has a mild winter season (November–March) with rain falling along coastal areas, and a hot and dry summer season (May–September). Daytime temperatures vary by season and change with the prevailing winds. The climate is generally moderate, characterized mostly by hot or warm days, and cool nights. In coastal areas, daytime average temperatures range between a minimum of 14°C in winter and a maximum of 30°C in summer. In the deserts the temperatures vary considerably, especially in summer, ranging from 7°C at night to 52°C during the day. Winter temperatures in deserts do not fluctuate widely and can be as low as 0°C at night and as high as 18°C during the day. Egypt receives less than 80 mm of precipitation annually in most areas, although in the coastal areas it may reach a total of 200 mm, received predominantly during winter as it hardly ever rains during summer. 1.1.2 Agroecological zones Using three factors (climatic conditions, soil characteristics, and water sources), the country is classified into five agroecological regions: Costal Region, Lower Egypt (also called Delta Region), Middle Egypt, Upper Egypt, and Newly Reclaimed Region (Figure 1.1). Coastal Region: extends along the north coastal areas, about 50 km wide and parallel to the Mediterranean Sea, and includes Alexandria, Matrouh, Ismailia, Port Said, North Sinai, South Sinai, and Suez Governorates. It is characterized by a moderate climate during the whole year, since it is affected by the Mediterranean Sea breeze with a profound influence on the vegetation and wildlife of the region. The average rainfall over the past 50 years is 133 mm. The region is dominated by sandy and calcareous soils and the main sources of water are rainfall and underground water. Delta Region: includes Beheira, Dakahlia, Damietta, Gharbia, Kafr El-Sheikh, Menofia, Qalubia, and Sharqia Governorates. The climate is warmer than the coastal region, characterized by warm winters and moderate temperatures during summer. The region has alluvial soils (clay to loam), with a predominance of montmorillonite types of clay mineral. The main source of water is the Nile River. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 4 Fi gu re 1 .1 T he a gr oe co lo gi ca l z on es o f E gy pt Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 5 Middle Egypt Region: includes Beni Suef, Fayoum, Giza, and Menia Governorates. The climate is like the Delta Region, which is hotter than the coastal region, but is characterized by warmer winters than the Delta Region and higher temperatures during summer. It has alluvial soils (clay to loam), with a predominance of montmorillonite types of clay mineral. The main source of water is the Nile River. Upper Egypt Region: includes Assiut, Aswan, New Valley, Quena, and Sohag Governorates. The climate is much hotter during summer and warmer during winter compared to the other regions. It has alluvial soils (clay to loam), with a predominance of montmorillonite types of clay mineral. The main sources of water are the Nile River and underground water. Newly Reclaimed Region: includes the Nubaria Governorate and all lands in the reclamation program adjacent to the Nile River in addition to the New Valley. It has a similar climate to the Middle Delta Region, but soils are sandy calcareous or calcareous. The main sources of water are ground water and the Nile River. 1.1.3 Cropping seasons Cropping is distributed across the three agricultural seasons: winter, November–May; summer, March–August; and nili, July–November (Barnes, 2014; Sims, 2015). Major crops include rice, maize, wheat, cotton, and sugarcane. The cultivation of these crops is relatively evenly distributed across the regions, with some differences. 1.2 Wheat Grain Sector There are two main sources of wheat grain supply in Egypt: domestic production and imports from foreign sources. Wheat is the most important crop and is exclusively grown for domestic consumption. Among cereals, wheat and barley are winter crops while rice and maize are summer crops; and therefore, there is no competition between the two crop groups in terms of planted area. Wheat occupies 43.7 percent of the winter cropped area and clover is the single most competitor to wheat, representing 25.3 percent of the total area under winter crops, followed by sugar cane (8.43 percent). 1.2.1 Wheat production Wheat is the most important crop in terms of both cultivated area and grain production. Wheat area increased from 581,409 ha with a productivity of 2.5 tons ha−1 and production of 1,435,926 tons in 1961 and reaching 1,436,738 ha, 6.9 tons ha−1, and 9,842,411 tons, respectively in 2021, the peak year in terms of area and production (FAOSTAT, 2024). Abdalla et al (2023) indicated that between 2000-2020, the increases in wheat area, production, and yield were 1.54, 1.64 and 0.2 percent, respectively with a 2 percent decline in wheat self-sufficiency over the same period. It also documented that the cultivated wheat area, production, and yields were characterized by high fluctuations due to frequent changes in policies, reduced government support, and poor extension services. Figure 1.2 shows the evolution of the total area and production of cereals and wheat during 2010–2022. The 13-year averages for 2010–2022 of area, production, and yield of wheat were 1.32 million ha, 8.92 million tons of grain, and 6.78 tons ha−1, respectively. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 6 During 2010-2022, wheat production increased by 33.3 percent from 7.2 million tons in 2010 to 9.6 million tons in 2022 (MoALR, 2022), mainly due to increases in farm-level productivity from use of new improved technologies and innovations (Table 1.1 and see Chapter 6). Accordingly, wheat represents 41.2 percent of the total area and about 39.6 percent of total cereal production. The average domestic production of wheat accounted for around 46 percent of the total annual demand (MoALR, 2022). In 2009, the GoE outlined the vision of increasing domestic wheat production in Figure 1.2 Evolution of cereal and wheat area and production for 2010–2022 0 500 1000 1500 2000 2500 3000 3500 0 5000 10000 15000 20000 25000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Th ou sa nd s ( ha ) Th ou sa nd s ( to ns ) Wheat (ha) Cereals (ha) Wheat (tons) Cereals (tons) Source: MoALR, 2023 the Sustainable Agricultural Development Strategy Towards 2030 (SADS) (MoALR 2009) development was spearheaded by MoALR and the Agricultural Research and Development Council. It envisages attaining 81 percent self-sufficiency in wheat through an increase of wheat area to 1.76 million ha and an increase in wheat productivity to achieve a higher average grain yield of 8.57 tons ha-1 in wheat (i.e., a total annual domestic production of 15.1 million tons by 2030) through the strategy aspired to achieve 74 percent self-sufficiency by 2017 although it reached only 43 percent (Abdalla et al. 2023). The SADS is a live document subject to periodic reviews. In 2023, the GoE presented a revised and more realistic plan for 70 percent wheat self-sufficiency with target wheat area of about 1.5 million ha and productivity of 7.5 tons ha-1 and production of 10 million tons of domestic wheat (D2S, 2023). 1.2.2 Wheat imports Egypt is one of the top wheat importers in the world, with the amount imported depending on domestic production and market demand in the country. During 2010– 2022, the average wheat import over ten years was about 10.3 million tons where imports increased from 9.8 million tons in 2010, although annual import reached 14.9 million tons during peak year in 2018. More recently, the average import during 2017– Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 7 2020 was 13.1 million tons to fill the consumption gap, which averaged 14.2 million tons of a total consumption of 22.8 million tons. This increase was due to increasing demand for wheat arising mainly from increases in both population and per-capita consumption. According to CAPMAS (2022), the Russian Federation and Ukraine constituted about 82.5 percent of total Egyptian wheat imports during the same period and each on average contributed about 7.47 and 2.95 million tons (59 and 23 percent of total wheat imports), respectively. Romania and France contributed about 1.01 and 0.50 million tons, respectively, accounting for nearly 8 and 4 percent of Egypt’s imported wheat. 