Demand management in Egypt

During the 1952-73 period, Egypt followed a variant of what Goldman has termed a foreign exchange or export-oriented demand management system for agriculture. Agriculture was managed in order to provide foreign exchange earnings, subject to the constraint imposed by the nation"s strong emphasis on social programs (embodied in a variety of controls and subsidies). In response to the external stimulus of oil price increases, and a significant foreign policy shift, Egypt moved rapidly to an import-intensive demand management strategy. The 1975-84 period witnessed significant changes in diet and dietary composition which directly reflect this shift in demand management strategy. Other sources of foreign exchange (oil, remittances) took some of the pressure for export generation off the agricultural sector and financed a surge of food imports. In recent years (1985-90) a more adverse international economic environment and the adoption of significant macro and sectoral policy reforms has stabilized (though not yet reversed) the previous decade"s demand shifts. The focus of this paper is on the complex of policies which Goldman identifies as key components of demand management -- pricing policies, macroeconomic policies, and trade policies. In the Egyptian case, the relevant pricing policies include not only direct food subsidies, provided through a variety of programs administered by the Ministry of Supply, but a range of other policies administered by the Ministry of Agriculture and Land Reclamation. Macro policies focus on the exchange rate, embodied in a complex system of multiple exchange rates. Trade policies include both the general orientation toward trade, and specific controls on particular food and agricultural commodities. Chapter 1 describes changes in Egypt"s consumption patterns over time, and compares Egyptian patterns with those of other countries and regions in the world. Chapters 2-4 detail the policies which have shaped aggregate consumption patterns. Chapter 2 discusses the system of food subsidies and rationing, as well as the changes which it has recently undergone. Chapter 3 chronicles the wide range of government interventions in the agricultural sector, the exchange rate, and the trade regime which directly and indirectly shape the productivity of the sector and the choices available to consumers. It also highlights the recent policy changes which have been undertaken. Chapter 4 discusses the impact and significance of recent policy reforms for Egyptian development and demand management. It also highlights some of the pitfalls associated with partial reforms in a complex, heavily regulated environment. (Author abstract)