In this blog, Marion Dixon explores the changing food regime in Egypt, as well as the political implications of this shifting food nexus in the country, and beyond. A full account of this research has been published in the Review of African Political Economy. Marion is a Professorial Lecturer at American University.
Forces pushing for and against democratization in the Arab world – evident in the 2011 ‘Arab Spring’ and counter-revolutions, civil strife and wars in subsequent years – are both rooted in the long transformation of agriculture and food systems in the region. This transformation has led to chronic food insecurity, epitomized by rising food prices since the 2007-08 global food-financial-fuel crisis. Agri-food system restructuring has not just affected the general population’s access to affordable, nutritious food. It also importantly reflects an agrarian crisis long in the making, denying food producers a decent livelihood and leading to peri-/urbanization.
In a recent article published in the Review of African Political Economy, I argue that agri-food transformation in Egypt was brought about in no small part by the growth of an agri-food industry that had been consolidated in the hands of fewer and fewer businesses – more precisely, Egyptian family business groups with agribusinesses, the agri-food arm of the military, financial firms, regional MNCs, and TNCs. The agri-food industry grew by siphoning land, water, labor and revenue from nearby smallholder farms and villages. More generally, its growth shifted development priorities away from the poor and disenfranchised. The consequences of its growth also extended beyond Egypt to southern neighboring countries. ‘Big business’ in Egypt has taken part in the ‘global land grab’ that has exploded since the 2007-08 crises by acquiring and attempting to acquire fertile agricultural land and other assets in neigbouring countries to the south, in an effort to expand its market share regionally and integrate its investments.
The Egyptian agri-food industry is just one sector of the formal economy that has experienced waves of corporate consolidation. Two interrelated neoliberal policies have helped to spawn this growth and concentration: Liberalization and privatization policies (‘structural adjustments’) since the 1970s led to the dismantling of the agrarian reform institutions that provided low-cost inputs, markets, and land to smallholders (fellahin). Moreover, a state programme of desert development created waves of new cities, by offering incentive packages of low taxes and virtually free land for the establishment of industrial zones and of twin cities close to provincial capitals. As part of this programme, land reclamation projects were established to support the growth of agribusiness. These two policies – structural adjustment and desert development – encouraged the movement of agribusiness from the Nile Valley and Delta into reclaimed desert lands, especially those to the west and east of the Delta.
This ‘desert frontier’ became the primary site of an agroexport market (largely of fresh fruits and vegetables) as well as a growing food processing sector and an animal protein complex (largely poultry, dairy, and fish and to a lesser extent beef) – foods disproportionately bought by wealthier consumers in Egypt and abroad. The agri-food industry grew and the desert frontier expanded through waves of consolidation. The first two waves were characterized by processes of corporatization. The first began around the early 1990s with a comprehensive structural adjustment program. The second swell started roughly a decade later, following Egypt’s entrance into the WTO and bilateral and multilateral trade agreements, when TNCs and MNCs (re-)entered Egypt. Facing growing competition from these regional and international corporations, existing ‘big business’ began to expand their market share and/or diversify into the agri-food sector through mergers and acquisitions. The third wave of corporate consolidation was a wave of financialization following a 2003 banking law that was highly coordinated with the global shift toward finance with the dot-com bubble crash and new US regulations on publicly traded corporations. Egyptian business groups began to set up financial arms and independent financial firms grew.
At the helm of mergers and acquisitions, financial firms – with the help of international financial institutions like the World Bank’s International Finance Corporation – also appear to be most involved and most interested in acquiring agricultural land and other valuable resources ‘offshore’ since the 2007-08 crises. One Egyptian financial firm, Citadel Capital (formerly a private equity firm turned investment firm), was in fact among the first investors to seek agricultural land abroad in the midst of the crisis. Citadel Capital (now Qalaa Holding) holds multiple investments in southern neighboring countries: The firm leases prime agricultural land in Sudan and South Sudan and holds mining concessions, shares in agri-food companies, and stakes in river and rail transport ostensibly extending from the Mediterranean Sea to the port of Mombasa on the Indian Ocean. These investments reflect not only the rising price of food and fuel, but also a pattern of consolidation in the formal regional economy. Citadel Capital’s river transport company, for example, will transport grains from its farms within the region (a percentage of grains were being sold well above international prices as part of a contract with the World Food Programme). And the company will likely transport through and out of the region not only the firm’s agricultural commodities, gold and other minerals but also the extractable commodities from the multiple other investors who have been grabbing land and water in Sudan and South Sudan.
The consequences of this land-grab are likely to be deep and widespread as these ‘big businesses’ take prime agricultural land and irrigation water from local small-scale producers. Taking root in the immediate aftermath of a crisis in the former Sudan, this land-water grabbing is also likely to exacerbate the fragility of state-building in both Sudan and South Sudan. Local food prices of essential grains continue to rise and Sudanese farmers protest against the lack of irrigation water and other state agricultural supports. In this way, the restructuring of Egypt’s agri-food system has undermined not only food security and political instability within Egypt, but has also had a “spill over” affect. However, land-water grabbing has drawn public opposition. At times the opposition has been considerable, as when talks were revealed of a potential deal that would grant leasing rights of Sudan’s Gezira Scheme to Egyptian agribusiness. In the face of opposition in Sudan, the talks were dropped. And public opposition in the region will only grow as food prices continue to rise.