1.2.3 Wheat consumption Wheat has been the main staple food in Egypt for thousands of years and represents 35 percent of per-capita total daily calorie intake. Wheat consumption increased by 43.39 percent from 14.98 million tons in 2010 to 21.48 million tons in 2020. The increase in total consumption during the last five years was not due to an increase in human consumption only but to the use of wheat grain for livestock feed emanating from high feed prices. Domestic wheat production is insufficient to satisfy local needs due to the high level of consumption and high population growth, which has resulted in large amounts of grain imports from international markets. Table 1.1 shows domestic production, import consumption, and national self-sufficiency ratio for wheat, with more information presented in Annex 1.1. Wheat self-sufficiency is the ratio of domestic production and the total wheat supply (that is total wheat available at a country level including local production and imports). As can be seen in Table 1.1, wheat self- sufficiency ratio in Egypt shows a generally declining trend, with a more pronounced decline in most recent years (MoLAR, 2024). Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 8 Domestic production of wheat in Egypt during 2000–2022 accounted on average for 46 percent of total annual demand, with the remaining 54 percent met through imports. Abdalla et al. (2022) reviewed wheat self-sufficiency in Egypt for 2000–2020 and sug- gested future pathways to achieve this in a sustainable way. 1.2.4 Wheat utilization Wheat consumed on-farm is stored at the farm-level and milled for a fee in small-scale village mills into very coarse flour at a 100 percent rate of extraction. The flour is baked into bread at farmers’ houses. Wheat is primarily consumed as staple food in the form of bread and/or processed food products such as confectionaries. Two main types of bread are produced in Egypt: (i) baladi (pita) bread—the common traditional flat bread made from coarse wheat flour produced with an extraction level of 82 percent and (ii) fino (French) bread and pastries made from fino flour, which is a fine wheat flour produced with an extraction level of 72 percent. Table 1.2 presents trends for wheat use for 2010–2021 during which annual total wheat consumption ranged between 12.423 and 19.035 million tons - averaging at 15.267 million tons. In Egypt, total wheat is apportioned among different uses. Although wheat is primarily (43.8 percent) used for bread, it is also used for biscuits, cookies, pies, pastries, pasta (macaroni and spaghetti), and other products. Product types vary Wheat production, import, consumption, and self-sufficiency in EgyptTable 1.1 Note: Storage capacity is much less than total consumption because (i) over 60 percent of local production is retained on farms and (ii) imports are made at intervals to allow for withdrawals for milling thereby making room for the next shipment. Year Production (million tons) Imports (million tons) Consumption (million tons) Self-sufficiency (%) 2010 7.2 9.8 17.7 40.5 2011 8.4 9.8 17.2 48.8 2012 8.8 6.6 15.8 55.7 2013 9.5 6.8 16.7 56.7 2014 9.3 8.1 17.8 52.1 2015 9.6 9.4 19.6 49.1 2016 9.3 10.8 19.6 47.7 2017 8.4 12.0 24.4 34.6 2018 8.3 14.9 23.5 35.5 2019 8.6 12.5 21.3 40.3 2020 9.1 12.9 22.0 41.4 2021 9.8 11.1 20.4 48.2 2022 9.6 9.2 18.7 51.4 Average 8.92 10.30 19.59 46.30 Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 9 depending on flour types, which are mainly categorized depending on flour extraction percentage during milling. Fino flour is used for making fino (French bread) and white colored shami flat bread. Premium flour is used for making biscuits, cookies, pies, and pastries. Baladi flour has a higher bran proportion (82 percent flour extraction) and is mainly used to produce more and cheaper subsidized baladi bread. This helps in decreasing the cost of subsidies to the government. Baladi flour may also be used for special food such as greesh (coarse milled whole grain). Semolina (65 percent flour extraction) mainly from durum wheat is used for making pasta. Given that bread is a major staple food in Egypt, the GoE subsidizes the locally consumed baladi produced out of the lower-grade (82 percent extraction rate) flour to make the local bread available at a lower price to most of the population. Since 1989, the subsidized price of one piece of local bread has been 0.05 EGP while the price ranges between 0.65–1.25 EGP in the free market. As a result, a large amount of subsidized local bread is used for livestock and poultry feed. Part of domestic wheat production is used as animal feed by many farmers because of the high prices of animal feed, making the country heavily dependent on imports to meet demand. Since 2013, the GoE has improved bread quality and encouraged people to reduce bread consumption by providing them with vouchers that they can use to purchase not only bread but also other supplies such as milk and detergents. Moreover, the GoE targeted the subsidies by canceling subsidies for those with higher incomes. Product 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Average % use Flour Premium (72%) 1,858 2,278 2,314 3,349 2,635 2,411 2,254 4,463 2,973 3,293 4,401 4,528 3,063 20.1 Baladi (82%) 4,192 4,219 4,162 3,709 5,570 4,258 5,726 4,550 2,527 3,912 3,314 3,934 4,173 27.3 Semolina 37 38 27 27 31 24 17 22 46 52 64 67 38 0.2 Greesh 41 37 35 32 35 20 2 3 9 10 10 12 21 0.1 Bread Baladi 5,124 6,175 5,127 5,879 4,678 6,744 6,636 5,475 6,918 6,875 7,359 7,522 6,209 40.7 Fino 284 320 315 348 300 597 501 412 516 506 519 529 429 2.8 Shami 209 5.0 2.8 4.0 3.8 5.6 3.2 3.1 2.5 3.0 3 62 26 0.2 Others 15 16 9 13 0.2 0.5 3 62 55 62 66 39 28 0.2 Biscuits, cookies, and pies 128 134 140 140 129 101 89 289 238 267 281 284 185 1.2 Pastries 96 103 145 121 136 42 49 108 115 120 128 135 108 0.7 Pasta and spaghetti 262 333 353 344 316 723 485 773 1,544 1,737 1,856 1,832 880 5.8 Other bakery products 177 110 140 71 56 72 43 173 130 146 87 91 108 0.7 Total use of wheat 12,423 13,768 12,770 14,037 13,890 14,998 15,808 16,333 15,074 16,983 18,088 19,035 15,267 100.0 Amount of wheat (000 tons) used during 2010–2021 in EgyptTable 1.2 Source: CAPMAS. 2023a: CAPMAS. 2023b Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 10 Egypt has one of the highest per-capita wheat consumptions in the world. The GoE bread price subsidy is believed to have encouraged more consumption of bread. Figure 1.3 shows cereal and wheat consumption per capita per year for 2008–2022. The highest per-capita consumption rate was 182.7 kg (2008), while the lowest was 122.5 kg (2012) after the GoE introduced the voucher system in 2012 to encourage people to reduce bread consumption and replace it with other food items. However, wheat consumption increased gradually to 163.9 kg in 2017 and then decreased to 137.7 kg in 2022. Feed prices increased more than wheat prices, and so farmers have used wheat grain as livestock and poultry feed. Even worse, because of its heavily subsidized low price, local bread (which requires substantial amounts of energy, labor, and other inputs for its preparation) was used for livestock and poultry feed thereby making the country heavily dependent on imports to meet its national wheat demand. 0 20 40 60 80 100 120 0 50 100 150 200 250 300 350 400 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 Po up la ti on (m ill io ns ) C on su m pt io n (k g pe r c ap it a) Population Cereal consumption Wheat consumption Figure 1.3 Cereal and wheat consumption per capita per year in Egypt: 2008–2022 Source: CAPMAS, 2024 1.2.5 Domestic wheat trade Domestic wheat production is primarily consumed by farm households, and some is saved as seed for the next season or sold to the GoE through the General Authority for Supply Commodities (GASC) under the Ministry of Supply and Internal Trade (MoSIT). The private sector is not allowed to directly purchase domestic wheat from farmers for their own use. The GoE purchases wheat through three different channels (Figure 1.3): (i) the Agricultural Bank of Egypt (ABE) purchases and stores domestic wheat on behalf of the GASC; (ii) the Egyptian Holding Company for Silos and Storages (EHCSS) purchases domestic wheat on behalf of GASC; and (iii) private mills buy domestic wheat under the umbrella of the Food Industries Holding Company (FIHC), which includes public flour mills. The ABE stores purchase wheat either in traditional grain storage facilities such as shonas (open sheltered flat stores) distributed throughout the country or silos and delivers the grain to public and private flour mills under contract to produce Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 11 the lower-grade flour (82 percent extraction rate), which is distributed to local bakeries for making subsidized traditional baladi. Both EHCSS and FIHC also deliver wheat to public and private flour mills under contract and follow the same value chain. Farmers can directly deliver wheat to the shonas and rural traders or cooperatives. Each year, the shonas usually receive harvested grain from mid-April until mid-July, but in 2022 the receival period was extended up to mid-August to