$Unique_ID{COW01210} $Pretitle{243} $Title{Egypt Chapter 3D. Crops and Natural Resources} $Subtitle{} $Author{Darrel R. Eglin} $Affiliation{HQ, Department of the Army} $Subject{million tons oil production gas percent feddans cotton foreign 1970s} $Date{1982} $Log{} Country: Egypt Book: Egypt, A Country Study Author: Darrel R. Eglin Affiliation: HQ, Department of the Army Date: 1982 Chapter 3D. Crops and Natural Resources Cotton Egypt is famous for its long-staple cotton, and it is important to agricultural incomes and exports. Although in total volume the country has been a minor producer of cotton, its share of world output of long-staple cotton amounted to about 45 percent in the late 1970s. In spite of its importance the government has deemphasized cotton since about 1965, partly to encourage greater production of food grains. Cotton acreage peaked at around 2 million feddans shortly after World War II but has been about 1.2 million feddans since 1975. In 1981 cotton acreage was 1.18 million feddans, and production of cotton lint was 508,000 tons. Yields have shown a slow upward trend since 1900, although insects and other factors caused occasional fluctuations (see table 8, Appendix A). Exports were 159,000 tons in 1980 compared with about 300,000 tons in the early 1970s. Domestic industry currently consumes over half of cotton production. In the late 1970s the government imported some short-staple cotton for the textile industry to free additional amounts of the more valuable long-staple cotton for export. Nearly all aspects of cotton production remained tightly controlled in 1982. Acreage totals were set by government agencies, approved varieties of seeds were supplied by the government and could be planted only in specified areas to avoid degenerative hybridization, and the government set prices paid for cotton along the marketing chain, starting with the farmer. In an effort to improve the use of arable land, the government has allowed farmers to plant oilseeds such as soybeans in place of cotton in areas where yields are poor, particularly in southern Egypt. The change would not appreciably affect output and export of long-staple cotton, but it would make the country less dependent on imports for vegetable oils and feed components. Grains Since the 1950s cereals (corn, wheat, rice, barley, and millet) often accounted for between 40 and 50 percent of the total cropped area. In the late 1970s grain acreage usually ranged between 4.7 and 4.9 million feddans and production between 8.1 and 8.2 million tons. As demand increased, imports expanded to compensate for stagnating production. Corn was the most important grain in both acreage and output because it was the poor man's food, largely consumed by farm families. By the late 1970s it was also used in preparing feed mixes for livestock. After 1975 acreage averaged about 1.9 million feddans and production between 2.7 and 3.2 million tons. In 1981 corn was planted on 1.9 million feddans and production amounted to 3.2 million tons. Imports of corn were 944,000 tons in 1980 and 1.4 million tons in 1981, largely for use in livestock feed mixtures. Imports were expected to be around 1.2 million tons in 1982. Studies indicated that production could be increased by about 70 percent, much of it by using high-yielding seeds. Wheat is the preferred bread grain; it is consumed primarily in urban areas. Wheat acreage has been relatively stable, usually near 1.4 million feddans since the 1960s, but yields increased, averaging 0.6 ton per hectare since 1974. An estimated 1.4 million feddans were planted in wheat in 1981, and production was 1.9 million tons. Wheat imports were 3.9 million tons the same year, and flour imports were 1.4 million tons. Although Egypt was an exporter of wheat until relatively recently, by 1981 wheat and flour imports supplied about three-quarters of consumption. Studies showed wheat production could be increased by about 50 percent, partly through use of high-yield seeds. Government marketing quotas have not been enforced since 1977 and were officially waived in 1979. Government agencies purchased only about one-fifth of the 1981 crop. Improvements in the water supply after World War II allowed rice acreage to grow rapidly, from 374,000 feddans in 1952 to 1.2 million feddans in 1968; production in those years was 517,000 tons (paddy or unmilled) and 2.6 million tons respectively. In 1981 rice was planted on 956,000 feddans, and production was only 2.2 million tons, the smallest area and harvest since 1966. Soil salinity, lack of incentives because of official prices, and other factors reduced the attraction of planting rice. Studies indicated that production could be raised by 30 percent. Domestic consumption sharply curtailed exports of rice, from 227,000 tons (milled) in 1976 to an expected 25,000 tons in 1982. Sorghum and barley were minor grain crops. In 1981 sorghum was planted on 412,000 feddans, and production was 645,000 tons. Barley was planted on 91,000 feddans, and production was 103,000 tons. Clover Egyptian clover is peculiar to the country and has been known since the time of the pharaohs. It is the major fodder for draft animals and builds up nitrogen in the soil. For this reason it is grown and ploughed under before planting cotton. The increasing demand for animal protein by a growing population with rising incomes