Mediterranean Policy ProgramSeries on the Region and the Economic Crisis Prepared in Partnership with Paralleli Euromediterranean Institute

(Turin)

Policy Brief
October 2012
Agricultural Constraints Although North African countries have made considerable efforts to improve their agricultural conditions, they continue to struggle with a poor endowment of cultivable land and water. In North Africa, the dry climatic and soil conditions severely limit increases in acreage. In almost all countries of the region, the irrigated area has grown significantly due to the building of various kinds of dams, particularly in Egypt. But grain yields remain very low in Morocco, Tunisia, and Algeria, where the yield per hectare is between 1 and 2 tons, which is significantly lower than yields in other countries of the Euro-Mediterranean region: in Turkey, Lebanon and Israel average yields range between 2.5 and 3.5 tons. Yields are higher under irrigation, as is the case with rice in Egypt, where yields per hectare are over 7 tons. Average grain yields in the European Union are around 5 tons per hectare. Agriculture is still the main livelihood of a substantial part of the population in a region living below the poverty threshold. Though the share of agricul-

Summary: While the North African countries have made considerable efforts to improve their agricultural conditions, those efforts may not be enough to cope with ever increasing food demand. Present agricultural policies must be modified to fill this food gap. This brief analyzes the missing elements in strategic policies for sustainable agricultural development in the region.

Agriculture in North Africa: A Chance for Development

by Jos Mara Garca Alvarez-Coque*
Introduction1 Agriculture is an important sector on both shores of the Mediterranean Basin. More than an economic activity, it is part of the culture and landscape of the countries of the region. In North African countries, the rural world remains a significant reserve of labor force for the rest of the economy. These countries still experience considerable population growth and are highly dependent on imports of basic products (cereals, meat, and milk and dairy products), which compete with traditional production systems that face structural and natural constraints. Is the region ready to address the increasing food demand? Are present agricultural policies enough to fill the food gap in the broader context of economic globalization? What aspects are missing in strategic policies for sustainable agricultural development in the region? This brief attempts to analyze these questions and suggest possible elements of an agricultural strategy. In the wave of social and political changes, this is a relevant topic.

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* Jos Mara Garca Alvarez-Coque is a professor of agricultural economics at the Universitat Politcnica de Valncia. 1 Some of the figures and arguments presented in this brief use findings from the project Sustainable Agri-Food Systems and Rural Development in the Mediterranean Partner Countries (SUSTAINMED, FP7-KBBE-2009-3), partly funded by the EU Commission.

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Policy Brief
tural workers in total employment has generally declined, agricultural employment still accounts for over 30 percent of the total workforce in Egypt and nearly 30 percent in Morocco (see Table 1). Seventy percent of the poor on the southern shore of the Mediterranean Basin are concentrated in rural areas. Food Security Prospects The efforts to expand the agricultural area (and even the irrigated area) and modernize the agricultural sector have resulted in a significant increase in agricultural production in recent years. However, there are considerable annual fluctuations in production depending on weather conditions, and domestic food demand has continued to grow in step with demographic change and urbanization. Food crises have been behind social upheavals such as those that occurred in 2007 and 2008, which partly contributed to the democratic revolts of 2011. With regard to domestic markets, North Africa is one of the world regions with the largest percentage of rural population with poor market access.1 An outstanding feature in North African countries is the net negative agricultural trade balance. Trade coverage (percentage of agricultural exports with respect to agricultural imports, 2010) reached 1 percent in Algeria, 21 percent in Egypt, 37 percent in Morocco, and 61 percent in Tunisia. The evolution over the last five years indicates that the situation shows no sign of reversal. Food dependency has a lot to do with the agricultural constraints: low yields in the cultivation of cereals, particularly in small landholdings in rain-fed areas. In addition, lack of transport infrastructure makes it difficult for any surplus to be sold in cities. Trade reforms have also increased the pressure on traditional production systems. The region is exposed to the increasing world market volatility. High food prices lead to an increased food bill, which implies a reduced availability of resources for the poorest families. The dependency problem is paradoxically aggravated by the emergence of the middle classes, which are prone to change their diet and consumption patterns. This has been a consequence of economic growth and, at the same time, a reflection of the failure of agriculture to meet the food needs of the population. Table 1. Agricultural population (thousands and percentage of total employment)
Algeria Egypt Morocco Tunisia Turkey Spain Greece Italy
2001 2001 2007-8 2007-8 Thousands (%) Thousands (%)

2,613 8,665 4,271 949 14,485 1,234 752 1,285

24 33 35 24 46 7 16 5

1,666 6,748 4,382 n.d. 5,016 967 524 860

20 31 40 n.d. 24 4 11 4

All persons depending for their livelihood on agriculture, hunting, fishing, and forestry. Source: FAO and WLO.

