The horrendous state of the Egyptian economy is a principal factor underlying Sadat’s willingness to address the Knesset in Jerusalem and to make major concessions at Camp David and since. Multiplying shortages, deteriorating infrastructures, and spiraling foreign debts comprise the economic news on Egypt. A central component of this domestic impasse is an acute agricultural crisis; for if agriculture flags, Egypt falls. Agriculture accounts for some 45-47 percent of total employment, for some 30 percent of gross domestic product, and for more than 50 percent of exports. Further, more than 50 percent of Egypt’s industry consists of agriculturally based sectors such as textile and food processing. Services, transportation, commerce and government activity are all intimately linked with agriculture — and Egyptian agriculture is in serious trouble. In 1974 Egypt became a net importer of agricultural commodities for the first time in its history. Labor productivity has stagnated. The rate of growth of land yields for cereal crops, cotton, and sugar cane has slowed or even declined in the 1970s. Food imports have soared from 1,305,700 metric tons of wheat and maize in 1970 to 3,376,900 metric tons in 1976, while exports of rice and cotton have declined from 654,500 and 285,300 metric tons, respectively, in 1970, to 211,000 and 165,200, respectively, in 1976. 
The origins of the current crisis can be traced back to policy choices and political decisions made during the Nasser regime, and to the legacy of Egypt’s agrarian development as a cotton exporter to the West since the 1820s. The course, pace and contradictions of historical capitalist development in Egypt were the product of the partial transformation of the relations of production by the integration of the country into the capitalist world market. Although the Egyptian countryside has long displayed strongly capitalist features, the pre-Nasser rural social formation was “disarticulated.” A highly capitalistic labor process in agriculture was combined with considerable auto-consumption and, therefore, a weak domestic market. Largely because of the political contradictions engendered by the crisis of British imperialism in the region, a state capitalist formation (Nasserism) emerged. In agriculture, this meant that the state assumed many of the functions of the old landlords. But the class structure, especially the strength of rural capitalists, the unequal distribution of resources, the social basis of the regime and its weakness relative to the developed capitalist countries, frustrated a transition either to fully capitalist relations or to full-scale socialism. The regime was willing neither to mobilize the peasantry nor to provide decentralized incentives for farmers. The current problems in rural Egypt can be interpreted as the fruits of the contradictions of state capitalist agriculture. A brief sketch of Egypt’s rural history before 1952 will help to place the analysis of the past 25 years in perspective.
Rural Transformation Under the Old Regime
The integration of Egypt into the international capitalist economy in the nineteenth century transformed rural social relations, the agricultural labor process, and agricultural technology.  Muhammad Ali introduced cotton into Egypt to increase revenue, which he needed to pursue his goal of an independent dynasty. Since cotton requires large quantities of water during the summer, when the Nile is at its nadir, large-scale cotton production necessitated the transformation of the old basin irrigation system. The basin system had been used in Egypt since the time of the pharaohs. The topography of the Nile Valley resembles the back of a leaf: the land slopes down gradually from the high land lying along the banks of the river and canals toward the desert. The high land along the banks of the river was flooded perhaps once every 15-20 years when the annual Nile flood was unusually high. The remainder of the land, comprising some 75 percent of the cultivated area in the Delta and nearly 90 percent in the Valley, was divided into basins by a system of dikes, some running perpendicular to the Nile, others parallel to it. Canals dug through the high land along the banks allowed the rising flood waters to flow into these basins. The sediment-laden water stood on the fields and soaked in after it was trapped by the dikes. Muhammad Ali requisitioned large numbers of peasants to deepen the canals in order to bring more water to the fields. These corvees, along with his military draft, provoked peasant flight from the land and even several peasant revolts. He was at the same time decentralizing his administration to cope with the problems of highly centralized bureaucracy in pre-industrial conditions. The process of peasant flight and government decentralization along with European pressure to introduce capitalist institutions, especially private property rights in land, laid the foundations for the rise of the social classes of large landlords, rich peasants (often village sheikhs), small peasant owners and a landless class.
The dual transformation of agrarian technology and the social structure continued under Muhammad Ali’s successors. Government attempts to extend the cultivation of cotton required the digging of summer canals and the extension of the transportation network. Such projects required labor and capital. The former was supplied by the corvee, the latter by borrowing abroad and by increasing taxes. As the size of the foreign debt mounted, taxes were increased further to meet the payments. The transformation of the agricultural infrastructure, together with the rise of private property rights in land, altered the social structure: peasants lost land to pashas, village sheikhs and moneylenders, either through flight, forfeit for failure to pay taxes, or foreclosure for failure to pay private debts.