increase domestic procurement due to anticipated global food crisis. Smallholder farmers prefer to sell their wheat to village traders, usually at local markets as they produce small amounts and have difficulties arranging trucks to deliver to storage facilities. In addition, traders may give farmers the option of (i) paying half of the price in advance to cover their production costs, (ii) delivering wheat produced at the farm gate, and (iii) receiving the same price as offered by the GoE. However, instead of the standard size of the local measurement unit (ardab, equivalent to 150 kg), traders may take advantage of farmers by using larger-sized ardabs that are up to 155 kg and so not paying for the extra 5 kg of grain. Local markets operate without any government interference and do not constitute illegal trade, such as selling grain to private mills or livestock farms. However, local grain traders sell the wheat either to shonas with a fixed price or sell it illegally to private mills at higher prices. Some traders may also sell wheat illegally to animal production farms. Farmers keep more grain than their consumption and other needs and use some to feed their livestock and poultry. Surplus grain can also be bartered in village markets in exchange for other crops or be sold for cash to meet other family needs. Currently farmers store wheat at home in plastic barrels (50 kg), jute sacks (50–88 kg), or plastic bags. Farmers harvest their fields at 12–13 percent moisture content and allow harvested wheat to air dry before threshing, which reduces the moisture content and allows safe storage. In addition, farmers use insecticides and fumigation to reduce losses in on-farm storage. Although the only legal domestic wheat trade is carried out by the GoE, large amounts of wheat are sold illegally to private mills or to livestock farms as feed. If detected, any illegally transacted wheat grain is confiscated without any compensation and sent to public mills. Therefore, in 2022, the GoE encouraged farmers to directly deliver wheat to shonas and in exchange to receive the bran at a low price for their livestock as an incentive. Table 1.3 shows the amount of wheat grain purchased by the GoE from domestic production. Despite the higher procurement prices for domestic wheat, the GoE purchased only 23.7 percent of locally produced wheat in 2010. The quantity delivered has increased with time and reached 43.7 percent of domestic production in 2022, which is still low. In general, during 2010–2022, on average more than 62 percent of domestic wheat production was retained by farmers for household consumption, seed for the subsequent season, and for sale in local markets. Farmers prefer to sell their product to local traders since the traders collect the wheat from the farm gate. Additionally, traders often provide loans for input purchases such as seeds and fertilizers. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 12 In 2022, with a goal of purchasing six million tons from domestic production, the GoE announced additional measures in which local wheat growers were prohibited from selling their produce to anyone except the GoE until the end of the season. The GoE constituted that out of their produce, farmers must sell 4.3 tons ha-1 to shonas or government mills and anyone who does not adhere will be fined. As a result, the GoE collected about 44 percent of local harvested wheat in 2022. In 2016, a higher rate of collection was reported because the GoE strictly enforced the measures to the extent that farmers with lower productivity had to buy grain from the market and deliver the decreed amount. Year Quantity (million tons) Collected (%) Produced Collected 2010 7.2 1.7 23.7 2011 8.4 2.5 29.9 2012 8.8 3.7 42.1 2013 9.5 3.6 38.5 2014 9.3 3.6 39.2 2015 9.6 3.7 38.5 2016 9.3 4.6 48.7 2017 8.4 3.8 44.5 2018 8.3 3.2 37.7 2019 8.6 3.3 38.7 2020 9.1 3.5 38.7 2021 9.8 3.5 35.1 2022 9.6 4.2 43.7 Average 8.9 3.4 38.7 Quantity of wheat grain produced and collected in Egypt: 2010–2022Table 1.3 Source: MoALR (2024); and MoSIT (2023) Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 13 Wheat procurement price To promote and encourage domestic wheat production, the GoE announces the annual procurement price to be paid to local wheat producers before the planting season. Apart from home consumption and livestock feed, domestic wheat price declaration and its timing influence wheat production by smallholder farmers (Abdalla et al, 2023). The MoALR and MoSIT set the wheat grain procurement prices. Domestic wheat prices are higher than the world market as an incentive for local farmers to increase the cultivated wheat area. Cleaning ratio, which is a measure of the purity of (or absence of foreign materials and dirt from) wheat grain determines the procurement price. There are three grades and prices based on the purity of wheat grain measured in kirat (qirat)2 (K) where the highest purity is 23.5 K followed by 22 K and then 20 K. The price per ardab ranges from 1,500 EGP for 23.5 K to 1,300 EGP for 20 K; and the price should be paid with immediate effect or within 48 hours of completing the transaction. The wheat price paid by GASC includes the ABE storage fee. Since the local price of wheat is above the world price, ABE ensures that imported wheat is not illegally sold in shonas as domestic wheat. Wheat grain supplied from shonas to mills is mixed with low-quality imported wheat as the domestic wheat is of higher quality. Figure 1.4 (and Annex 1.2) shows the procurement price paid for domestic wheat grain compared to the world price. It is worth mentioning that the procurement price announced by the GoE is always higher than the wheat world price. In 2010, the domestic wheat grain price (farm support) was $318 per ton 3 and gradually rose to $366 per ton in 2015. However, after the sharp currency devaluation in November 2016, farm support prices in US dollar terms were significantly lower than in previous years. Therefore, the procurement price for local wheat reduced to $275, $211, and $288 per ton in 2016, 2017, and 2020, respectively. In 2022, the GoE approved a bill to raise the procurement price of domestic wheat for the next harvest season in 2022/2023 by more than 17 percent to $338 per ton. On the other hand, the on-farm price of wheat paid by traders increased from EGP 1,813 per ton in 2010 to EGP 4,407 per ton in 2020. While the price in EGP increased during this period, due to devaluation, the dollar value of wheat grain decreased from $320 to $278 per ton. On-farm wheat prices are always higher than the GoE procurement prices, giving wheat growers the opportunity to sell their product to wheat traders. As a result, many farmers prefer to sell their production to local traders not only because the prices are higher but also because traders collect the wheat from the farm gate. Although the GoE subsidizes nitrogen fertilizers to all farmers no subsidy support is provided by local traders to wheat farmers. 2  Wheat grain quality (purity) measured out of 24. Wheat with 22 qirat has a 92 percent purity level (Barnes, 2022). 3  Ton indicates metric ton and $ indicates US dollars throughout this document. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 14 1.2.6 Institutions Procurement In Egypt, the GoE is a major player in the wheat sector as the sole official purchaser of domestic wheat and the major wheat importer. McGill et al. (2015) indicated that the GoE purchases 45 percent of total local wheat production, owns 30 percent of milling capacity, and employs a further 20 percent of milling capacity on contracts with the private sector. Despite some illegal trade, the GoE is the sole legal purchaser of domestic wheat through the GASC of MoSIT. This is a GoE agency responsible for domestic purchase through three channels described in section 1.2.1 on domestic wheat trade (Figure 1.5). The ABE (ex PBDAC) is the largest purchaser of domestic wheat, accounting for almost half of the GoE purchases. The ABE collects wheat from farmers and traders on behalf of GASC, which allocates funds to pay for the purchases from farmers and traders (ABE, 2022). The EHCSS is the second largest buyer of domestic wheat on behalf of GASC, and the FIHC is the third largest buyer. The GASC is also the world’s biggest wheat purchaser or importer (McGill et al. 2015). Government wheat imports are purchased through tenders issued by the GASC and imported by the GASC. Wheat imported by the GoE is handled by the General Company for Silos and Storage (GCSS), which has a storage capacity of 400,000 tons in the ports of Alexandria, Damietta, and Safaga (McGill et al 2015). During 2019–2021, GASC accounted for 56 percent of total national imports, with the remaining 44 percent due to the private sector. 