The direct consumption of cereals has been declining and is being replaced by an indirect consumption of products of animal origin. The North African countries have 2 percent of the worlds population, but concentrate between 16 and 19 percent of wheat imports.2 The population has multiplied by 2.5 over the last 35 years. This may give rise to increasing difficulties in food security. However, the demographic dynamics in the region are quite varied, with populations in the Maghreb countries growing a little over 1 percent annually due to the decreased fertility experienced in recent decades, and significantly higher growth, about 2 percent annually, in Egypt. Agricultural Strategies Agriculture remains a key activity for economic and social development in North African countries. In these countries, a sharp dualism between traditional agriculture and modern agriculture still prevails. Traditional agriculture has an especially important presence in Morocco, Tunisia, Algeria, and Egypt. It continues to be a style of agriculture that uses ancient techniques and that is poorly integrated into the market. Traditional farmers are highly dependent on the natural environment and dominate rain fed areas. In contrast, modern agriculture, consisting of large farms oriented toward exporting, is found mainly in irrigated areas devoted to fruits, vegetables, and cultivated plains of grain and olive trees. Development options chosen in the 1950s and 1960s did not get the expected results: the revitalization of the agricultural sector, often based on land reforms accompanied by large-scale hydraulic projects, had limited impact. In the
2 See Sbastien Abis, Dsordres agricoles et alimentaires en Mditerrane, Revue politique et parlementaire, 1051, 2009:125-129.

1 World Bank, World Development Report 2008, p. 54.

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1980s, structural adjustment programs were implemented, including liberalization measures involving reductions in government transfers to agriculture and rural areas. In the last decades, North African countries moved between the need to exploit their comparative advantages in production and exports of fruits and vegetables, and the need to foster their traditional farming to reduce food dependency. For these dual objectives, programs like the Green Morocco Plan, launched in 2008, gave irrigated agriculture a strategic role in national development. Most of these programs still lack a common vision of cooperation and synergy among those participating in rural development. Governments and international agencies act through major programs where non-governmental organizations (very present in the region) are involved in small projects in the fields of health, education, and the environment. In general, agricultural policies remain weak and have failed to build the confidence of economic agents, necessary to promote investment and improve income distribution. In addition, the democratic deficits and lack of a transparent regulatory framework do not favor foreign investment or international cooperation. Unstable Food Equation Although North African countries do not appear as a priority on the global map of hunger, they are hotspots of unrest, as shown by the emergence of bread riots. Already in 1977 in Egypt and in 1984 in Tunisia, riots broke out against the rising price of bread. In spring 2008, protests spread to many peri-urban areas. While it would be excessive to describe as bread riots the Arab revolutions that have occurred since the winter of 2010-2011,3 the increase in food prices has been a catalyst for social unrest.4 Budgetary provisions have been substantial in these countries in the form of social transfers, the aim clearly being for governments to buy peace. For example, Moroccos Compensation Fund subsidies reached 3 billion in 2011 for sugar, flour, and gas. In Egypt, the value of food subsidies amounts to 2 percent of GDP and reached $4 billion
3 See Sbastian Abis, La scurit alimentaire, une projet concret pour la Mditerrane. Les Echos, 28/03/2012. http://www.lesechos.fr/. 4 Empirical evidence to support the hypothesis that price increases are at the source of political unrest can be found in Marc F. Bellemare, Rising Food Prices, Food Price Volatility and Political Unrest, SSRN (June 28, 2011 http://ssrn.com/abstract=1874101), and in Marco Lagi, Karla Z. Bertrand, and Yaneer Bar-Yam, The Food Crises and Political Instability in North Africa and the Middle East, New England Complex Systems Institute, August 10, 2011.

