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IMPACT OF INTERNATIONAL FISH TRADE ON FOOD SECURITY IN EGYPT

by

Izzat H. Feidi
Fisheries Consultant
Arab Academy for Science and Technology and Maritime Transport
Cairo, Egypt

Abstract

Egypt, like many other developing countries, considers that fish and fishery products play an important role in the country's food security and domestic economy. The Egyptian fisheries resources in marine, fresh and brackish waters contribute to people's well-being as to nutrition, income, employment, source of foreign currency earnings from exports and as a readily available food supply. Furthermore, INFOSAMAK together with the INFOnetwork, with strong support from FAO, should work diligently to help countries like Egypt in its development of fish trade by implementing the recommendations reached by the FAO E-Mail Conference and the Advisory Committee on Fisheries Research.

1. AN OVERVIEW OF THE FISHERIES SECTOR

1.1 Fish Production

Egyptian total fish production in 2001 from all sources totaled 771 515 metric tonnes. These quantities are derived from marine, brackish water, freshwater and aquaculture sources. The marine fisheries are mainly in the Mediterranean Sea and the Red Sea including the Gulf of Suez, and produced a total of 133 173 metric tonnes (17.26 percent of total). The northern four brackish water lakes produced a total of 144 710 metric tonnes (18.75 percent), the coastal lagoons 3,308 metric tonnes (4.65 percent), inland lakes 35 854 metric tonnes (4.65 percent), the River Nile system with its canals 111 606 metric tonnes (14.47 percent) and fish culture employing various systems, a total of 342 864 metric tonnes (44.43 percent). In cumulative terms, capture fisheries in 2001 produced a total of 428 651metric tonnes or 55.6 percent of the total while aquaculture contributed the balance of 342 864 metric tonnes (See Table 1).

The main species produced from capture fisheries are mullets (16 percent), catfishes (7.72 percent) and sardinella (3.1 percent). From aquaculture tilapia production (38 percent) are by far the main species followed by mullets (16 percent), grass (11.71 percent) and common (2.38 percent) carp.

Generally speaking, Egyptian fish production has been on the rise for the last few years. This increase is mostly attributed to fish farming, especially since 1997 when production from farming increased from 66 600metric tonnes to 324 500 metric tonnes in 2001, an increase of almost five folds. Landings from the northern lakes, the coastal lagoons and inland lakes remained steady. The River Nile system, where production remained steady for a number of years, showed a considerable increase in landings from 82 500 metric tonnes in 2000 to 111 600 metric tonnes in 2001, an increase of over 35 percent in one year only. The marine fisheries, however, show a declining trend in landings for the last few years from both the Mediterranean and Red Seas (See Table 2).

Recent estimations of the Maximum Sustainable Yield (MSY) for marine and inland fisheries are not available. It is a general opinion however, that most marine and inland fisheries resources are fully, or close to fully exploited. The increase in the landings from the River Nile in 2001 should be looked upon with reservation. The sudden increase may be due to improved collection of statistics, and may not be a consequence of a sudden increase in the fertility of the River Nile. At this stage it could be described as a temporary increase, which could be attributed to increase in flood waters or to very arbitrary estimates. Further confirmation of these statistics is required.

It appears that capture fisheries from the various sources require a reduction in the fishing effort, as well as the introduction of other management measures to ensure that sustainable production is reached and maintained. Increases in domestic production seems only possible from engaging more in aquaculture in both fresh and marine waters. This will require various regulatory and precautionary measures, especially in the freshwater use policy and the development of technologies which are environment friendly. The success of the private sector in increasing local supplies of fish from farming should be further encouraged by the Governmental fisheries agency in Egypt, the General Authority for Fish Resources Development (GAFRD). Fish farming at community level of small stakeholders is considered a major source for supplementing local supplies and for reducing imports of fish products. The creation of a "cottage industry" aquaculture will bring various benefits to rural areas.

1.2 Elements of the Fisheries Sector

A wide variety of fishing vessels and gear are in use. The registered fishing fleet in 2001 consists of 3 954 powered vessels of which 2 954 are operating in the Mediterranean Sea using trawls, purse seine, long line, trammel and other gears. In the Red Sea, there are 1 000 powered vessels using the same types of gear as in the Mediterranean. The sizes of the engines range from as small as 10 h.p. to over 800 h.p. in the bigger vessels. The bulk of these engines range from 30 h.p. to 100 h.p. In addition, there are about 41 000 boats propelled by sail and operate mainly in the inland and lake fisheries. Purse seining is generally conducted at night with light attraction techniques. Nets are typically 200-250 m. long and 60 m. deep. The purse seiners have usually 20-30 crew members.

In the Mediterranean Sea fisheries, the fishing grounds are located on the wide continental shelf in front of the Nile Delta and the Sinai Peninsula. It has a coastline of about 1 100 km. long, extending from Sallum in the west to Rafah in the east. The continental shelf of 200 m. deep along the coast is largely composed of salty mud and muddy sands. It widens up to a maximum of 70 m. long in front of the Delta. Most of the fishing operations are concentrated in the coastal zone, from Alexandria to Port Said, about 300 km in length, using principally trawls, at depth of 10-100 m. The rest of the shelf is hardly exploited. The shelf area is estimated at about 87 120 km. sq.

The Mediterranean fishery has been influenced by the construction of the High Dam at Aswan in Upper Egypt. The reduction in the outflow of nutrients carried by Nile floods reduced the production of demersal fish, sardine and shrimp. However, it seems that when the outflow from the Nile increases, total production increases as was the case in 1998 and 1999 (See Table 2). It should be noted that the decrease in the Mediterranean Sea fishery has been compensated by the creation of the world's largest man-made lake, Lake Nasser as a new fishery resource for Egypt. The fleet in 2001 consisted of 2 954 powered vessels of which 1 137 are trawlers, 973 long liners, 479 vessels with trammel nets, 238 purse seiners and 163 use a variety of other gears. The main fish species landed are sardine, silverside, mullet species and shrimp.