0 50 100 150 200 250 300 350 400 450 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Pr ic e ($ /t on ) World price Domestic price Figure 1.4 Domestic wheat procurement price and world price Source: own elaboration using MoSIT (2024) and World Bank (2024). Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 15 Domestic Wheat Consumers Imported Wheat Farmers and rural households On-farm storage Private village mills Rural households Flour Baladi bakeries Bran Feed factories, bakeries, poultry producers, and traders Flour Fino bakeries, food factories, traders, pastries, and shops Public mills (FIHC) Private mills (under contract) Private mills Shonas Silos GSCC port storage Private port storage Human food Donated Retained seed Animal feed ABE EHCSS FIHC Government purchases GASC Private N o pr oc es si ng (W ho le g ra in ) Processing (72% flour) Processing (82% flour) Figure 1.5 Schematic presentation of wheat grain value chain in Egypt Note: ABE, Agricultural Bank of Egypt (ex PBDAC); EHCC = Egyptian Holding Company for Silos and Storage; FIHC = Food Industries Holding Company; GASC = General Authority for Supply Commodities; and GCSS = General Company for Silos and Storage. Wheat grain storage Wheat grain purchased from domestic production is stored in the 355 large shonas, each with a capacity of 6,000–8,000 tons. The ABE administers shonas with a total capacity of 2.1 million tons. The EHCSS has 44 silos distributed throughout the country with a total storage capacity of around 3.4 million tons. The FIHC purchases wheat and delivers directly to government-operated mills (McGill et al. 2015); however, even though it also purchases wheat from farmers, it does not have its own storage facilities. Instead, it delivers grain directly to government-controlled public flour mills, which have facilities to store wheat until it is milled. Table 1.4 illustrates the number of shonas, stores, and silos owned and managed by the public and private sectors during 2010–2022. In Annex 1.3 shows the historical trend in amounts of wheat grain stored in shonas and silos, and the beginning and ending stocks. Over 85 percent of the shonas belong to the public sector and the total number decreased from 564 (100 percent public) in 2010 to 522 (86.2 percent public) in 2022, during which the private sector accounted for 13.8 percent of the ownership (Table 1.4). Likewise, most grain stores belong to the public sector; the number decreased from 1,284 (100 percent public) in 2010 to 731 (63.1 percent public) in 2022 when the private sector accounted for 427 (36.9 percent) of the 1,158 total number of stores (Table 1.4). Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 16 The need for large-scale grain storage became apparent in mid-1954 with increase in demand for wheat, and wheat import then began by Egypt. A plan was set to build 20 silos but only two were built at the time: in Alexandria (58 thousand tons) and Embaba (56 thousand tons) in Cairo. Recognizing the high losses from open storage, establishing new silos started in earnest in 1975. Three new silos were established in Safaga and Alexandria ports and Shobra, each of 100 thousand tons capacity. Another plan aimed at building 20 silos, but only nine were built by 2000. In 2002, a national project aimed to build 50 more silos. However, the number of silos increased from 33 in 2010 to 60 in 2020, with the private sector increasing its capacity over the years. Of the 60 silos, in 2020, only 18 were owned and managed by the public sector and the others by the private sector, contributing 70 percent. The storage capacity of silos almost tripled from 2010 to 2020 (Table 1.4 and Annexes 1.4 and 1.5). This increased from only 1.5 million tons in 2010, doubled in 2018, and reached 4.2 million in 2020 for both the public and private sectors. Currently, there is another project to build new silos in the newly reclaimed land where the wheat area has been increasing. Year Number of shonas Number of stores Number of silos Public sector Private sector Total Public sector Private sector Total Public sector Private sector Total Storage capacity (million tons) 2010 564 564 1,284 1,284 33 33 1.50 2011 536 536 1,393 1,393 28 28 1.56 2012 510 510 1,331 1,331 29 29 1.30 2013 521 521 1,414 1,414 24 24 1.20 2014 517 2 519 1,470 1,470 15 7 22 1.10 2015 534 3 537 1,066 3 1,069 17 2 19 1.10 2016 488 4 492 1,141 2 1,143 15 4 19 1.10 2017 470 10 480 1,085 2 1,087 15 3 18 2.40 2018 357 33 390 875 3 878 12 26 38 3.00 2019 434 74 508 713 4 717 18 38 56 3.40 2020 451 78 529 780 4 784 18 42 60 4.20 Numbers of shonas, stores, and silos and storage capacity in Egypt: 2010–2020Table 1.4 Source: CAPMAS, 2022 The GCSS has a total storage capacity of 721 thousand tons for imported wheat only. The GCSS handles storage of all wheat grain imported by the public sector at the ports. GCSS has facilities to receive grain ships of up to 70 thousand tons in Alexandria, Dakahlia, Damietta, and Safaga ports. It has silos with a total capacity of 355 thousand tons where it has a mechanized 50 thousand tons capacity horizontal warehouse silo in Damietta, as well as inland silos of 165 thousand tons capacity in Imbaba and Shubra areas of Cairo and 151 thousand tons capacity silos in Alexandria. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 17 Wheat grain processing All wheat grain purchased from domestic markets and imported by GASC is milled to produce flour (at 82 percent level of extraction) for making baladi. Milling for this type of flour is carried out by public flour mills controlled by FIHC and by private mills operating under contracts. The flour is either sold directly to consumers or to baladi bakeries and warehouses. Wheat imported by the private sector is temporarily stored in private storage in the ports and then moves directly to the mills that produce fino flour to be sold to fino bakeries, pastries, food factories, shops, and traders. All wheat bran is sold to factories producing animal feed, bakeries, poultry producers, and traders (McGill et al. 2015). Figure 1.6, which is based on data from MoSIT (2024), shows the number of baladi and fino bakeries in Egypt during 2010–2020. 0 5 10 15 20 25 30 35 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 N um be r o f b ak ar ie s Baladi bakeries Fino bakeries Figure 1.6 Number of baladi and fino bakeries operating in Egypt 1.2.7 Wheat sector policy Wheat sector policy in Egypt in the 1960s was a government-controlled quota system with defined area, and fixed price (McGill et al. 2015). In the 1980s, new reforms liberalized the sector, with prices liberalized, quotas removed, and subsidies reduced. The Agricultural Policy Reforms Program from the mid-1980s helped the GoE maintain progress on liberalizing agricultural markets and removing policy barriers to private sector participation in agriculture (Lewis 2010). Three agricultural sector strategies were developed, which differed in their objectives and programs based on prevailing international and national circumstances, with targets to increase the annual growth rates of agricultural production in the range of 3.0–4.1 percent (MoALR, 2009): (i) the first strategy of the 1980s dealt with liberalization of the agricultural sector and pricing policies; (ii) the second strategy of the 1990s aimed to complete the economic reform program and increase the value of agricultural exports; and (iii) the third strategy of 2000s, concentrated on achieving self-sufficiency in cereals and continuing the land reclamation program (of 63 thousand ha annually). Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 18 The wheat sector policy is driven by the GoE’s desire to make the country self- sufficient. The current SADS (MoALR 2009) focuses on the vertical expansion of wheat through intensification to increase productivity per unit area. This includes using high- yielding, early maturing, and salinity and drought tolerant wheat varieties, expanding use of certified seed, and increasing cultivated wheat area using raised-bed technology. Moreover, the GoE supports public services in agronomic research and use of good agricultural practices to increase yields in the wheat sector. Figure 1.7 presents data on subsidies provided to consumers and farmers during 2010–2022 (MoF, 2024). The subsidy progressively increased due to increases in wheat prices in both domestic and international markets. These changes in prices resulted in increases in the total value of bread subsidies given to consumers. Input subsidies provided to the farmers are however lower than the bread subsidies given to consumers to ensure bread is available to people at an affordable price, especially those with low income. 