The Ability to Pay: Egypytian Food Imports Threatened

As a result of its continuous currency crisis Egypt is facing problems in financing food and fuel imports. Lack of diesel for pumps and farming equipment in turn threatens domestic agricultural production.

The country is the world’s largest wheat importer, a dependency that has developed since the 1950s when Egypt started to import large quantities of P.L. 480 deliveries from the US as I describe in chapter 4 of Oil for Food.

This dependency is not to go away despite Egyptian efforts to increase self-sufficiency from currently around 60 percent. There is simply not enough land and water around. Ethiopia has already questioned the Nile waters accord of 1959 that grants Egypt three quarters of the flows.

Egypt is now amidst a demographic transition. Birth rates have been falling and the fertility rate, the average number of children per woman, stands at 2.64. However, it takes time until youth cohorts grow through a population pyramid.  Population will continue to grow to 124 million by 2050 and will only level out afterwards.

That means more food imports while Egypt faces growing problems financing them. It has turned into an oil net importer at the end of the 2000s. Natural gas exports face problems of their own due to underinvestment and sabotage of the pipeline to Israel and Jordan. In any case the rent component of natural gas production is much lower than for oil, even Qatar, the world’s largest LNG exporter receives the majority of its government revenues still from oil.

The problems of Syria are similar. Because of a lack of refining capacity its overall petroleum balance turned negative in monetary terms at the end of the 2000s. Dwindling crude oil exports did not earn as much foreign exchange as was needed to import refined products like gasoline. With the civil war and the EU import embargo against Syria this gap has grown.

Hence, the ultimate story of food security in the Middle East is not domestic agriculture, but economic diversification and the ability to pay for food imports. This is a daunting task given the current global financial crisis and the paltry track record of  the region’s countries in this field.

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