The Red Sea fisheries may be divided into two main sections: (a) the Gulf of Suez, which is a shallow gulf not more than 100 m. deep with a nearly flat bottom; and (b) the Red Sea coast, which extends from the southern part of the Gulf of Suez to the Egyptian-Sudanese border. The Red Sea fleet in 2001 consists of 1 000 fishing vessels of which 206 are trawlers, 83 purse seiners and 711 longliners. The main fish species produced are Spanish mackerel, snappers, lizard fish and sardine.

Inland fisheries resources include four lakes- Manzala, Burolous, Idko and Maryoutt- on the Mediterranean coast of the Delta. The Lakes are generally shallow with a rich aquatic life. Large parts of the lakes are overgrown with emergent aquatic vegetation, speeding up the process of becoming land due to widespread public and private reclamation efforts, which since 1953 reduced the open-lake areas more than 30 percent. The lakes are intensively used for various types of low technology aquaculture. The environment of the lakes has changed substantially since the erection of the High Dam. They were largely marine in character; they are now characterized by the steady flow of brackish drainage water. This has brought about a change in the species composition in the lakes from one with a significant marine fish and crustacean component to one largely dominated by euryhaline freshwater species, especially tilapia and typical brackish species, mainly mullet. Total fish production in 2001 was 144 710 metric tonnes, an increase of 2.5 percent over 2000.

The Lagoons or coastal depressions are those of Port Fouad and Bardawil located east of Port Said. These Lagoons do not have any inflow of Nile water or drainage water, but have open connections to the sea. Port Fouad depression has a surface area of about 12,600 hectares and is connected to the Mediterranean Sea as well as the Suez Canal. The Bardawil depression is much larger with an area of 67 000 hectares and is located in the northern part of the Sinai. Average depth is 1 - 1.5 m and is connected to the Mediterranean Sea. In 2001, fish production reached 3 146 metric tonnes, a substantial increase from 1998 catches of 1 900 metric tonnes. About 1 200 small fishing boats operate in the Lagoons using primarily trammel nets, gill nets and veranda nets. Main species produced are flathead, crab, sea bream and sea bass.

The inland lakes include Nasser, Qaroun, Rayyan, Bitter and Temsah Lakes. Lake Nasser is the largest in the country. Its surface area is 7 000 sq. km, of which 500 000 hectares lie in Egypt and the rest form Lake Nubia in the Sudan. Around 4 000 fishermen are licensed to fish in the Lake. They use drift nets catching mainly tilapia. In 2001, the Lake produced 28 153 metric tonnes. Some tilapia stocking is being carried out from a hatchery nearby.

Lake Qaroun is a natural depression in Fayoum, about 80 km west of Cairo. It is about 45 m below sea level and has a surface area of 23 000 hectares. Salinity, due to drainage water, has been increasing changing the fish fauna from brackish to marine species. Mullet and shrimps are produced from the Lake, and a shrimp and mullet fry from the Mediterranean for stocking in the lake is on-going. El Rayyan is a depression of a similar nature of Qaroun, with an area of about 18 000 hectares. It is also stocked with mullet fry from the Mediterranean. Bitter and Temsah Lakes are expanded areas of the Suez Canal. In 2001, these two lakes produced 5 444 metric tonnes.

Fishing in the Nile River system is an old traditional activity. Tilapia and catfish constitute the bulk of the catch, which in 2001 amounted to 111 606 metric tonnes. The amount was considered a substantial increase when compared to previous years. The canals are fished by a large number of private fishermen. They use several types of gear including seine nets, gill nets, and hook and line. Most of the catch goes to fishermen's household and small village markets. Catches are generally roughly estimated.

Aquaculture has expanded considerably over the last few years. The production reached a record of 342 864 metric tonnes in 2001 or 45 percent of total landings; a substantial increase from 1995 when production was only 45 000 metric tonnes. This progress in production is mainly due to private sector operations (294 033 metric tonnes), which yielded also 23 716 metric tonnes from cage culture, and 18 371 metric tonnes from rice fields. GAFRD farms produced 6 744 metric tonnes. Tilapia, carp and mullet are the main species produced. However, catfish, sea bream, sea bass and shrimp are now produced, but at lesser quantities.

GAFRD is the main supplier of fry for stocking freshwater ponds from its hatcheries. In 2001 it produced 293.4 million fry for freshwater aquaculture and 7 million fry for marine. In the last few years, the private sector has also started to operate hatcheries to stock its farms. In 2001 it produced 101.3 million tilapia fry. Marine fish farming depended on wild fry collected and distributed by GAFRD. There are several fry collecting stations in seven governorates, where wild caught fingerlings are collected for distribution. Mullet is the major species group. In 2001, it provided a total of 134.35 million fry. Some sea bass and sea bream fry are also collected. In recent years the private sector has also established hatcheries to produce fry for their farms, including the production of shrimp larvae.

Updated, reliable information on the fishermen population is not available. The closest estimate indicates that total employment in the fisheries sector is approximately one million persons. This estimate includes about 321 000 licensed fishermen in capture fisheries, and probably more than twice as many who are not. It is believed that an additional 300 000 persons work in fish farming, handling, transportation, processing, marketing and other related activities and services to the industry. In 2001, it is reported that there are 90 official fishermen's cooperative in marine, inland and aquaculture fisheries with a total of 90 957 members.

1.3 Fish Utilization, Domestic Marketing and Consumption

Consumption of fish in Egypt is a traditional and important component of the Egyptian diet, and is the main source of cheap animal protein for a growing population. Fish consumption is characterized by a long standing traditional preference for fresh fish. However, with increased cheap small pelagic fish imports, and the developments in cold storage facilities, and improved distribution channels, frozen fish is becoming more and more acceptable to consumers. In addition, fish consumed in areas far away from landing sites is salted, which also some of the sardine and mullet catches from the Mediterranean and Red Seas are. Although salted fish is traditionally eaten during certain holiday periods, salting is expected to decline as internal transport and marketing improves. Processing facilities include units for freezing, canning, filleting and smoking fish. Canned tuna and sardine are sold locally and exported. In recent years some quantities of imported salmon are smoked for local sale and exported to neighboring countries.