0 10 20 30 40 50 60 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 B ill io n (E G P) Subsidy for bread consumers Subsidy for crop producers Figure 1.7 Subsidy provided to crop producers and bread consumers The GoE is heavily involved in the wheat value chain at all levels (McGill et al. 2015). It provides subsidies for inputs (particularly fertilizers and mechanization) and price support for wheat produce. The details of the subsidies on inputs and price support on outputs follow. Producer support The GoE provides subsidies for inputs and outputs to support crop producers, which equally apply to wheat producers as well. Description of each subsidy type is provided below. 1. Input subsidies: the GoE provides subsidies for inputs for all crop producers. In some cases, the cooperatives facilitate delivery of subsidized inputs (fertilizers, pesticides, mechanization, etc.) to the farmers under the guidance of the Ministry of Agriculture and Land Reclamation (MoALR). According to the Ministry of Finance (MoF 2022), the GoE allocated about $27.3 million ($1 = EGP 24.38) for Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 19 farmer subsidies covering not only wheat but also all other crops in 2021/2022. The major input support for the wheat sector consists of nitrogen fertilizer subsidies like all other crop producers provided through cooperatives. There are no direct subsidies for seeds, but the CASP, which is a public seed institution, sets seed prices at relatively lower levels for farmers. Furthermore, the GoE supports all farmers by providing them with soft loans for some agricultural purposes, with the public treasury bearing the interest differences on loans allocated for agricultural production. For example, the GoE allocated a budget of $13.5 million ($1 = 44.44 EGP) for the 2024/2025 crop season. 2. Output price support: price support is the main tool for increasing domestic wheat output. The GoE supports the output of wheat producers by setting and announcing high procurement prices for domestic wheat production, which is always at a premium relative to the import parity price (that is above the world price). Moreover, the GoE supports domestic wheat farmers by purchasing their products at prices much higher than international prices—thereby providing them a secure market. Consumer support The GoE also provides bread subsidies to consumers. Egypt’s traditional food subsidy system Tamween has a long history with wide coverage. In 2015, about three-quarters of Egyptian households benefited from the system, which has gradually declined with recent reforms. In 2019, 65 percent of households still received food ration cards, and 73 percent benefited from the bread subsidy (MoSIT 2019). The bread subsidy system includes the following: • Bread subsidies ensure that bread is affordable to all Egyptians. The GoE used to provide baladi flour to be sold at a subsidized price to baladi bakeries. The actual cost of producing a loaf of baladi was EGP 0.48 and the GoE subsidy covered EGP 0.43 per loaf, thereby reducing the price to only EGP 0.05. The GoE also supports farmers with subsidized flour to bake their own bread, where there are no bakeries in small villages. In general, the subsidy program allows each beneficiary to purchase up to 10 kg of subsidized baladi flour per month. Initially, the GoE found it difficult to track the precise volume of bread produced and consumed, leaving the door open to extensive fraud with the subsidized flour sold on the black market. In response, the GoE implemented a new bread subsidy program, commencing in 2013, allowing each beneficiary to purchase up to 150 loaves of bread per month (five loaves per day) using an electronic smart card system. The current system allows beneficiaries who consume less than the quota to convert their bread savings into points (1 point = EGP 0.01) and may be spent on 44 other food items (for example beef, chicken, rice, and cheese). About 26.3 percent of bread beneficiaries consumed less than the quota (MoF 2022) and the system became more efficient in reducing bread wastage (Yigezu et al. 2021a). The approved food products are purchasable at over 27,000 MoSIT-partnered private grocery stores, as well as from 2,500 state-owned consumer complexes. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 20 In the past, the GoE subsidized the baladi price, which was sold at about EGP 0.05 ($0.001) per unit of baladi bread (a flat pita kind of bread) which is less than one- tenth of actual production cost. The GoE compensates bakeries for the difference in production costs. In the 2017/2018 fiscal year (July–June), the GoE allocated about $4.72 billion for food subsidies. Of this amount, about $2.50 billion was earmarked for the bread subsidy program (Abdi et al. 2018). As of June 1, 2024, the GoE increased the price of one baladi bread to EGP 0.20 ($0.004)—marking the first increase in price of subsidized bread in Egypt in 36 years. The new price is still only about 40 percent of the actual production cost. • The total number of beneficiaries of subsidized baladi bread reached 69.9 million in 2024/2025 (MoF 2024), compared to 66.7 million in 2021/2022 (MoF 2022). The GoE allocated about $2.17 million ($1 = 44.23 EGP) for bread subsidies for 2024/2025, of which $0.12 million and $2.05 million were allocated for subsidized baladi flour and bread, respectively. In 2021/2022, in contrast, the GoE allocated about $3.56 million for food subsidies of which about $2.08 million was earmarked for the bread subsidy system (MoF 2022). Unused baladi allowance can be converted into points on a smart card at the rate of one loaf = 10 points and redeemed for 32 other subsidized food and non-food items sold at 20–30 percent discounted prices. Therefore, the GoE allocated an additional $46.3 million ($1 = 44.278 EGP) to cover the extra price differences of the use of redeemed unused baladi allowance for purchasing other subsidized commodities. Public investments The GoE has long recognized that substantial losses occur throughout the wheat value chain. Poor storage of wheat leads to both quantitative and qualitative losses (McGill et al. 2015). Quantitative losses occur from poor handling and leakages in the system, where wheat is re-sold illicitly, which is also believed to occur at mills as well as in bakeries. Recognizing these losses, the GoE has tried to encourage new investment in storage capacity and to reform the system of subsidies to eliminate the black-market sale of flour. Therefore, the GoE has allocated more public investment to enlarge wheat storage capacity and modernize wheat storage facilities. Moreover, the GoE supports public services in the Egyptian wheat system (for example breeding and agronomic research with the aim of improving wheat yield and phytosanitary control etc.). Yigezu et al. (2021a) estimated the levels of food loss and wastage along the wheat value chain in Egypt and their socioeconomic, biophysical, and environmental implications. The results revealed that about 4.4 million tons were lost or wasted, reflecting a loss of about 4.79 billion m3 of water and 74.72 million GJ of energy. Therefore, the GoE implemented the National Project of Silos, which allocated more public investment to modernize existing wheat storage facilities, including replacement of all shona storage by more efficient silos to reduce the cost of losses, and to expand wheat storage capacity. The EHCSS aimed at building 60 new silos nationwide, each with a storage capacity of 10,000 tons (SIS 2022), and plans to expand storage capacity of several silos from 30,000 to 90,000 tons each in Upper Egypt. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 21 1.2.8 Other policy directions As mentioned above, the GoE supports wheat producers and public investments and general services in the wheat value chain. SADS (MoALR 2009) focused on intensification of wheat production through availing high yielding, early maturing, and salinity and drought tolerant varieties. A recent strategy set forward is aimed to increase the coverage of certified seeds to reach 100 percent of the total wheat area by the 2025/2026 cropping season. However, this is contrary to the objective of the reforms of the 1980s and1990s which aimed at reducing the use of certified seed of wheat from over 60 percent to optimum levels (assumed to be between 25-33 percent) for self-pollinated crops (Delouche and El-Hawary, 1998). To increase the country’s self-sufficiency, the GoE has also developed another strategy aiming to increase the cropped area through land reclamation in sandy soils in the desert by looking for more water resources. This land reclamation project of 1.5 million feddan (630,000 ha) has wheat as the major target. In 2022 about 250,000 feddan was reclaimed, increasing the wheat area by 105 thousand ha. Following the Russia–Ukraine war disruption, two options for moving toward achieving national self-sufficiency in wheat were proposed (Abdalla et al. 2023): (i) increasing the area share under wheat cultivation, mainly by replacing winter clover by wheat and (ii) increasing wheat yields on existing irrigated cropland. The authors concluded that expanding the area cultivated with wheat and increasing grain yields per unit area require effective policy interventions, ensuring incentivizing wheat prices (similar or above the price of imported wheat, which is often of lesser quality). During 2010–2020, the national storage capacity was 1.5 million tons. The GoE planned to increase wheat storage capacity by establishing and building new modern silos in port cities and wheat production areas. The current GoE policy is to have wheat to cover national demand for at least six months. Accordingly, storage capacity must be doubled from the current 4.5 million tons which is almost triple the country’s capacity during 2010–2020 (see Figure 1.7). Other policy imperatives are to enhance the rural economy, improve social and physical infrastructure of rural settlements, and develop human resources for rural society to reduce poverty and increase food security. Over the years, the GoE also introduced other regulations that affect the wheat system in Egypt including the following: • Since 2016, Egypt’s Central Bank has devalued the pound more than three times and finally moved to a more flexible exchange rate policy in 2024 to rebalance markets and ease a foreign exchange shortage that had stifled business activity and hit confidence. The bank devalued the pound from EGP 7.73 per $1 in 2016 to about EGP 48.00 per $1 in 2024. • Since 2016, Egypt has gradually lifted fuel subsidies, which has implications for wheat production costs and grain prices. • In 2017, Egypt banned the trade of imported wheat in the domestic market, as well as its delivery to local mills without permission from the MoSIT. The ban is Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 22 valid only for a three-month period during the GoE’s wheat procurement time from mid-April until July. This attempts to stop imported wheat entering the domestic procurement channels. • In 2017, the Central Administration for Plant Quarantine of MoALR tightened its agriculture quarantine regulations and imposed a standard that foreign wheat shipments with ergot levels exceeding 0.05 percent are to be rejected. • In 2018, GASC changed the specifications for GoE purchases of imported wheat and reduced the required protein percentage in GASC tenders for wheat purchases. This decision attempts to allow a greater number of bidders to participate in GoE tenders, increase competition, and in turn potentially reduce price increases. 1.3 Wheat Seed Sector 1.3.1 Historical development In Egypt, the history of organized seed production dates to the establishment of the Cotton Seed Production and Distribution Unit at the Ministry of Agriculture (MoA) in 1892. Since then, the national seed sector has had several progressive structural and organizational changes, which can be roughly divided into the following four major phases: Phase 1 (1892–1960): emergence of an organized seed sector revolving around cotton seed production and distribution, with a unit for cotton was established under the MoA. The Unit gradually evolved to a Branch (1942), Section (1957), and Directorate (1960), while expanding its scope in agricultural research, seed production, and distribution of major field crops. Phase 2 (1961–1990): consolidation and reorganization of primarily public-led seed sector development culminated with the establishment of the Undersecretariat of Central Administration for Seeds (CAS) in 1980 under MoALR. This period was characterized by promulgation of the first comprehensive and all-inclusive Agriculture Law No. 53 of 1966, which provides the basis for subsequent Ministerial Decrees (MDs) governing the seed sector. Phase 3 (1991–2000): diversification and liberalization of the seed sector allowing more private sector participation in agricultural research and seed supply. Under MD No. 926 of 1995, CAS was reorganized and split into two complementary public organizations: CASP and the Central Administration for Seed Testing and Certification (CASC). Phase 4 (after 2000): strengthening the seed sector and deepening the role of the private sector by recognizing intellectual property rights (IPR) in the agricultural sector underpinned by promulgation of Law No. 82 of 2002 on plant variety protection (PVP). Egypt officially became a member of the International Union for Protection of New Plant Varieties (UPOV) in 2020. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 23 1.3.2 National Seed Policy In the 1980s, the GoE made a transition from central planning and control toward a free- market economy and initiated economic reform programs. Since 1986/1987, the MoALR has taken a leading role in reforming the agricultural sector by liberalizing production, pricing, marketing, foreign trade, and investments. Egypt does not have specific policy for the seed sector, in the form of specific legislative act or administrative decree as in most other countries (Delouche 1996), but the GoE has a general policy direction embodied in many of the laws and administrative decrees that relate to investments and business practices and encourages and facilitates the establishment of a liberalized seed sector with full participation of and investment by the private sector to enhance agricultural development. Delouche (1996) found that, overall, seed policy in Egypt is adequately enunciated and adequately progressive, and emphasis and impetus in seed sector reform should continue to focus on implementation of the policies and reforms already clearly enunciated and adopted. The NARP project advocated and played a major role in restructring the seed sector and entry of private seed companies into the sector. The seed sector reforms summarized in Annex 1.6 aimed at the following (El-Wanis and Weisbecker 2001): • Establishing an independent agency for testing, release, and registration of new crop varieties • Reducing GoE investments and supporting seed production of self-pollinated crops • Ending the involvement of the Agricultural Research Center (ARC) in certified seed production, processing, and marketing • Evaluating pilot schemes to determine conditions for entry of the private sector and bring better management and efficiency into the seed sector • Encouraging the seed producer’s union and seed trade association to provide a forum for dialogue or consultation to support the development of the national seed sector Delouche and El-Hawary (1998) provided details of the reforms and reorganization of the agricultural sector in general and the seed sector in particular that took place starting from 1990/1991 under the Agricultural Policy Reforms Program (APRP) and National Agricultural Research Program (NARP) projects. They summarized major progress made over a period of seven years until 1998 (Annex 1.6). The most significant outcomes were the decrease in the role of the public sector in seed supply, entry and increase in the role of the private sector and decrease in the quantity of supply of the seed of self-pollinated crops, particularly wheat. Apart from the APRP and NARP projects, the GTZ (Duetsche Gessellschaft fur Technische Zusammenarbeit) seed project worked on the Improvement and Decentralization of Governmental Seed Production and Marketing (IDGSPM). Starting in 1987, the project conducted several economics and cost structure studies for decentralization of seed Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 24 sector operations of CAS to provide evidence-based policy decision for the private sector participation, capacity building, providing infrastructure, and human resources - all of which played key roles in restructuring the seed sector in Egypt (TRD, 1994; Nasr and Grenzebach,1996). Moreover, ICARDA’s strong collaboration with the then CAS (now CASC and CASP) in strengthening the capacity of national staff, in conducting country case studies and advocacy for private sector participation is well documented in Egypt and beyond (Bishaw et al 1997; van Gastel et al 1997; Turner et al 2000; ICARDA, 2001). 