In the last decades, North African countries moved between the need to exploit their comparative advantages in production and exports of fruits and vegetables, and the need to foster their traditional farming to reduce food dependency.
in 2011. These measures have often been ineffective and burdensome for the state. For consumers, subsidizing products does not prevent increases in the prices of most food products, and protests do not show signs of slowing down, even after democratic reforms.5 What is worse, subsidies are not sustainable, especially within scenarios of increasing cereal prices. The new democratic era should favor rethinking the redistribution systems to ensure a decent standard of living for those in need. In addition, fighting the sources of poverty and designing a coherent agricultural development strategy remain necessary in order to promote food security without resorting to a blind subsidization of food consumption. Old and New Partners The EU has largely dominated the agricultural trade relations of North African countries: Morocco shows a positive agricultural trade balance with the EU, while Algeria and Egypt show a large deficit. This European dominance is also explained by the absence of common positions in North African countries and their failure to achieve SouthSouth integration. The lack of South-South cooperation limits the ability of North Africa to play a strategic role in world markets. The diversification of trade relations is a
5 The previous analysis and questions are based on the brilliant comments on the contradictions of agricultural policies in Morocco by Najib Akesbi, Prix, dpendance alimentaire et stabilit sociale, Mouvement pour une Organisation Mondiale de lAgriculture, http://www.momagri.org, 2011.

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trend in Mediterranean Arab countries and trade ties are being developed with many countries outside the EU, in particular Turkey and other extra-regional powers like the United States and emergent countries (Brazil, China, India, Russia, and South Africa). Two-thirds of food imports in North Africa are purchased from countries outside the Euro-Mediterranean zone. The United States ranks as the leading trading partner for agricultural products (mainly grains, in particular wheat, maize, and soybeans) in Turkey, Egypt, Jordan, Morocco, and Algeria. The Mediterranean region currently receives 22 percent of U.S. wheat exports.6 Imports from Brazil are also increasing (mainly beef, soybeans, and sugar), and from Russia and the Ukraine, which are forecast to become major partners in the wheat trade in the Mediterranean region.7 A New Agenda In addition to the agenda for agricultural development, strategic options are needed in order to achieve food security and alleviate rural poverty. All possible alternatives that work in favor of meeting needs in the long term must be considered. This requires a regional perspective, very different from the fragmented approaches that have dominated the history of Euro-Mediterranean policies.8 The new strategic vision has to be founded on the following principles. Introduce a Pro-Small-Scale Farming Policy Most farms in the Mediterranean Basin are family farms, although structures are very diverse across countries. Demographic pressure on agricultural land has decreased in the last two decades (see Table 2). Small farms (less than 5 hectares) are of great importance, particularly in Morocco where they account for 71 percent of the total holdings. It is surprising that although small and medium-size farms are the majority, they continue to remain unnoticed, often marginalized and ignored, during the design of agricul6 CIHEAM. Atlas Mediterra 2010. p. 118. 7 See Garcia Alvarez-Coque et al. Agricultural Globalization and Mediterranean Products, in CIHEAM, The Mediterranean Diet for Sustainable Regional Development, CIHEAM/ Les Presses de Sciences-Po, Paris, March 2012, Chapter 17. 8 The European Parliament has recently recognized the need for relaunching the EuroMediterranean process to support democracy in the region. See European Parliament, The EU Trade and Investment Strategy for the Southern Mediterranean following the Arab Spring Revolutions, Report on Trade for Change, April 4, 2012.

Table 2. Agricultural Population and Holdings in Egypt, Morocco, and Tunisia

Ratio Agricultural population / Agricultural land (persons per hectare) 1990 2000 2008 Average size (ha) of holdingsa

Egypt Morocco Tunisia

9.41 0.34 0.25

7.39 0.32 0.24

6.74 0.29 0.22

0.83 5.84 10.45

a Data correspond to the last Agricultural Census carried out in each country: Egypt 1999/2000, Morocco 1996, Syria 1994, Tunisia 2004/2005 and Turkey 2001. Source: FAOSTAT

tural policies. There is a powerful assumption among policymakers that traditional agricultural systems are to be relegated to the past. Yet what we see today is that family farms may very well be our best bet for overcoming the current challenges.9 Most often, policies have gone against small farms despite the fact that family farming has been the basis of stability and wealth, making efficient use of available resources in a given environment. Promote the Mediterranean Diet Nutritionists have widely recommended the Mediterranean model of food consumption, which helps to prevent cancer and obesity.10 Olive oil, fruits, and vegetables are considered part of this system. The food consumption growth in emerging economies, and North African countries are no exception, is largely associated with a break in traditional diets. Consumption of high-calorie and highfat agro-industrial products is increasing throughout the region, leading to the paradox that the Mediterranean diet, proposed by the World Health Organization as a nutritional standard, is gradually disappearing to the advantage of Westernized diets. Problems with excess weight and obesity are spreading in the region, particularly among younger generations. Twenty percent of children under five are now overweight.