As domestic production increased in recent years mainly from increased aquaculture activities and imports, domestic supply has grown by almost 56 percent since 1996. As a result of this increase in domestic production and imports, supply has grown at a slightly faster rate than the rate of increase in the population. As a result, the annual per capita supply increased to almost double. In 1991 the per capita consumption as reported by GAFRD was 8.3 kg. It increased to 15.2 kg in 2001, just over the international average reported by FAO of 14.5 kg. per capita. This increase in consumption indicate the change in the traditional attitude of preference for meat and poultry, improvement in the distribution system, importation of low priced fish species and increasing in the purchasing power of some sectors of the population, who consume high value imported fish and fishery products. The FAO Food Balance Sheet for Egypt estimates that the average annual fish per capita consumption is 12.8 kg that supply consumers with 25 calories, 3.8 g. of animal protein and 0.9 g. of fat per day (See Table 5).

The population of Egypt has increased by almost 10 percent from 61.3 in 1998 to 67.9 in 2001. It has been estimated to increase to 80.3 million in 2015 and to 95.8 in 2025. With such growth of the population, demand will grow for fish and food. As a consequence, unless unexpectedly new fisheries resources are exploited possibly from untapped off shore resources, or a substantial increase in aquaculture in fresh and marine waters, extra quantities of fish will have to continue to be imported in order to prevent prices from rising to levels at which fish will be beyond the reach of low-income sections of the population. Egyptian fish consumers are becoming more and more positive towards imported species, if local species become less available or become more expensive especially if imported species are cheaper. Also, fish from aquaculture is becoming more acceptable to the consumers, since all species cultured are typical native species such as carp, tilapia and mullet. It should be noted that an increase in cheaper quantities of imported fish is expected to have a generally depressing effect on fish prices as a whole and will, as a result, have negative effects on the income of fishermen and farmers, but may benefit consumers in general.

If the annual average rate of consumption is to be maintained at the level of 2001 of about 15.2 kg per capita, then total quantities required in 2010 would be around 1.20 million metric tonnes and 1.44 million metric tonnes in 2025 for population levels of 80.3 million and 95.8 million respectively. GAFRD estimated that in the last few years, Egyptian domestic fish supplies from local sources was maintained at a rate of about 75 percent of requirements and the consumer gap was maintained at about 25 percent. Assuming that the present trend continues for the next few years, the required supplies from local sources for year 2010 would amount to approximately 900 000 metric tonnes, and for the year 2025 the quantity required would be 1 077 000 metric tonnes. Consequently, the quantity of imports to cover the consumption gap would be 300 000 metric tonnes and 360 000 metric tonnes respectively.

1.4 Fish Import - Export Situation

Egypt is a net importer of fish and fishery products, with imports vastly exceeding exports in both quantity and value, even though the unit value of exports is many times higher than the unit value of imported products. Fish imports have for many years provided at least a quarter of the total supply of fish to the Egyptian market. In 1996, Egypt imported 144 110 metric tonnes with a value of EP 490 million, increasing yearly to reach 261 430 metric tonnes valued at EP 534 million in 2001 (See Table 4). Most of the imports (70 percent) are frozen fish products mainly small pelagics of mackerel, herrings, hake and other marine fishes. Fishmeal represents about 20 percent of imports and the balance of 10 percent includes canned tuna and sardine, as well as fresh or chilled fish products. The Netherlands is the most important supplier of Egyptian fishery imports followed by Norway and the United Kingdom. The export-import commodity mix in year 2000 as reported by FAO is shown in Table 3.

The value per unit of Egyptian fish export is much higher than per unit of imports (US$ 5.00 to US$ 0.5). In 1996, Egypt exported 577 metric tonnes valued at EP 11.8 million fluctuating in the following years to reach 1 220 metric tonnes at a value of EP 5.1 million. The main products exported are fresh and chilled fishes (mostly sea bream and sea bass), representing about 50 percent of exports. Frozen fish products represent about 35 percent and the balance of 15 percent of exports include ornamental fishes, frozen octopus and salted fish. The principal destination of Egyptian exports is Europe, which accounts for almost 60 percent of products shipped. Exports to these countries are principally fresh or chilled, frozen, salted and fish in oil. Some countries in the Middle East, such as Saudi Arabia and Lebanon, receive fish from Egypt mostly as canned and smoked products (See Table 3).

2. CONSIDERATIONS FOR SECTOR DEVELOPMENT

2.1 Improving Imbalance in Fish Trade

Egypt is predominantly a net importer of food to feed a rapidly growing population and is expected to continue to do so, for the foreseeable future. The general rise in international prices of imported food items, including prices of imported fish, should give Egypt the incentive and opportunity to produce more fish from its available and undeveloped fishery resources. The increase of domestic landings should filter down to the masses in more supplies at reduced prices, as well as save foreign currencies. Imports of fish and fishery products increased in volume by about 30 percent between 1996 and 1997, but dropped by 18 percent in 1998 to start a rising trend in 1999, 2000 and 2001 by 8 percent, 10 percent and 18 percent respectively. This trend is expected to continue to rise if measures are not taken by the relevant authorities concerned, to at least stabilize this rate of increase in imports and work on decreasing it as much as possible.

Few years ago, some of the Egyptian fish exports were mostly of small quantities of high value species of fresh or chilled, to countries in the European Union (EU), especially Greece and Spain. At present, Egyptian fish exports to EU are not allowed due to quality standards required as indicated in EU Directive 91/493 EEC of July 2002. However, the EU is sending a delegation to Egypt this month (January 2003), to inspect the establishments and laboratories that wish to export to the EU markets to ensure compliance with EU quality standards. Anyway, Egyptian exports are meager and do not in any way alter the heavy negative balance of fisheries trade (See Table 3).