1.3.3 Seed Regulatory Frameworks Law No. 5 of 1926 was the first law issued to regulate the production and distribution of cotton seed. Law No. 52 of 1932 was the first law issued to regulate and control the quality of cotton seed produced, which later expanded to other main grain crops. This was followed by Law No. 123 of 1946 for seed production of selected major agricultural crops. Subsequent laws were issued regarding cotton seed production and maintenance of purity (Law No. 158 of 1958), registration of agricultural crop varieties (Law No. 146 of 1960), and quality control of seeds of agricultural crops (Law No. 278 of 1960). The laws, decrees, and resolutions regulating the production and control of seeds of agricultural and vegetable crops were incorporated into one under Agriculture Law No. 53 of 1966, as a comprehensive law with provisions for previous agricultural laws and subsidiary provisions that give the MoA the authority to issue the regulations through ministerial decisions. The Central Department became an independent department, named the Administration of Seed Production and Inspection and affiliated directly with the MoA, in 1960. Finally, the organizational structure of the department has expanded because of the expansion of its activity and increased number of employees. Agriculture Law No. 53 of 1966 is an all-inclusive agricultural act and covers the following (El-Wanis and Weisbecker 2001): (i) organization of crop production, (ii) registration of crop varieties, and (iii) seed production and marketing. This law and related MDs issued pursuant to provisions in the law include allocation of seed production areas (zoning), establishment of seed processing facilities, quality control and certification, and control of seed trade. In 1967, several MDs were issued, including MDs No. 25 (production of seed of agricultural crops), No. 87 (crop seed processing stations), No. 88 (processing and treatment of cotton seed), No. 89 (control of cotton seed for industrial purposes), No. 90 (seed testing), and No. 91 (import and export of seed). Following its establishment in 1995, CASC reviewed and updated all relevant seed laws, and prepared a comprehensive draft law for enactment by the legislature. Gaps in the law related to rules and standards for field inspection, certification of seed and planting materials, seed trade, and market control were issued in respective MDs. Some of the key MDs issued to improve the seed industry follow (Delouche 1996; Delouche and El- Hawary 1998; El-Wanis and Weisbecker 2001): • MD No. 293 of 1990 dealing with field inspection of seed crops • MD No. 726 of 1993 covering the control of seed exports Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 25 • MD No. 1517 of 1993 defining certification of horticultural, medical, aromatic, and vegetatively propagated crops • MD No. 513 of 1994 setting rules and conditions for certified seed production of agricultural crops • MD No. 700 of 1994 regulating seed import • MD No. 1550 of 1994 setting field inspection standards for certification of field crops and vegetable crops • MD No. 1064 of 1995 specifying crops to be registered for seed production • MD No. 926 of 1995 reorganization of CAS and the establishment of CASP and CASC as separate organizations • MD No. 706 of 1996 granting legal authority for seed marketing control officers of CASC • MD No. 1350 of 1997 established the organization of main sectors in the MoALR and the Central Administrations under each sector including organizational structure of CASP and CASC (General Directorates and Directorates) and defined the responsibilities of each unit. • MD No. 38 of 1997 assigning CASC as the official seed certification authority stipulating various operations of the seed sector (handling, processing, storage, trade, import, and export) • MD No. 326 of 1997 setting standards for seed-borne diseases • MD No. 867 of 1997 assigning CASC the responsibility for coordinating variety registration/description (distinctness, uniformity, and stability tests, DUS) and variety performance (value for cultivation and use, VCU) tests. This limits the role of public research to produce parental material and breeder seed. • MD No. 868 of 1997 authorizing CASC to set specifications for seed packages to control fraud It prohibits seed trade except for those involved in seed production • MD No. 82 of 1998 defining crop variety registration protocols and procedures • MD No. 368 of 1998 setting seed testing standards and procedures for certification • MD No. 1648 of 2001 determining the testing period for new vegetable varieties imported from Organization of Economic Cooperation and Development (OECD) countries • Law No. 82 of 2002 of plant breeders’ rights providing protection to breeders for their IPR • MD No. 829 of 2011 defining conditions and procedures for seed certification • MD No. 1160 of 2017 amending provisions of MD No. 829 of 2011 • MD No. 1733 of 2018 to align and domesticate regulatory frameworks with the Common Market for Eastern and Southern Africa (COMESA) seed trade harmonization regulations Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 26 Agriculture Law No. 53 of 1966 is currently being reviewed in line with the national and international developments in the seed industry. The developments in plant variety registration, seed production, marketing and quality assurance are also reviewed, and penalties are amended for violations of the provisions of the law. 1.3.4 Institutional arrangements Cognizant of the importance of seed in raising agricultural productivity and production, the MoALR focused on developing a prudent policy and regulatory framework to lay the foundation of the national seed sector comparable to international levels, represented by different actors of the seed sector (Figure 1.8). Within the national seed policy and regulatory framework, the following are key players in governance of the Egyptian seed sector. Ministry of Agriculture and Land Reclamation: The MoALR was reorganized in its current form with Presidential Decree No. 31 of 1996. The Agriculture Law gave the MoALR the statutory responsibility for coordinating the seed sector in Egypt. It has an overall responsibility for the development of the seed sector and is authorized to issue MDs and resolutions. National Seed Council: the NSC was established by MD No. 820 (of 1988) and reconfigured by MD No. 588 (of 1991) to represent all stakeholders of the seed sector and to advise the MoALR on policies and issues related to the seed sector (Annex 1.7). The NSC is responsible for leading, guiding, and monitoring reform of the seed sector. The council members include heads of the Field Crops Research Institute (FCRI) and ARC and chairs of wheat, maize, rice, and food legumes research programs as well as representatives from Egyptian Millers Association, EHCSS, and MoSIT. Variety Registration Committee: the technical and administrative procedures for variety registration were revised and its management transferred to CASC from ARC. MD No. 937 of 1995 was issued to broaden the functions and membership of the VRC, which include MoALR, CASC, agricultural research institutes (ARC and its affiliates), universities, the private seed sector and sector associations. MD No. 867 of 1997 assigned the responsibility of DUS and VCU testing to CASC. MD No. 82 of 1998 established the policy and provides guidelines on procedures for the release of crop varieties developed by ARC. VRSC is accountable to the MoALR with a Secretariat attached to CASC. The decree envisages the establishment of a Variety Release Advisory Committee consisting of nine members drawn from ARC (three members), private seed companies (two), CASP (one), CASC (one), the Egyptian Seed Association (one), and the Egyptian Association of Plant Breeders (one). Agricultural Crop Seed Committee: works within the framework of Agriculture Law No. 53 (of 1966) and MD No. 726 (of 1993) regulating seed export (packaging, sealing, and issuing international certificates) and MD No. 700 (of 1994) regulating seed import. Both MDs amend MDs No. 90 and 91 of 1967 for seed export and import, respectively. The president of ARC is the chair of the Seed Committee and members consist of Directors of FCRI and representatives from CASP and CASC as well as heads of the Horticulture Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 27 Research Institute, the Central Administration for Agricultural Quarantine, and some private seed companies, and representatives from Plant Protection Research Institutes (Annex 1.8). Agricultural Research Center: apart from its primary mandate of generating and transferring genetic innovations, ARC has the Seed Technology Center, which is responsible for conducting research on seed science and technology focusing on practical problems of seed production under Egyptian conditions (see Chapter 2). Some institutions of higher education such as Ain Shams, Alexandria, and Cairo Universities offer seed courses at undergraduate and graduate levels for students specializing in agronomy or crop science and conducting seed research. Central Administration for Seed Production: CASP is the largest public agency entrusted with implementing the government’s seed production policies and involved in seed production and marketing of field crop seeds. It has 22 branches across all governorates and about 225 sale outlets nationwide. It also operates 14 seed processing centers in the major seed production areas of the country (see Chapter 4). Central Administration for Seed Certification: CASC, established under MD No. 926 of 1995, is the lead agency responsible for implementing variety release and registration, seed quality assurance and certification, seed laws and regulations, and policy enforcement (see Chapter 5). National Seed Trade Association: in 1998, private sector seed producers and traders formed the Egyptian Seed Association as a non-profit organization to represent their common interest. The goal is to create a liberalized and integrated seed sector conducive to private sector investment for the benefit of Egyptian farmers, seed exports, and agricultural development (El-Wanis and Weisbecker 2001). Later, the Egyptian Seed Industry Association was established in 2006 with similar objectives by a group of seed companies. 