added to the pressure for fodder because grazing areas are almost nonexistent. Since the 1950s the berseem acreage has expanded at the particular expense of cotton. Between 1975 and 1978 clover averaged 2.8 million feddans a year compared with 2.2 million feddans in the early 1950s. Production data were unavailable in mid-1982. Sugarcane The upper Nile Valley is nearly ideal for growing sugarcane, and most of the cane fields and sugar mills are located there. Sugarcane requires large amounts of water and chemical fertilizer, and development of irrigation and fertilizer plants in Upper Egypt in the 1950s and 1960s facilitated expansion of the industry. Sugarcane acreage increased from 92,000 feddans in 1952 to over 250,000 feddans by the early 1980s, while sugarcane production increased from 3.3 million to over 8.6 million tons, reflecting some improvement in yields. Sugarcane also requires good drainage, and portions of Upper Egypt's sugarcane area suffered increased salinity and waterlogging in the 1970s because of inadequate drainage, and this lowered yields. Sugarcane is one of the most profitable crops to farmers. Local refineries contract with individual farmers for their supply of cane, effectively controlling sugarcane acreage. In 1980 sugar beets were planted in the delta for the first time. Fruits and Vegetables Egypt grows a wide variety of fruits and vegetables, and their importance increased sharply after 1952. Acreage of vegetables increased from 252,000 feddans in 1952 to 1 million feddans in 1979; vegetable production rose from over 1.8 million tons in 1952 to 7.8 million tons in 1979. Tomatoes, potatoes, onions, and garlic were the most important vegetable crops. Fruit acreage increased from 94,000 feddans in 1952 to 361,000 feddans in 1981. Production of fruits rose from 894,000 tons in 1952 to 2.6 million tons in 1981. Over half of the acreage was planted in citrus fruit trees; dates and grapes were other important fruits. A major spur to the expansion of fruits and vegetables was a rapid rise in prices paid farmers, because citrus fruits and grapes were the main produce for which the government attempted to regulate prices. Most of the fruits and vegetables were grown for urban markets, but some were exported. Large investments in processing, packaging, and marketing facilities would be required for Egypt to enter the competitive export market on a substantial scale, but Egypt possesses a natural advantage in that its fruits and vegetables ripen a few months ahead of the season in Europe. Livestock Most animal husbandry forms a part of overall farming activity. Cattle and water buffalo are raised primarily as draft animals, although their milk and meat are consumed as food, the skins used for leather, and the manure used as fertilizer and fuel. Goats are kept for their milk, meat, and hides and because they scavenge for much of their food. Sheep are raised for wool and meat by farm families and some nomads who still retain large flocks. Poultry, primarily chickens, are raised by most farmers for eggs and meat or to be sold. Many farmers keep donkeys for farmwork and transportation. Camels are still bred as beasts of burden for desert conditions but are not used much for farmwork. Horses and mules are still used to haul carts. Cattle and water buffalo, the primary source of draft power on farms, increased slowly in number after World War II. In 1981 there were an estimated 2.3 million head of cattle and 2.4 million water buffalo. The sheep population declined slowly from about 2 million in 1937 to 1.7 million in 1981. Camels declined from 200,000 in 1947 to about 90,000 in 1981. The number of pigs had remained stable at about 15,000; only the Copts (see Glossary) and Christian foreigners eat pork. Chickens were the main poultry, numbering 27.3 million of the local variety in 1979. The diet of the population is seriously deficient in protein. The demand for meats increased substantially during the 1970s, causing livestock and dairy activities to become the fastest growing component of the agriculture sector. By the early 1980s animal products accounted for over 30 percent of agricultural output. In 1981 domestic consumption of red meat was about 485,000 tons, of which 355,000 tons were produced in Egypt. About 80 percent of the locally produced red meat was from water buffalo (140,000 tons) and cattle (138,000). Mutton and lamb amounted to 50,000 tons and goat meat 22,000 tons. Minor amounts of pork and camel meat were consumed. The basic constraint on livestock activities was the lack of feed and grazing land. Fodder consisted partly of crop residues, such as stalks, husks, and bran, and of clover when crop residues were gone. There was a shortage of feed for the existing animals, and some agronomists considered the current area of clover an uneconomical use of a scarce resource, i.e., land. Development of modern chicken farming continued in the 1970s. The government-owned General Poultry Company produced some 25 million broilers in 1981; it was the main source of young chicks and manufactured half of the country's output of chicken feed. In 1981 there were about 2,700 private commercial poultry farms, each with a capacity to produce about 5,000 chickens every seven weeks. Production of poultry meat totaled about 135,000 tons in 1981, supplemented by imports of 82,000 tons, although