2.2 Measures Required for Increasing Production

A set of measures may be taken by the public and private sectors responsible for producing more fish domestically, in order to reach a better and more sustainable growth in fish production aimed at reducing imports. These measures include:

The above measures, beside several other logistical, legal, administrative improvements, as well as reductions in post-harvest losses, are meant to provide opportunities to expand the local base to increase fish supplies and reduce imports are not without constraints in their implementation. Most of these constraints are centered on the low quality of the biological and catch statistics available. Current information, although showing considerable improvements recently, are mostly based on old and out-dated estimates and may vary depending on the source and ad hoc generalizations. Other constraints deal with the problems associated with pollution of the scarce freshwater supply for aquaculture from industrial effluents and sewage, inadequate mixing of fresh and salt water in the River Nile system, coastal lakes and lagoons which adversely affect the quality of the water in many water bodies; lease of land suitable for aquaculture of five years is insufficient for planning feasible aquaculture projects; shortage of financial, logistical and institutional support for fishermen cooperatives in their catching, processing and marketing and distribution activities.

3. FISH AS A FOOD SECURITY ISSUE

3.1 Present Situation

The FAO World Food Summit held in Rome in 1996, defined food security as "...exists when all people at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life". The role of fish in enhancing food security lies in the importance of fish in supplementing the minimum diet of populations at large, and in particular, of sectors having low purchasing power. In addition, fish has a role to play in food security even if fish workers themselves cannot afford to eat them, as long as the fishery provides them with an income sufficient to buy food. Egypt with its dense and fast growing population concentrated along the River Nile and the Delta Region (about four percent of the total area of one million sq. km), has so far managed to increase its average per capita consumption of fish, although supplemented by imports. The ability to continue this trend lies in the ability of the importers (government and private sectors) to allocate foreign currencies to meet the cost of fish imports.

In many developing countries, fish does play a significant role in food security through its contribution to people's well-being and income, including foreign currency earnings from exports, and as a readily available food supply. This is more evident with population concentrations living in coastal areas and around inland water bodies. In Egypt, while such communities do exist mostly living around the northern lakes, the River Nile and in some coastal cities, much of the coastline is desert, inhabited only by small communities. Nevertheless, Egypt's increased fish production over the last few years is mostly attributed to freshwater aquaculture practiced in the Delta Region around the northern lakes, thus providing inhabitants with easy access to fish. It also indicates a healthy demand for more fish and sufficient purchasing power for fish landed in these communities. The share of fish in total animal protein per capita supply indicates an average increase in the purchasing power. Eventually, however, the development of per capita fish consumption at a low price of popular farmed fish, such as fresh tilapia or imported frozen small pelagics, will take place.

With a fast growing population and almost stagnant capture fisheries as well as the possible drain on foreign currencies to import fish, the question is raised if aquaculture can help meet the challenge to provide food for the Egyptian masses. As a matter of fact, Egypt's rapid population growth continues to be one of the main economic challenges facing the Government. The country's population is estimated by the Egyptian Central Agency for Public Mobilization and Statistics (CAPMAS), amounted to 67.9 in 2001. It also estimated that the birth rate have dropped from 2.9 percent 15 years ago to 2.1 percent in 2000 and to 1.95 percent in 2001. This downward trend is expected to continue as a result of continuing intensive and well-financed family-planning campaigns, improving health and rate of life expectancy, raising the standards of living and migration from rural to urban areas (The United Nations Development Programme [UNDP], forecasts the population growth rate in 1995-2015, at 1.6 percent per year).

Subsequently, demand for food in Egypt as in the rest of the world, will grow over the next few years. Currently, consumption patterns fall broadly into two categories: the two million or so wealthier households that are considered 'middle class' and whose tastes are more sophisticated; and the rest of the population, who live on staple foods, most of which is subsidized. Given expectations that economic reform in Egypt will remain cautious and gradual, this income distribution breakdown is unlikely to change dramatically in the short to medium terms. Significant shifts in the types of food stuffs required by Egyptians are therefore unlikely to change, and overall rises in demand will be determined largely by population growth.

Supply side factors are likely to exert a greater influence on consumption. Although Egypt's favorably fertile land enables farmers to produce some of the world's biggest yields, nevertheless rapid population growth over recent decades means demand has so far outstripped the country's productive capacity. So Egypt, which was a net food exporter as recently as the early 1970s, has now become one of the world's largest food importers. Unless local food production increases rapidly, the volume of food that the country has to source from abroad will grow. Food importation, including imports of fish, will expose the Egyptian food industry to two main supply-side influences. Firstly, the depreciation of the Egyptian pound - 35 percent since the start of 2000 - is making, and will continue to make, imported foodstuffs more expensive. This will put some imported 'luxury' foodstuffs out of the reach of many middle class Egyptians. Secondly, the government is anxious to narrow Egypt's large trade deficit (11.4 percent of GDP in 2000) - particularly when the current account suffers because of drop in foreign currency revenues, such as from low tourism. It has therefore occasionally taken steps to cut non-essential imports, raise tariffs and by vetting banks' provision of letters of credit. Non-essential food stuffs - food stuffs account for 10-15 percent of imports - are one potential target. Imports of essential foodstuffs, in particular wheat, are less likely to be affected.

3.2 Food Subsidies

Food subsidies in the Egyptian economy have been in existence as far back as 1940s, when the Egyptian government operated such a system. In the 1970s, the Egyptians expanded in terms of commodity coverage and rate of subsidization. At its peak in 1980-81, it covered more than a dozen items including fish imports. Food subsidy accounted for 14 percent of total government spending and corresponded to 12.8 percent of total private consumption. Since the early 1980s, the government has gradually cut spending in this area, primarily by reducing the number of subsidized commodities including fish. In 1996-97, the system covered four commodities: bread, flour, cooking oil and sugar and represented 5.5 percent of government spending, and 1.9 percent of the total private consumption. Given that these commodities are tradable (Egypt is a net importer of wheat products, edible oils and sugar), the subsidy cost is sensitive to changes in the world prices.