9 GRAIN. The Climate Crisis Is a Food Crisis. Small Farmers Can Cool the Planet. A Way Out of the Mayhem Caused by the Industrial Food System. 2009; Jouili, M. Tunsian Agriculture: Are Small Farms Doomed to Disappear? 111 EAAE-IAAE Seminar. Small Farms: Decline or Persistence. Canterbury, U.K.: University of Kent, 2009. 10 See the comprehensive study on the Mediterranean diet and all its implications related to production, consumption, and sustainability in CIHEAM, The Mediterranean Diet for Sustainable Regional Development, CIHEAM/Les Presses de Sciences-Po, Paris, March 2012.

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In times of food crisis and loss of purchasing power, urban consumers sometimes see fruits and vegetables as unattractive in terms of price. Consumers turn to imported products available through the major distributors, which are much more competitive. Olive oil, a typical Mediterranean product produced in the region, is only purchased in small amounts in local markets. It is exported in the form of oil blends and often re-sold in its country of origin. Health and nutrition plans should be of top interest to defend the diversity of diets in the region. Develop Local Production Systems Emerging economies, in the light of growing urbanization, are gradually adopting an economic model characterized by globalized mass production.11 This involves long production chains, dependence on world markets and the increasing presence of transnational companies able to reach the critical mass and make the huge investment necessary to stay in the market. Transferring this model of a long value chain to North African countries involves the intensive agricultural production that leads to natural resource depletion (land and water). It is clear that some mass production is required, inside and outside of the region, given the increasing food needs of urban populations. However, there is an alternative and more sustainable model based on the development of local markets and on the following characteristics: 1) reduced distances between farmers and processors; 2) products developed in response to various organoleptic criteria, in particular taste; and 3) products incorporating a cultural content related to territory, local products for which we are able certify origin. Adopt a Value Chain Approach Linked to different production models mentioned in the previous paragraph, there exist in the region various value chain models with very different levels of modernization, horticulture being a good example of this. Value chains aimed at the domestic market tend to have a lower level of organization than chains aimed at agricultural exports. Most of the production of fruits and vegetables in North African countries is for the domestic market (Egypt and Morocco export 13 percent and 24 percent of their production). The small farms that dominate are poorly organized
11 The costs of the model of mass production for sustainable agriculture are highlighted by Jean Louis Rastoin. Quel futur alimentaire pour lhumanit au-del du modle agroindustriel contemporain? Un essai de prospective lhorizon 2050. Mission Agrobiosciences, Novembre 2009. www.agrobiosciences.org.

Transferring [a globalized] model of a long value chain to North African countries involves the intensive agricultural production that leads to natural resource depletion.
into cooperatives and suffer from poor infrastructure and considerable loss of product, due to its perishable and seasonal nature. By contrast, large-scale farms, able to meet the demands of European retailers in terms of plant health and quality, characterize the agro-export chains. It is not surprising that North African countries mainly export to Europe, since a South-South regional market has so far failed to consolidate. Fruits and vegetables provide a relatively important source of income, which encourages open debate about the European market within the framework of the Euro-Mediterranean region. Few policies have explored the organization of the value chain and its impact on export performance or considered the opportunities offered by transnational cooperation in the Euro-Mediterranean region.12 Encourage Knowledge-Based Agriculture The challenges of food security in the region require further efforts in international cooperation, including support for knowledge transfers, advice and information services, and cooperation between farmers and technological centers. Efforts should consider quality initiatives and certification, organic farming, innovative investments, entrepreneurship and the diversification of non-farming economic activities. Best practices in dry regions, such as those developed by Israel, indicate the benefits of a developed education system and high-performing extension services. Actions cannot be carried out without taking into account the interests of the rural population. The International Assessment of Agricultural Knowledge, Science and Technology for Development
12 A value chain approach to studying the situation of food and agriculture in the Mediterranean countries is one of the contributions of the Sustainmed project. See http:// sustainmed.iamm.fr/.