domestic consumption was only an estimated 187,000 tons. Over 90 percent of local eggs came from village flocks, but native poultry, although resistant to local diseases, were poor producers of meat and eggs. Fisheries Fish offered an excellent potential source of protein that the average Egyptian diet lacked, but development of a fishing industry had barely started. In addition to commercial fishing on the Nile, some development of fishing had occurred before the 1970s, largely along the Mediterranean coast; the annual catch was around 100,000 tons. Sardines, which fed on nutrients carried to sea by the Nile, constituted a large part of the catch. After completion of the Aswan High Dam, the nutrients no longer came downstream, and the sardine catch fell drastically. Development of a fishing industry on Lake Nasser was started, but progress has been slow. By the early 1980s statistics on the fish catch were not published, presumably because the amount was minor. Energy, Mining, and Manufacturing After the 1952 Revolution considerable effort was expended to develop industry, which included energy, mining, and manufacturing. The effort succeeded in making the sector a significant contributor to the economy. Industry's share of GDP rose from 15 percent in 1952 to 29 percent in 1979, and expanding industry was a major factor in the GDP growth over three decades. Nonetheless expanding industry created relatively few jobs; industrial employment increased from 8 percent of the labor force in 1952 to 14 percent in 1979. There were additional problems associated with industrialization that by the early 1980s required solutions if the economy were to meet the needs of the rapidly expanding population over the remainder of the century. Energy After 1975 Egypt's oil industry came to dominate the economy financially. By 1980 expanding production combined with rising international prices to account for 67 percent of the country's commodity exports and 35 percent of government revenues. Although Egypt was a minor oil producer in the world and particularly in the Middle East, the petroleum industry contributed 16 percent of GDP in 1980, more than mining and manufacturing combined. Egypt's association with petroleum began early. Oil seepages were observed near the mouth of the Gulf of Suez in Roman times. The first well was drilled in 1886, but commercial production did not begin until 1913. The industry languished relative to the rest of the Middle East until the 1950s, when exploration by large international oil companies was promoted by government policies. By 1981 over 90 percent of the oil produced was from some three dozen fields on the Sinai Peninsula and offshore in the Gulf of Suez. A few commercial oil and gas fields had been discovered in the Western Desert, and hopes were high that large fields would be found there. Substantial gas fields had been discovered on the delta and offshore, and oil discoveries remained a possibility. By 1981 Egypt's oil reserves were estimated at about 400 million tons (3 billion barrels). The Egyptian General Petroleum Corporation (EGPC) was the state-owned oil company charged with primary responsibility for managing and operating the industry. The forerunner of the company had been formed in 1956, and it subsequently proceeded through a few reorganizations-the latest in 1976. EGPC functioned as a holding company with fully owned affiliates and as a partner of or a participant in joint ventures with foreign companies. Exploration was almost completely by foreign oil companies under production-sharing agreements with EGPC in which the foreign company was responsible for exploration costs. Terms were adjusted in agreements to encourage and reward exploration in less promising areas. Roughly one-fifth of the oil produced belonged to the foreign companies to repay exploration and other costs. EGPC and the Ministry of Petroleum (established in 1973) had successfully promoted cooperation with foreign companies so that exploration and oil development went ahead largely with the risks and the financing resting with the foreign oil company. Discoveries in 1979 and 1980 created additional interest in exploration and production agreements on the part of foreign companies. Some ninety-five agreements with foreign oil firms specified an impressive exploratory and development drilling program (over US$600 million a year) extending at least to the mid-1980s. The drilling program seemed likely to find at least enough oil to sustain current production for the immediate future. The prospects of Egypt's oil industry changed markedly during the 1970s. In 1971 production was 21 million tons and declining because old fields were petering out. By 1974, when international prices quadrupled, production amounted to only 11.5 million tons. Promotion of greater exploration by EGPC beginning in the early 1970s resulted in discovery and development of additional fields to replace those where production was about completed. In 1975 Egypt also regained control over some fields lost to Israel in the 1967 war. Foreign oil companies improved techniques, which resulted in greater recovery of the oil in fields. By 1977 Egypt's oil production was back up to 21 million tons. Production was 24.2 million tons in 1978, 26.5 million tons in 1979, 29.8 million tons (600,000 barrels a day) in 1980, and about 32 million tons