Egypt, being one of the world's biggest per capita consumers of wheat, which is the most heavily subsidized food item, has initiated a campaign in the early 1990's to increase wheat production in the country during the planning period of 1995 - 2000, aimed at improving yields and increasing the cultivated area by 20 percent. It is reported that the yield has increased during that period by 37 percent. However, this increase in local production, coupled with the soaring world prices caused by the lifting of the United States' wheat export subsidies, increased transport costs and draught in key producing countries, the wheat bill kept on increasing. Likewise, local fish production especially in the aquaculture sector efforts are exerted to increase yield per unit of productivity by introducing new know-how and appropriate technologies, reduction in post-harvest losses through better handling, and engaging and expanding production of fish from mariculture in an effort to keep up with the increasing local demand and reduce imports.

3.3 Privatization of the Economy

Since 1991, privatization of the Egyptian economy has been an integral part of Egypt's overall programme of development. Privatization represents a major strategic objective, perhaps the most important tool to implement the structural modifications package recommended by the International Monetary Fund (IMF) in the agricultural sector, which includes fisheries. Efforts are being directed at encouraging active participation of the private sector in all fields of economic activity. Privatization is expected to sustain competition by breaking up state monopolies and subsidiaries, which are characterized by protection by transferring ownership of public sector enterprises to the private sector, and by increasing private sector investment in the economy. All this is expected to lead to better allocation of resources and liberalization of trade in agricultural commodities. Egypt successfully completed the IMF programme in 1988. Since then, the privatization programme slowed down. One reason for this is that many of the more profitable companies have already been sold off. Other reasons are the government's hesitancy to worsen unemployment while the economy is performing poorly and its concern about loosening control of 'strategic' industries and major utilities.

3.4 FAO and Food Security

The FAO World Food Summit (WFS), held in Rome in November 1996, was the first global gathering at the highest political level to focus solely on food security. In adopting the Rome Declaration on World Food Security and the World Food Summit Plan of Action, it renewed the commitment of the international community to ensuring food for all "by reducing the number of undernourished people to half their present level by 2015".

FAO has a major role to play in assisting countries in implementing the provisions of the WFS Plan of Action that fall within its mandate, as well as in monitoring, through its Committee on World Food Security (CFS), overall progress in achieving the Summit goals. Towards achieving the WFS goals, FAO established a US$ 500 million Trust Fund for Food Security to supplement its regular field programme, by providing funding projects in needy countries to initiate, strengthen, accelerate and expand activities in the areas of increasing food availability in low-income food deficit countries (LIFDC), and for funding FAO's Special Programme on Food Security (SPFS), including projects in artisanal fisheries and aquaculture.

The FAO Conference adopted the Code of Conduct for Responsible Fisheries in October 1995. Aware of the generally poor state of the many of the world's major fisheries, ineffective conservation and management practices, and the need to ensure long-term sustainable development in the fisheries sector led to the adoption of the Code. Its Article 11 "Post-Harvest Practices and Trade" establishes the needed link between the conservation and management of the fisheries resources and their utilization and trade. While its main tenor is to promote the further liberalization of trade in fish and fishery products, it contains several important provisions which emphasize this link. While the Code is voluntary, its implementation by countries will definitely bring various benefits to the development of their fisheries.

Furthermore, FAO's Fish Marketing and Utilization Service (FIIU) held an E-mail Conference on Fish Trade and Food Security (FTFS) between 19 October and 12 December 1998. The discussions centered on various aspects on globalization and the implications of fish trade and food security. The proceedings of the Conference indicated the varied interpretations of food security depending on the level of aggregation: local, national, international, regional and global. Anyway, the main recommendations called on FAO to consider the investigation into the effects of trade in fish products in those individual countries that are thought to be at risk of uncertain food supplies, and to undertake more market research and stimulate further product development and diversification in low-cost fish products.

Also, the Second Session of the FAO Advisory Committee on Fisheries Research held in 1999 called for further work to be implemented on relevant issues of trade; effects of trade on food security in selected LIFDCs; conduct review on diverting small pelagics to food rather than fishmeal; studies on the barriers which prevent increased intra-regional trade in developing regions and gather information on trade subsidies for fishery products. The Fish INFONetwork, which includes INFOSAMAK, was called upon to carry out most of the above requested work.

4. GLOBALIZATION OF INTERNATIONAL FISH TRADE

4.1 Egypt's Membership in Trade Arrangements

Egypt acceded to the World Trade Organization (WTO), the successor of the General Agreement on Tariff and Trade (GATT), in June 1995 (Egypt had joined GATT in 1970). The WTO is a full-fledged international organization, intended to oversee liberalization of international trade. Its functions are mainly to:

In April 1995, the EU Council of Ministers approved a summery report defining the Euro-Mediterranean Agreement (EMA) objectives with a view to establishing a Euro-Mediterranean partnership with countries around the Mediterranean including Egypt. The agreement provide for cooperation in various areas including economic and financial matters, as well as the establishment of a free trade area over a maximum period of 12 years. After nearly five years of negotiations, Egypt signed its EMA with the EU in June 2001, but it is not expected to come into force for another two years of the signature, i.e. June 2003. The most important aspect of the agreement concerns free trade whereby Egypt gains immediate duty - free access to EU markets for its industrial products. In return Egypt must phase out customs duties on EU goods within 12-15 years of the agreement coming into force. The EU is already Egypt's biggest trade partner, accounting for 34 percent of the total in 2001, ahead of the US with 31 percent. However, there are doubts about Egypt's benefit from its accord with the EU due to the competition on industrial products. For that reason, winning greater access for its agricultural products is a more immediate concern for Egypt, as these are more competitive. Exports of Egyptian fish products to be decided upon after the EU delegation visits Egypt in January 2003.

The US - Egyptian Partnership for Economic Growth and Development was launched in March 1995 to refocus the two nations' economic relationship, away from aid and towards the promotion of trade and enhanced commercial ties. Egypt looks forward to enter into a free-trade agreement with the US in the future.