The rise to power of rural moneylenders was an integral part of the rise of cotton cultivation and paralleled the peasants’ loss of land. The hold of these moneylenders was well established by the 1870s, with important consequences for later agricultural developments. Borrowing was in part a direct consequence of higher taxes; many peasants simply borrowed to pay the tax collector. The link was also indirect: peasants borrowed the working capital to produce cotton and then used the receipts from the sales of cotton to pay taxes. The dislocations of and the resistance to this dual process of transformation contributed to the ‘Urabi revolt and to the subsequent imposition of a British administration.
The British completed the transformation of the irrigation system and consolidated private property rights in land and labor. Perennial irrigation was extended throughout the Delta upon the completion of the Delta barrage in 1890, and into Middle Egypt by the Aswan Dam in 1902. By 1914, perennial irrigation was the rule as far south as Asyout. Unfortunately, however, the British administration was faced with limited funds due to 1) the need to be self-financing; 2) the prior claims of irrigation, fighting the Mahdi in the Sudan and debt service payments; and 3) the need to keep taxes low to reduce rural unrest. This financial constraint led them to under-invest in drainage. The additional water which the public irrigation works provided allowed debt-pressed small peasants to shift to a crop rotation in which cotton was planted every two years instead of every three. Large landholders, on the other hand, largely retained the three-year system.
The result of these two changes was a fall in the yields of cotton, the principal cash crop, beginning in the first decade of the twentieth century. Contemporary observers stressed that the fall in cotton yields stemmed from a rise in the water table, soil deterioration due to shortening of the fallow, and insect attacks. The rise of the water table suffocated the deep roots of the cotton plant and promoted soil salinization through capillary action and evaporation. The inadequate drainage system was the root of this problem. Cotton was a water-using crop and the rotation shift exacerbated the situation by pouring more water onto the land. By 1908 the water table was less than one meter below the surface in many central Delta regions. The intensification of cropping also contributed to other soil problems and to insect attacks. Contemporary agronomists attributed much of the stability and fertility of Egyptian basin cultivation to the long fallow period (sharaqi), during which the soil heated, dried out, and cracked. This aerated the soil, broke up colloids and promoted the growth of nitrifying bacteria. (Colloids are the result of an ionization process that binds the atoms of a substance more tightly, making it a barrier to water and moisture.) With the shortening of the fallow, first by the switch from basin to perennial irrigation, and then by the rotation shift form three to two years, these beneficial effects were lost. The shortening of the fallow and the increased use of water also contributed to the proliferation of insect pests. Serious attacks occurred every year after 1904.
The landlord-based government in the interwar period made efforts to remedy the drainage problem. The stock of public drains rose from 6,523 Km in 1922 to 10,246 Km in 1939. The landlords themselves responded by earlier sowing and closer spacing of cotton plants to avoid the problems of pest attacks and by dramatically increasing their use of chemical fertilizer: fertilizer imports rose from about 58,000 metric tons in 1919 to about 575,000 in 1936-1938. Such changes were really a “package,” since fertilizer was most productive on well-drained lands and also stimulated earlier ripening of cotton, which averted insect attacks. Small peasants, however, faced difficulties in adopting these changes. First, the government-sponsored rural credit system was dominated by large landlords, and most peasants did not use it. The landlords had access to credit at rates of interest as low as 5 percent per year, while the smaller fellahin continued to borrow from village moneylenders at rates between 20 and 30 percent per year. Since small peasants had to borrow if they were to use fertilizer, the cost of fertilizer was higher to them than to the pashas. This no doubt discouraged their using it. Their use of fertilizer was further discouraged by the fact that their lands had undergone greater deterioration before World War I because they, but not the pashas, had adopted the “soil-destroying” two-year crop rotation and the clay-like soil structure which inhibited the lateral flow of water prevented their rising water table from spilling over onto the pasha’s lands. Nor could the peasants adopt earlier planting of cotton to ward off insect attacks. Birsim, or Egyptian clover, a nitrogen-fixing crop, normally precedes cotton in the rotation; to plant cotton earlier would have required the peasant either to change birsim’s place in the crop rotation (unlikely, unless he drastically increased his use of nitrogen fertilizer) or to take fewer cuttings of clover — and therefore to have less food for his work animals. The peasants did neither, and failed to adopt the earlier-planting strategy to ward off insect attacks. Thus the unequal access to productive resources blocked the diffusion of a yield-increasing technique.