in 1981. Recent discoveries, particularly in 1980, were expected to raise production to about 35 million tons by 1985. Production would begin to decline after the mid-1980s unless additional fields were found. Consumption of petroleum products expanded rapidly in the 1970s. Consumption nearly doubled between 1974 and 1980-from 6.7 to 13.2 million tons. Consumption was expected to continue to grow at about 12 percent a year, reaching around 24 million tons by the mid-1980s. Because about 20 percent of the oil produced belonged to the foreign companies, Egypt's own oil exports amounted to about 6 million tons (US$700 million) in 1977 and increased to about 12 million tons (US$3 billion) in 1980, when they accounted for 67 percent of commodity export earnings. Unless the growth of oil consumption slows or new fields are discovered, oil exports will fall rather sharply by the mid-1980s and could amount to only about 4 million tons (worth less than US$1 billion at 1980 prices). In 1981 the country had six state-owned oil refineries, located at Suez, Tanta, Alexandria, El Ameria (Al Amiriyah), and Mastrot (Musturud, near Cairo). By 1982 capacity was on the order of 16 million tons a year, although actual throughput was probably about 14 million tons or possibly less. In the immediate future, refinery output would probably have a surplus of heavy products, such as fuel oil, and a shortage of middle distillates, such as gas oil. Foreign trade could adjust supplies to the products needed, although exports would be low valued while imports were the reverse. Over time some changes in the refining program could attune output closer to the economy's needs. In addition to crude oil, the country had substantial reserves of natural gas. In the 1970s seven gas fields were discovered, which along with gas associated with crude oil production provided recoverable reserves of about 276 billion cubic meters (equivalent to about 225 million tons of oil or over half of crude reserves) in the early 1980s. Probable gas reserves were estimated at 425 billion cubic meters, which could prove conservative if the high expectations for some gas-prone areas are realized. Development of natural gas resources and consuming facilities afforded officials a means of conserving domestic consumption of crude oil and products in order to maximize foreign exchange earnings from exports of crude and petroleum products. Foreign oil companies had little interest in exploring for or developing Egypt's natural gas deposits. Except for pipelines, transport of gas was extremely difficult and costly, so exports of gas were largely precluded. Foreign companies were not excluded from gas sales on the Egyptian market, but the government-set prices for gas were too low to be attractive. As a result, little had been done to gather gas associated with crude oil production; foreign oil companies had relinquished concessions back to EGPC that contained gas without commercial quantities of crude oil. EGPC had undertaken most of the development of gas discoveries. In the early 1980s EGPC prepared a new series of incentives to encourage foreign oil companies to risk funds to explore for and develop gas resources, but the results were not yet known in mid-1982. In the late 1970s officials, with financial assistance from the World Bank, developed some of the country's gas resources. By 1981 gas production capacity amounted to 8.5 million cubic meters a year, but demand was limited to about 6.6 million cubic meters because of the lack of distribution facilities and consumers equipped to use gas. Associated gases were primarily in the Gulf of Suez where, except for minor amounts used in oil field operations, the gas was flared. In 1981 a limited gas-gathering pipeline system was being constructed to bring associated gas to consumers in Suez. Most of the gas supplies available in the early 1980s came from EGPC gas fields in the delta and the Western Desert-linked by pipeline to select consumers in Cairo, Alexandria, and the delta. The systems were confined to localized areas and were not interconnected. Observers expected that in the mid-1980s demand for gas in fertilizer, cement, and other manufacturing plants as well as electric power stations would far exceed supply unless strong measures were begun to expand supply. Gas could substitute for some petroleum products in domestic consumption, thereby freeing an equivalent amount of crude oil and products for exports; the substitution could add US$1 to US$2 billion a year in oil exports by 1985. Pipelines carry most of the crude oil produced to refineries located relatively close by. About half of refinery output was distributed via pipelines, including one to Upper Egypt. Trucks distributed most of the rest of petroleum products. Pipelines ran from the few gas fields that had been developed to the closest important urban-industrial areas. In addition Egypt owned half interest, and major Arab oil states the other half, in the Sumed (Suez to Mediterranean) Pipeline, which extends 512 kilometers from the Gulf of Suez to near Alexandria, for the transshipment of Middle East crude for distribution via the Mediterranean Sea. In 1982 Sumed consisted of dual forty-two-inch pipelines with a total capacity of 80 million tons a year. Subsidiaries of EGPC marketed over three-quarters of the petroleum products sold on the