Egypt is also a signatory to various multilateral regional and bilateral agreements dealing with trade such as the Arab Common Market planned for 2007, which comprises 19 Arab States. The Agreement for Facilitating and Promotion of Intra-Arab Trade has a membership of all 22 Arab States. Egypt is also a signatory to the Greater Arab Free-Area (GAFTA) to be completed by 2008. It joined the 21- member state Common Market of Eastern and Southern Africa (COMESA) in June 1999. It is also a member of the Islamic Group of Eight (D8) which encourages trade and economic cooperation among its members. Egypt plans to set up a free-trade zone with Morocco, Tunisia and Jordan, all of which have signed similar trade agreements with the EU. The aim of the agreement is to facilitate trade of industrial and agricultural inputs between the countries, which can then be exported to the EU.

4.2 An Overview of the Foreign Trade Situation

The liberalization of Egypt's restrictive trade regime will probably continue to be gradual. The country has a large trade deficit, well above 10 percent of its GDP (US$ 86.4 billion in 2001); moreover, in light of the slow progress on boosting exports, it is unwilling to lower tariffs faster than required under international trade agreements. Because of this trade imbalance, the Government is committed to diversifying its economy and promoting private sector, export-led growth. Egypt's imports for the fiscal year ending June 2001 were US$ 16.4 billion, while exports for the same period totaled only US$ 7.1 billion.

With the Egyptian currency continuing to depreciate and its services in particular prone to sharp downturns - the promotion of exports has become an increasingly urgent aspect of Government policy. In November 2001, President Hosni Mubarak created the Ministry of Foreign Trade and declared raising exports as a matter of 'life or death' for Egypt. With these concerns uppermost, the Government has also imposed some restrictions on imports. The central bank has tightened the rules governing the issuing of letters of credit provided by banks to importers, and has on occasions refused to release hard currency from Egypt's international reserves for imports it considers non-essential. Import tariffs are generally ad valorem, based on cost, insurance and freight (CIF) value. Tariff rates are high by international standards to protect local industries, which may range from 40 percent to 135 percent. Conversely, tariff on essential imports are low, 1percent on basic foods including fish imports. To tighten controls on imports, various non-tariff barriers were introduced including cumbersome import documentations, foreign exchange controls, rigorous inspection of quality standards including on foodstuffs and sales tax on imported products. On the other hand, most export duties have been eliminated except for some items as part of the Government's export promotion strategy. Exports are not liable for sales tax or export permits.

4.3 WTO, Trade Liberalization and Food Security

A long debate on food security in the WTO agricultural negotiations has taken place reflecting the fact that all countries consider food security to be important, especially for developing countries. Some of the issues discussed, deal with the extent of protection of domestic production as necessary in order to ensure food security. Most countries feel that this may be handled through the combination of means including increased exporting to finance importing, stockpiling (Egypt's fish stockpiling is very limited) and increased protection of domestic production in developing countries. Countries also differ on whether liberalization and market orientation should be the main route, because distortions jeopardize food security or whether market failings and particular circumstances such as adverse climate, require more emphasis on intervention or whether a gradual approach towards liberalization is best.

Developing countries are of the view that they need to intervene in agricultural trade because they see little prospect of developed countries ceasing to distort markets with subsidies and protection. At times, they lack foreign exchange to finance imports, because they need to support small scale subsistence farming. In this context, the developed countries are accused of practicing dumping, i.e. exporting at prices far below the production costs, which is seriously damaging the domestic markets in developing countries. This practice is seen as leading to a negative impact that these agricultural subsidies have on the economy and livelihoods of developing countries. This double standard by the developed countries is seen as leading to over-production, export dumping and decrease of prices of commodities.

While developing countries admit that developed countries have allowed them to benefit in developing their trade; they still feel much more is needed for reaching economic development and poverty eradication. For example, the EU trade policy includes spending US$ 41 billion a year on agricultural subsidies regardless of the negative effects they can exert on developing countries economies. Furthermore, they failed in allowing them to enlarge their export by removing quotas and provide full market for all their exports. They are also accused of opening up their markets in the name of free trade, without considering the impacts on poverty and food security.

The WTO has an important role to play to achieve the common objective of global food security. The negotiations on agriculture, including fishery products which are underway for two years now, aim at substantial improvements in market access, reductions of, with a view to phase out, all forms of export subsidies, and substantial reductions in trade distorting domestic support. Bringing these negotiations to a successful conclusion is the key contribution the WTO can make towards achieving global food security. Further trade liberalization will have a positive impact on food security, both directly through better and secure access to food supplies on global markets, and indirectly through its contribution to poverty alleviation.

History has shown that food security does not equal self sufficiency of a country. It has more to do with international trade in food products that make them available at competitive prices and set the right incentives for those countries where they can be produced more efficiently. Food shortages have to do with poverty, rather than with being a net food importer. Food security these days lies not only in the local production of food, but in a country's ability to finance imports of food through exports of other goods. In this sense, an open multilateral trading system with a diversity of countries supplying food products, might be a better guarantee for stable and secure supplies.

Poverty rather than a lack of global food production is the root cause of food insecurity, as was recognized by the 1996 World Food Summit. The continuation of the agricultural reform process through the on-going WTO negotiations on agriculture can be expected to have significant positive effects on the purchasing power of the poor. The economic development of many countries critically depends on their overall export performance on how they do in agriculture. For this reason, reducing or eliminating trade distorting subsidies and improving market access opportunities will help boost domestic production, and thus farmer's income where food can be produced most efficiently.

Food security is dependent on national production, access to international markets and the availability of foreign exchange to buy imports. The WTO negotiations on agriculture will contribute to all this. The further dismantling of trade barriers and trade distorting subsidies can be expected to strengthen the capacity of the global food system to feed a growing world population. It will mitigate the risks of food shortages that in closed markets exist due, for example, to the vagaries of the weather. It will contribute to the stability of the world food supply, and most importantly, it will help increase the incomes of the vast number of farm households in developing countries.

Liberalization of trade in general calls for the need to globalize institutions of governance in the area of food security. It is believed that governance challenge for food security is not so much to deliver more public food commodities at the global level, but instead to persuade existing governments to deliver the minimal public food commodities needed at the national level. This view contradicts those of the opinion that power moves upward to regional, transitional and global organizations. The general opinion expressed in this matter, however, is the belief that improved governance is needed at all levels, but in countries where food security is still a serious problem, national governments must take the largest responsibility for tackling the problem.

5. CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

Egypt is predominantly a net importer of food including fish and fishery products, and will continue to depend on food imports for its food security requirements. It is expected to continue in this way for years to come if its present rate of fish consumption is to be maintained. The continued rise in international prices for foodstuffs should give Egypt the incentive to produce more fish for food to narrow the fish deficit gap and allow fish to play an important role as a food production system in the domestic economy. Also, to finance imports, Egypt will require increasing its exports to improve its needed foreign currency earnings to be able to pay for essential imports.

It is generally believed that most marine and inland fisheries resources are fully exploited. There is an urgent need to reduce fishing effort and other management measures should be taken in various aspects of the fishery sector, to ensure that sustainable production can be maintained. In the short term, it is unrealistic to expect substantial increases in production from most marine and inland water bodies. The only opportunity to increase domestic fish production, besides resorting to more importation, is through expansion of aquaculture production, especially at community and cottage-industry levels; to reduce production costs in competition with prices of imported fish; and from fresh and marine waters. For a sustainable aquaculture development, certain measures (principally, improvements in the quality of water used by fish farmers and in farm management technology) as well as environment friendly coastal sites, can be implemented.

Economically speaking, the fishing industry and its various sub-sectors, provide employment and means of livelihood to an estimated one million people beside their families out of a total population of about 68 million in 2001. Fish is a traditional and important item in the national diet. The average annual per capita consumption in 2001 is estimated at 15.2 kg. Local production provides two-thirds while the gap of one third of supplies is covered through imports. Narrowing the food for fish gap should become a priority in the future fisheries development policies.

On the international level, the implementation of the Uruguay Round Agreements will bring about a shift in production and trade to less subsidizing net importers, primarily the developing countries, such as Egypt. Trade concessions negotiated during the Uruguay Round provide for increased market access by reducing or eliminating trade barriers, as well as providing legal security for market access through tariff bindings.

Multilateral Trade Agreements (MTN), which Egypt negotiated and by which all members of the WTO will be bound, strengthen and expand the rules, procedures and institutions that govern measures that could be used to protect market access, and thus offset all or part of the increased market access agreed. Agreements relevant to trade in fisheries products include:

Not all the implications of the WTO are positive for the Egyptian fishery sector, bearing in mind that Egypt is far more an importer than an exporter in fishery products. Several principal implications, positive and negative, which will be brought about on Egypt by the international liberalization of fish trade, including:

Egypt will benefit from the EMA with EU and from other free trade agreements and preferential treatments concluded with other countries in a number of ways. This will include expansion of its economic reforms, harmonization of its regulatory regimes and administrative requirements in relation to products, financial transfer and technical assistance. The EMA and other intra-Arab trade agreements can also compensate for some WTO shortcomings to facilitate its foreign trade conditions and related benefits. Furthermore, the expansion of Egypt's commitments to the WTO will help to liberalize trade policies to a greater extent.

5.2 Recommendations

All countries, although with varying degrees, consider food security to be most important and in some countries vital to their national and social security. In this context Egypt, with a rapidly growing population and in the current regional political situation with the economy performing poorly, it is necessary for Egypt to protect and increase domestic production of food commodities to ensure food security in a future promising globalization and liberalization of international trade. This may be achieved through a combination of measures. These measures include:

Table 1: Fish Production-All Sources, 2001

Resources

Production in MT

Percent of Total

Marine Fisheries

Mediterranean Sea

59 624

7.73

Red Sea

73 549

9.53


Sub-total

133 173

17.26

Northern Lakes

Manzala

68 400

8.87

Burulous

59 200

7.67

Idko

10 910

1.41

Maryoott

6 200

0.80


Sub-total

144 710

18.75

Coastal Lagoons

Bardaweel

3 146

0.41

Port Fouad

162

0.02


Sub-total

3 308

0.43

Inland Lakes

Qaroun

1 396

0.18

Rayan 1&3

861

0.11

Nasser

28 153

3.65

Bitter & Temsah

5 444

0.71


Sub-total

35 854

4.65

River Nile & canals

Nile system

111 606

14.47


Sub-total

111 606

14.47

Fish culture

Government

6 744

0.87

Private

294 033

38.11

Cages

23 716

3.07

Rice fields

18 371

2.38


Sub-total

342 864

44.43

Grand Total

771 515

100.00

Source: GAFRD, "Report on Fish Production 2001".

Table 2: Development of Fish Production during (1996 - 2001) (1000 metric tonnes)

Resources

1996

1997

1998

1999

2000

2001

Marine Fisheries

Mediterranean Sea

51.1

52.7

68.0

89.9

54.9

59.6

Red Sea

48.4

57.4

57.1

82.4

76.0

73.5

Sub-total

99.5

110.1

125.1

172.3

130.9

133.1

Northern Lakes

Manzala

52.5

63.1

78.3

65.0

74.1

68.4

Burulos

59.4

58.7

59.0

55.3

51.8

59.2

Idko

10.1

10.8

10.3

9.5

8.9

10.9

Maryoott

4.0

4.5

4.3

5.2

6.4

6.2

Sub-total

126

137.1

230.2

135

141.2

144.7

Coastal Lagoons

Bardaweel

1.6

2.2

1.9

3.9

3.3

3.1

Port Fouad

0.2

0.2

0.2

0.2

0.1

0.2

Sub-total

1.8

2.4

2.1

4.1

3.4

3.3

Inland Lakes

Qaroun

0.9

0.9

1.0

1.5

1.8

0.2

Rayan 1&3

0.7

0.9

1.1

1.7

1.9

1.4

Nasser

45.4

52.6

53.8

41.3

16.8

28.2

Bitter & Temsah

1.8

1.7

2.8

2.8

5.8

5.4

Sub-total

48.8

56.1

58.7

47.3

26.3

35.2

River & Canals

Nile & branches

64.4

65.5

68.3

64.0

82.5

111.6

Sub-total

64.4

65.5

68.3

64.0

82.5

111.6

Fish Culture

River weed ctrl

15.3

12.3

10.9

12.4

-

-

Fish farming

54.6

66.6

116.0

203.9

323.7

324.5

Rice fields

21.3

6.9

12.4

10.0

16.4

18.4

Sub-total

91.2

85.8

139.3

238.7

340.1

342.9

Grand Total

431.6

457.0

545.6

648.9

724.4

771.5

Source: GAFRD, "Report on Fish Production 2001"

Table 3: Egyptian Imports & Exports of Fishery Commodities by Quantity & Value, 2000

Commodity

Imports

Exports


Quantity m.t.