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(IAASTD)13 recently asked to reorient research and development to new forms of agriculture, blending the latest science with traditional knowledge and practices. Reshape Euro-Mediterranean Relations Since the plans agreed to in the Barcelona Process-Union for the Mediterranean in November 2005, bilateral trade agreements have been accelerating agri-food trade liberalization. One example is the new protocol for Morocco passed by the European Parliament in 2012. Here restrictions will become the exception rather than the rule. However, the creation of a common economic space for the Euro-Mediterranean region is far from being achieved. The Agadir Agreement, which aims to promote trade relations between Morocco, Tunisia, Egypt, and Jordan, is below its targets. The Mediterranean resembles a puzzle in which bilateral relations are mixing, but not always generating projects with a regional perspective. None of the association agreements refer to restrictions on agricultural subsidies in the EU, beyond what is required by the multilateral framework of the World Trade Organization (WTO). For North African countries, giving direct aid to producers is beyond the reach. The 45 billion in decoupled direct payments in the EU are considered as green box, not limited by the WTO. This payment system is likely to be redefined after 2013-2014, but nevertheless, it represents a clear example of the asymmetry of agricultural policies to the North and South of the Mediterranean basin. In fact, the proposals for reforming the CAP post-2013, laid down by the European Commission in October 2011, do not consider the possibility of including partnerships with Southern and Eastern Mediterranean countries, nor other third countries, in a shared approach to agricultural policies. However, the new CAP will include some elements that could be considered in the discussions to strengthen the partnership between the two sides of the Mediterranean Basin. Among them, two relevant approaches are 1) the organization of agricultural production chains to ensure the sustainable distribution of value, including transnational cooperation; and 2) the measures to increase the competi13 The IAASTD process included a multi-stakeholder bureau cosponsored by FAO, the Global Environment Facility, the United Nations Development Program (UNDP), the United Nations Environmental Program (UNEP), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the World Bank, and the World Health Organization. A multi-stakeholder bureau comprising 30 representatives from government and 30 from civil society governed the assessment.

The Mediterranean resembles a puzzle in which bilateral relations are mixing, but not always generating projects with a regional perspective.
tiveness of rural areas; through innovation, preservation of ecosystems, development based on local governance and social inclusion. Both approaches support the idea that it is not only with trade liberalization that a shared development will be reached in the Euro-Mediterranean region. The need to strengthen agricultural cooperation between the EU and Southern Mediterranean countries is urgent.14 In spring 2011, the Commission launched a European Neighborhood Policy Action Plan that includes a program for agriculture and rural development (ENPARD). In 2012, the Commission declared that a new strategic vision is needed, based on an incentive approach that provides support to partners engaged in a reform process.15 It focuses on three elements: democratic transformation, partnership with local people and inclusive, sustainable growth. It seeks to improve the efficiency of cooperation in the region at a time when EU funds are limited by the economic crisis affecting the majority of European countries. Trade liberalization alone is not sufficient to alleviate the urgent need for new jobs for rural youth in North Africa, which lacks infrastructure, education, sanitation, human rights and peace. It is necessary to support more effective partnerships, which promote an emergent civil society seeking to build a basis for developing democracy. A gradual trade liberalization in Southern Mediterranean
14 Experts from the Euro-Mediterranean region called for an agricultural pact to strengthen the partnership between the two shores of the Euro-Mediterranean region (Appel de Maffliers, France, December 20, 2009). See also IPEMED Un pacte agroalimentaire et rural pour lintegration regionale euromediterraneenne Groupe de travail Agriculture, agroalimentaire, rural dIPEMED (sminaires dAix en Provence, March 31 -April 1, 2006, Paris, September 18, and December 18-19, 2006. 15 European Commission, High Representative of the EU for Foreign affairs and Security policy, Delivering on a new European Neighborhood Policy, Joint communication to the European Parliament, the Council, the European economic and social Committee and the Committee of the Regions, May 15, 2012.

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countries must be accompanied by increased development aid, support to civil society, and an immigration policy with a medium-term perspective.
About the Partners

The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm. www.gmfus.org

Paralleli Euromediterranean Institutes mandate is to contribute to the creation of a Euro-Mediterranean area of freedom and of economic and social development. The institute acts at the local, national, and international level with the aim of meeting the needs of the North-West region of Italy concerning its relations with the other sides of the Mediterranean Sea. The activities of the Institute fall within the process of Euro-Mediterranean partnership initiated by the European Union with the 1995 Barcelona Process and currently undergoing a major relaunch through the Union for the Mediterranean, since July 2008. Paralleli intends to contribute to the reinforcement of political relations, economic cooperation, cultural exchange, and human flows between the European and the South-East Mediterranean countries. Its main objective is to promote dialogue at cultural, social, and political level between the societies of the Mediterranean countries, with the aim of encouraging and improving economic relations between them, with a particular focus on the dimension of sustainability and co-development. For this reason, the institute has decided: to involve civil society in the development of Euro-Mediterranean relations; to create and to support networking in the Mediterranean area; and to increase the value of research in order to suggest truly effective policies to local, national, and international actors. www.paralleli.org