None of these problems faced the wealthier peasants. They avoided the problems of land fragmentation; the average-size landholding of between 5 and 50 feddans is remarkably stable, changing less than 2 percent for the entire 1914-1939 period. They held, on average, fewer work animals per feddan than small peasants, giving them less reason to take extra cuttings of birsim and to delay cotton planting. Their larger farms meant that they faced fewer problems of coordination and linkage with other units in drainage installation. Should problems arise, their considerable local political and social power, strengthened by their role in the electoral system, guaranteed a solution favorable to their interests. Their local power ensured greater access to credit, and, therefore, to fertilizer. They began to exploit their lands more directly: Whereas such proprietors relied heavily on share and cash rental systems before World War I, by 1939 some 73 percent of farms between 5 and 50 feddans were exploited directly, using either wage labor or the ‘izba system (described below). A class of rural capitalists was clearly in the process of formation in this period.
The Growth of a Rural Proletariat
The results of the inter-war technical changes, themselves responses to agronomical problems generated by the social structure and by British colonial policies, were an increase in inequality between large landowners and rich peasants on the one hand and small peasants on the other. Landless workers may have benefited, since all of the new techniques increased the demand for labor. This effect was reinforced by the doubling of the area planted in rice, a labor-intensive crop. There were many workers seeking these jobs, however. To the landless peasants (roughly 30-40 percent) one should add those who held less than the three feddans necessary for subsistence. Probably at least 75 percent of the rural population had too little land to live on and had to enter the market for labor or for land. Thus the supply of labor grew through land fragmentation and dispossession for failure to pay taxes. Further, the collapse of cotton prices more than offset any favorable effect on wages from the technological changes. Real wages fell sharply in the Depression, as did consumption per capita of the principal foodstuffs. The consequences were widespread malnutrition, especially pellagra, which affected perhaps one third of the Delta population. As in the US South before World War II, this was the result of a diet of almost nothing but maize bread. Bean consumption could have remedied this, but bean consumption per capita fell sharply. Beans were squeezed out by the more cotton-intensive two-year crop rotation. The nutritional problems were aggravated by the synergistic effects which exist between protein and vitamin deficiencies and the parasitical diseases bilharzia (schistosomiasis) and anklyostoma, diseases which spread with perennial irrigation.
These workers were primarily employed either as casual wage labor for harvest work or irrigation maintenance, or as year-round workers on large estates. Over 75 percent of large estates were cultivated directly. These estates (‘izab) were often hamlets established by the landlord at some distance from the local village. The essence of the system was the granting of parcels of land to peasants to grow their subsistence crops (maize and beans) and fodder for the animals (birsim) in exchange for labor in the landlord’s cotton fields at a reduced wage. These subsistence plots were rotated in accordance with the general rotation of the fields among the crops and fallow.
In addition to supervisory personnel, ‘izab employed two sorts of agricultural labor, those “attached to the domain” (tamiliyya), and daily wage workers, often migrants (tarahil). The former were usually hired by the year, and received both money wages and payment in kind. Sometimes this took the form of a share of the subsistence crops; at other times a small parcel of land was granted on which workers were forbidden to grow cotton. This land parcel rotated with the general crop rotation of the estate (cotton, wheat, maize and clover). Sometimes this plot of land was granted in exchange for a reduced rent; at other times the fellah was obliged to pay only the land tax on the parcel. In either case he was obliged to furnish labor services to the landlord for which he received a money wage below that of ordinary day laborers. The time spent working for the landlords may have amounted to as much as 25 days per month. Such labor was allocated to a variety of tasks, but it was especially employed in cotton cultivation. The workers were housed on the izba in mud huts constructed by the proprietor.