Value U.S.$

Quantity m.t.

Value U.S.$

Frozen products

181 584

100 965

344

286 000

Canned products

25 296

30 399

20

18 000

Fresh or chilled

1 745

1 792

498

715 000

Fishmeal

51 932

35 672

-

-

Ornamental fish

-

-

63

97 333

Salted fish

-

-

22

37 000

Others

587

2 074

41

58 000

Total

261 144

170 902

988

1 211 000

Source: "FAO Statistical Yearbook", 2002

Table 4: Development of Exports and Imports of Fish and Fishery Products 1996-2001

Year

Export

Import

Quantity in tonnes

Value Thousand L.E.

Average price Thousand L.E.

Quantity in tonnes

Value Thousand L.E.

Average price Thousand L.E.

1996

577

11 775

20.40

144 110

489 972

3.40

1997

2233

45 553

20.40

207 356

414 712

2.00

1998

2137

41 040

19.20

176 301

310 036

1.76

1999

692

4130

5.97

193 157

334 092

1.73

2000

957

4159

4.34

213 631

476 406

2.23

2001

1220

5114

4.19

261 430

533 915

2.04

US$ = L.E. 4.50 (2001)

Source: (GAFRD) Report on Production 2001

Table 5: Food Balance Sheet: Egypt-2000 (1000 mt)

Fish, Seafood

Production

Imports

Exports

Total

Feed

Food

Kg./year

Per capita Supply

Per day

Calories

Protein gm.

Fat gm.

Freshwater

380

0

0

380

-

380

5.6

11

1.7

0.4

Demersal

41

14

0

55

-

55

0.8

1

0.2

0.0

Pelagic

131

397

0

527

186

342

5.0

11

1.6

0.5

Marine, other

34

33

0

67

-

67

1.0

2

0.3

0.1

Crustaceans

16

0

0

16

-

16

0.2

0

0.1

0.0

Cephalopods

5

0

0

5

-

5

0.1

0

0.0

0.0

Molluscs, other

0

3

0

3

-

3

0.1

0

0.0

0.0

Total

607

447

1

1053

186

867

12.8

25

3.8

0.9

Total Meats

1397

192

1

1588

-

1588

23.4

95

8.6

6.5

0 = less than 1000 metric tonnes
Population: 67 884 000, (2000).
Source: Extracted from Food Balance Sheets, FAO, 2000.

LITERATURE CONSULTED

Economist Intelligence Unit; Country Commerce - Egypt, July 2002.

Economist Intelligence Unit; Country Report: Egypt at a Glance- 2003-04, Nov, 02.

FAO; Sub Committee on Fish Trade: Globalization and Implications for International Fish trade and Food Security, Bremen, Germany, March 2000.

FAO; GLOBEFISH, Effects of World Trade Organization's Regulations on the World Fish Trade; Volume 65, Rome, February 2000.

FAO; Report of the World Food Summit: Five Years Later, Rome, June 2002.

FAO; Report of the Twenty- Sixth FAO Regional Conference for the Near East, Tehran, Islamic Republic of Iran, Cairo, 2002.

FAO; Advisory Committee on Fisheries Research: Report on E-mail Conference on Globalization: Fish Trade and Food Security, Rome, March 1999.

FAO, Government of Japan; Proceedings of the International Conference on the Sustainable Contribution on Fisheries to Food Security, Kyoto, Japan, December 1995.

Feidi, Izzat; FAO/WTO Seminar on Fish Trade in the Near East Region: Challenges to Eliminate Fish Trade Barriers in the Near East Region; Cairo, Egypt September 2002.

Feidi, Izzat; Fish Trading Opportunities in the Arab Region, FAO/RNE, Cairo, Egypt, June 1996.

Gunter, Tammi; The Political Economy of Food Subsidy Reform in Egypt, International Food Policy Research Institute, Washington D.C. November 1999.

General Authority for Fish Resources Development, (GAFRD); Agriculture Policy Reform Program, RDI Report 76: Identifying Policy Barriers for Fisheries Development, Cairo, Egypt, August 1999.

General Authority for Fish Resources Development (GAFRD): Report on Fish Production 2001, Cairo, Egypt,

Kurien, John; Does International Trade in Fishery Products Contribute to Food Security? Discussion note to FAO/FIIU E-mail Conference, Rome, March 1999.

Oxfam; Why Should EU Stop Giving Subsidies? Oxfam, 2002, (www.eldis.ids.uk)

Oxfam; What are the Worst Features of EU Trade Policy? Oxfam, 2002.

Refaat, Amal; New Trends in Egypt's Trade Policy and Future Challenges; The Egyptian Center for Economic Studies, Working Paper No. 36, March 1999, Cairo, Egypt.

Ruckes, Erhard; Will Greater Liberalization of Markets at the Global Level Promote Food Security at the National Level? FAO 50th Anniversary Symposium, Quebec City, Canada, October 1995.

Paasberg, R.L. Whose Responsibility is it to End Hunger? International Food Policy Research Institute (IFPRI), 2002, www.eldis.ids.ac.uk.

United Nations; Challenges and opportunities of the New International Trade Agreements (Uruguay Round) for ESCWA Member Countries in Selected Sectors: Agriculture under GATT and WTO, with Special Reference to Egypt, N.Y., 1998.

WTO; Agriculture Negotiation: Backgrounder, Up-date, Phase 2, Food Security www.wto.org.

WTO; Trade Policy Reviews: Egypt: June 1999.

WTO; Trade Liberalization and Food Security; Rome, June 2002.

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