1.3.5 South–South Collaboration Egypt has established 10 model farms, currently operating in nine African countries: the Democratic Republic of Congo, Eritrea, Mali, Niger, South Sudan, Togo, Uganda, Zambia, and Zanzibar. The main objective is to transfer Egyptian expertise, experience, and technology and provide technical support in agricultural development within South– South collaboration. This aims at strengthening bilateral relations between Egypt and countries of the African continent and supporting foreign investments in agriculture. It is one of the development projects to achieve integration and transfer Egyptian agricultural experience and technology to African countries. Such collaboration with African and neighboring countries for example will enhance seed trade and generate national income for the country. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 28 M in ist ry o f A gr ic ul tu re an d La nd R ec la m at io n Ag ric ul tu ra l Re se ar ch Ce nt er Ag ric ul tu ra l Se rv ic es a nd Fo llo w -u p Se ct or Ce nt ra l Ad m in ist ra tio n fo r Se ed P ro du ct io n Ge ne ra l Ad m in ist ra tio n fo r Se ed M ar ke tin g Re se ar ch D ep ar tm en t Re se ar ch In st itu te s ( 16 ) Ce nt ra l La bo ra to rie s (8 ) Br an ch La bo ra to rie s (4 ) Pr od uc tio n ca rt or Ag ric ul tu ra l m ec ha ni za tio n (1 30 ) Ce nt ra l Ad m in ist ra tio n of Ex pe rim en t ( 46 ) Ce nt ra l Ad m in ist ra tio n fo r Ag ric ul tu ra l E xt en sio n Ex te ns io n Ar ea s ( 9) Pr od uc tio n D ep ar tm en t Ex te ns io n an d Tr ai ni ng Pl an ni ng D ep ar tm en t Sa le s D ep ar tm en t Se ed o ut le ts D ep ar tm en t Co nt ra ct D ep ar tm en t Fo llo w -u p D ep ar tm en t Pu rc ha se D ep ar tm en t Fi na nc ia l D ep ar tm en t O pe ra tio n D ep ar tm en t Su pp lie s D ep ar tm en t Pr oc es sin g Ce nt er s ( 14 ) Cr op D ep ar tm en t Go ve rn or at e Ad m in ist ra tio n (2 1) Ge ne ra l Ad m in ist ra tio n fo r Se ed P ro du ct io n Ge ne ra l Ad m in ist ra tio n fo r Co m m er ci al A ffa irs Ge ne ra l Ad m in ist ra tio n fo r Se ed P ro ce ss in g Ce nt ra l Ad m in ist ra tio n fo r Se ed C er tifi ca tio n Se ed M ea su re m en t an d de ve lo pm en t Gi nn in g a nd M ill s Fi el d In sp ec tio n Go ve rn or at e S ee d Te st in g C en te rs Go ve rn or at e S ee d Ce rt ifi ca tio n M ar ke t Co nt ro l Pl an t V ar ie ty Pr ot ec tio n O ffi ce Fi gu re 1 .8 O rg an iz at io na l s tr uc tu re o f t he se ed se ct or in E gy pt Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 29 1.4 Challenges • Wheat is one of the most important food security crops in Egypt. Significant investments were made in raising productivity and area expansion to boost domestic wheat production in the country. Despite significant increases in domestic production, the country continues to depend on wheat imports, which are not expected to decline in the immediate future. The situation is exacerbated by the current global crisis and the GoE is trying to mitigate the effects. • Substantial postharvest losses were reported in the wheat value chain both for domestic production and imported wheat. Losses from traditional and old and outdated storage structures as well as flour and food processing facilities are huge. Modernizing storage structures and postharvest processing requires large investments. • There are several legislations and MDs governing the seed sector and committees with overlapping responsibilities and specialties. For example, it is not clear whether the Seeds Committee for Agricultural Crops, as stipulated in the Agriculture Law, or the NSC, established by a MD, is entrusted with responsibility for developing the seed policy. Moreover, the obligation to implement legislation and MD is subject, in some cases, to the discretion of the respective competent authority. • MoALR (2009) recognized the complexity of institutional structure of the agricultural sector characterized by duplicative and overlapping duties and responsibilities and called for the strategy for reform of the MoALR and its institutions, the cooperative sector, and civil society organizations active in the agricultural sector. 1.5 Lessons Learned The agricultural sector policy of Egypt revolves mainly around wheat because of the crop’s political, economic, social and cultural significance. In its effort to boost domestic wheat production, the GoE made a concerted effort by investing in technology generation and delivery and supporting both the inputs and output prices to bridge gaps in wheat self-sufficiency. As a result, the country attained one of the highest wheat yields among the developing countries. The Egyptian agricultural research for development model combining generation, production, and transfer of technology and innovation proved successful, with adoption and impact realized very quickly. The model is useful to adopt for countries where the public sector remains dominant, but technology generation and delivery are not going along hand-in hand and varietal replacement is lagging. Currently, Egypt is a member of the OECD Seed Scheme, UPOV, ISTA, and COMESA; and its national seed sector associations are members of regional and international seed trade associations. A recent report on seed system performance indicators rated Egypt among the second-tier countries with good performance in Africa (TASAI, 2024). However, the report focusses on a few major crops including wheat and was more qualitative than quantitative in nature. All these memberships not only help in the development of the seed sector but also its reputation as one of the potential players in the global seed industry which would benefit the country. Chapter 1: The Wheat Sector in Egypt: History, Organization, and Characterization 30 1.6 Recommendations 1. Egypt lacks a specific seed policy or seed sector development strategy reflecting the changing needs of the seed sector and providing guidance to seed sector development for the stakeholders. It is critical to have a consolidated seed policy and strategy to govern the seed sector and accelerate its development. 2. Though amended through several MDs, Agriculture Law No. 53, which was envisaged to review and consolidate the national seed law in view of global changes in the seed sector development, remains scattered and in different documents. 3. Given better facilities and the higher productivity level relative to its neighbors, Egypt has great potential to benefit from engaging in regional seed trade and hence in playing an important role in efforts to harmonize seed regulations in the COMESA region. 4. The public sector plays a major role in technology generation and scaling. There is limited private sector participation in the wheat seed sector, particularly in variety development. Apart from PVP, which is in place, there are no other incentives to encourage private sector investment in agricultural research for wheat. 5. Wheat productivity in Egypt is one of the highest in the developing world, with an average of 6–7 tons ha−1. Given the limited natural resources (land and water) and the effects of climate change, Egypt—as one of the hotspot countries in the Middle East—is developing climate-smart wheat varieties particularly heat-, drought-, and salinity-tolerant, and water- and fertilizer-efficient varieties are critical. To this effect, consistent and sustainable access to genetic resources by wheat breeding programs in the country is vital for the development of climate-smart varieties with higher yield potential. Past studies (Yigezu et al. 2021b) and results presented in Chapter 6 document that low level of adoption of improved agricultu