domestic market. A couple of international oil companies distributed the remainder. The government set prices for oil products, which since the 1960s have changed infrequently. In 1981 domestic petroleum prices ranged between 94 and 38 percent (an average of 80 percent) below international prices. The low prices did not promote conservation but instead deprived the budget of higher revenues and entailed a large economic loss when measured against the product's value in international markets. About US$7.3 billion of investments in the oil industry were planned for the 1980-85 period. About two-thirds of the investments were to be in exploration and development, largely by private foreign oil companies. The bulk of planned private investment had been arranged under various concession-exploration agreements. The remainder of planned investments was largely by the government and destined for refining and marketing facilities. Oil and gas were the predominant source of energy, accounting for about three-fourths of the commercial energy consumed. In addition to commercial energy, crop residues and animal wastes added perhaps as much as a quarter to the primary energy consumed. Hydroelectricity supplied the other major form of commercial primary energy, accounting for about 16 percent in 1980. The hydroelectric potential of the Nile River had been largely achieved with the completion of the Aswan High Dam and its 2,100 megawatt generating station, which were designed and constructed by the Soviet Union. By 1982 parts of the turbines were in need of replacement, which the United States government agreed to finance (US$100 million) through its aid programs. Generation of electricity at the Aswan High Dam has been less than annual capacity because water release is based on irrigation and not electricity needs. The water released in spring and summer exceeded what the turbines could use, but it was less in fall and winter. In addition sufficient transmission facilities were lacking. In the 1980s small hydro-generating facilities were to be added to the more northern dams on the Nile River. Completion of these would exhaust the river's hydro-potential. Another possibility, discussed for years, was construction of a canal from the Mediterranean Sea to the Qattara Depression to tap the 135-meter drop from sea level to generate electricity. In the early 1980s the feasibility of the project continued to be studied. In 1979 some seventeen generating stations had 3,404 megawatts of capacity and generated 16.8 billion kilowatt hours of electricity. Effective hydro-generating capacity amounted to 1,606 megawatts, and hydro-generators accounted for 46 percent of the electricity produced. Thermal generation produced the majority of electricity. Most thermal generators used petroleum products, but gas was to become more important in the future. Generating units and load centers were interconnected via a network of transmission lines. In 1980 about 65 percent of the urban population and 23 percent of rural inhabitants had access to electricity. The government was extending rural electrification. In 1981 and 1982 the country experienced a shortage of electricity that should disappear in 1983 when additional generators begin operations. Discussions had begun on construction of some nuclear power plants to meet the country's power needs late in this century. Low-grade coal deposits have been found in the Western Desert and the Sinai Peninsula; the reserves were estimated at perhaps 100 million tons. In the early 1980s only one deposit appeared commercially viable-to supply fuel for power generation. Egypt has a vast potential for solar energy if techniques to exploit it become available. A few isolated geothermal sources had been found but appeared unusable for commercial application. The government-controlled prices for the various forms of energy were substantially below world prices, although some energy prices had been raised sharply since the late 1970s. Low prices encouraged consumption while depriving producers of the investment funds necessary to match supply to demand. Other Natural Resources Egypt has few natural resources. Low-grade iron ore was mined near Aswan until a slightly better grade ore was exploited at the Bahriyah Oasis after the mid-1970s for use in the Helwan iron and steel plant. Production was 1.4 million tons in 1979, and reserves were about 250 million tons. Limited transportation facilities restricted mining capacity to about 2.5 million tons a year. Impurities in the ore caused a loss in smelting efficiency. Substantial phosphate deposits existed, some of which were exploited. The Abu Tartur deposit, where an experimental mine was started in 1979, had reserves estimated at more than 1 billion tons. Total phosphate production amounted to 587,000 tons in 1979. Manganese mines on the coast of the Sinai produced about 180,000 tons annually before they came under Israeli control after the 1967 war. Manganese production since the return of the Sinai has been very small; studies have cast doubt on the feasibility of rehabilitating the mines and smelter. Extensive deposits of rock, gravel, and sand exist for the construction industry, and limestone and gypsum were available for cement production. Small quantities of natron (used to produce caustic soda), talc, asbestos, lead, and zinc were mined in the 1970s.