These resident workers were supplemented by laborers hired by the day for certain tasks, notably the wheat and especially the cotton harvest, emergency labor such as fighting pests, and the digging and cleaning of irrigation canals and drains. Sometimes this labor was supplied by land-poor peasants from the neighboring villages, but often it was supplied by migrant workers, usually from the Sa‘id (Upper Egypt). Several features of that region’s economy induced Sa‘idis to seek this kind of work in the Delta. Most areas of Upper Egypt retained the basin system of irrigation, with its long “dead” season in the summer, well into the twentieth century. This led to a high degree of seasonal unemployment there, and gave large proprietors in that region little reason to hire resident workers. Both the population density and the percentage of landless families was higher in Upper Egypt than in the Delta. All of these factors increased the Sa‘idis’ need to seek wage labor and made it relatively easy for labor contractors to recruit them. Sa‘idis in particular were used to dig the public irrigation canals and to labor on the other public works after the abolition of the corvee. Indeed, the system appears to have originated at the time of the abolition of the corvee, and as a result of the existence of large numbers of peasants dispossessed in the 1960s and 1970s.
Such a system allowed the supervisors to concentrate their energies on cotton, wheat, and irrigation maintenance. Further, the system tended to split the work force in two; the year-round workers were more secure than the casual laborers. The latter, indeed, acted as a “reserve army of the unemployed/insecure,” strengthening the hand of the employer. The high degree of direct supervision of the labor force, the production of crops for export, and the reliance on the sanction of firing workers were all capitalist features of this system. At the same time, because of the method of paying the year-round labor force with subsistence parcels, there was little rural domestic market demand and the powers of the states and the powers of private property tended to merge on the estates. These are basically non-capitalist features. The system of agricultural production in pre-World War II Egypt was an intermediate, hybrid social formation. 
This system of direct exploitation apparently gave way to rental systems during and after World War II. The virtual cessation of cotton growing during the war years removed the major economic rationale for the system. At the same time, the increased in rural class conflict made it more difficult for absentee landlords to enforce their authority. This intensification of class conflict had a number of sources: Per capita consumption of grains and pulses declined steadily; the Wafd was discredited, leaving the door open for more militant agitation by the left and the right, especially by the Muslim Brothers; and the increased British control and interference in the Egyptian polity provided a ready target for such agitation. Landlords began to rent their estates to intermediaries, often rich peasants, who in turn would rent the lands out in smaller parcels to poor fellahin.  This institutional arrangement, along with the Korean War cotton boom, led to rapidly escalating rents and to intensification of cropping and of cotton planting. These rent increases, combined with inflationary pressures of the boom, further intensified rural class conflict. An important reason for the Free Officers’ coup was to arrest this conflict and to forestall a victory by the left or, rather more probably, the Muslim Brothers. 
The Officers inherited a densely populated, highly commercialized, fundamentally capitalist rural economy which had undergone several waves of technical changes. Much of the technical change was aimed at repairing the damage of previous changes, and productivity gains were modest. Although land yields were relatively high for an underdeveloped country, labor productivity had stagnated since World War I, along with consumption per capita and real wages. The distribution of land remained highly unequal.
Agriculture Under Nasser
The Nasser regime continued the transformation of Egyptian agriculture by its land reform, its price policies, and its investment decisions. Agricultural production made important advances during the period 1955-1966. The land reform, while excluding the poorest peasants (tarahil), nevertheless reduced inequalities in landholding. It also greatly strengthened the government’s hold in the countryside. Because of its social base and ideology, the regime had an “engineering-technocratic” orientation towards all problems.  Such an approach to agricultural problems had serious limitations, however, especially as it was administered by the notoriously sclerotic Egyptian bureaucracy.
Various factors contributed to this orientation. King Farouq’s repressive policies and their own strategic errors (e.g., on Palestine) had greatly weakened the left. The Muslim Brothers had also suffered severe repression. The Free Officers survived in part due to their underground, highly secretive mode of operation. This military/conspiratorial/manipulative orientation of the new regime combined with the need to retain wide freedom of action in the vital area of foreign policy to centralize power and to promote “top-down” policies. The regime’s lack of a solid urban class base reinforced such tendencies. The government gained much of its continuity and popular support from the bureaucracy, heavily staffed by engineers at critical decision-making levels and was supported as well by the more well-to-do peasantry. Obviously, such a regime would not rely on large-scale mass mobilization campaigns like the Chinese in the 1950s to solve the manifold agrarian problems facing the country. Nor were the peasants to be provided with the incentives and scope for individual or small-group choice which any agricultural economy, whether capitalist or socialist, must provide if agricultural development is to proceed.
The material basis for the passive support of the peasants, especially the rich peasants, those owning from 5 to 50 feddans, was the land reform. The Agrarian Reform Laws in Egypt broke up the largest estates as units of ownership while retaining fairly large areas as units of production.  Some 9 percent of the rural population of 1970 received distributed land, which amounted to some 12.5 percent of the cultivated area.  One must distinguish between the distribution of land ownership and the distribution of farms as productive units. In general, the latter are larger than the former, as large ownerships are broken down into smaller units while very small owned parcels are consolidated via tenancy arrangements. The distribution of ownership and of farms in 1961, the year of the last agricultural census, had evolved from 1950.
The consolidation of the rich peasants’ position was perhaps the most important aspect of the reform. They did not receive land directly, but their purchases of land in “distress sales” by larger landlords and through the elimination of the large pasha class, and the absence of mobilization of poor and landless peasants, made them the dominant force in the countryside.  If one believes the 1975 figures, fragmentation through Islamic inheritance laws has reduced the rich peasants’ share of area farmed. But as those above them were eliminated their relative strength in the countryside increased. Other government policies did little to weaken the rich peasantry. Leases had to be in writing and for a minimum of three years; rents were not to exceed seven times the basic land tax assessed in 1949. If sharecropping was used (infrequent on larger estates and less than 20 percent of rental arrangements on 10-20 feddans), the crops and the costs were to be divided 50/50. Landowners responded to these regulations by shifting to direct exploitation of their lands using wage labor (the percentage of the cultivated area which was leased declined from roughly 60 to 50 percent) and, more frequently, by simply evading the laws. Minimum wage regulations were similarly evaded. The landless laborers who had not been tenants (tarahil and other casual laborers) received little if any land as a result of the reforms. Indeed, they suffered an initial decline in employment as a result of the reforms, since small peasant recipients of land parcels supplied their peak season labor needs from within their own families rather than by hiring outsiders.
Such landless peasants were (and are) a substantial fraction of the rural population. Land reform reduced their numbers and their percentage in the population, but both have been rising since then. In 1950, perhaps 1.2 million families (44 percent of agricultural families) were landless. In 1961, their number had declined to perhaps one million families (40 percent of agricultural families); but by 1972, some 1.5 million families (45 percent of agricultural families) were landless.  When one adds the very large numbers of peasants who own less than three feddans (the subsistence minimum), it is clear that the agricultural proletariat is very large indeed, perhaps 75 percent of the rural population.
A critical component of the land reform and of the rise to rural dominance of the rich peasants was the establishment of government cooperatives. In order to prevent the loss of economies of scale in irrigation, drainage and crop consolidation, as well as to ensure that cotton would not be grown too frequently for maintenance of soil fertility, the agrarian reform set up a system of supervised cooperatives to take over the functions of input supply, marketing and organization of production. These managerial functions of the old landlords were transferred to state agencies, while ownership of the land remained vested in individual peasants — a sort of cooperative ‘izba. Following the devastating cotton-leaf worm atack of 1961, the system of consolidated crop rotation, input supply and marketing was extended to the whole country.
Impact of the Nasser Reforms
Initially, the impact of this system on production was salutary.  Problems of pest control and irrigation maintenance were ameliorated. Land ownership for those former tenants and tamaliyya workers who received land engendered more careful agronomy. In addition, the government provided selected seed, fertilizer and other inputs at subsidized prices. This alternative allocation mechanism which emerged excluded the poor as systematically as a price system in an environment of such unequal resource ownership would have done. On the one hand, an extensive black market emerged, supplied by the farmers themselves and from other sources in the distribution channels in the bureaucracy. On the other hand, the cooperatives themselves have simply rationed the inputs directly. There is every reason to suppose that this has favored the rich peasants.  Their wealth, status and social similarity to the government-appointed agronomist formally in charge of cooperative decisions ensures that the well-to-do peasants are the first to receive whatever scarce inputs are available. Legally, such corruption should be restrained by the proviso that 80 percent of the seats on the board of supervisors of a coop must be small farmers. However, the government agents are in fact little constrained by this board, and illiterates are excluded from membership. Further, most small peasants are too preoccupied with the struggle for subsistence to try to interfere with the wishes of rich peasants who are often their landlords or employers.
The cooperative system favors rich peasants in other ways as well. The consolidation of the crop rotation meant that small peasants were required to plant all of their land in cotton one year, all in clover the next, and all in food the next, rather than have a little cash, a little fodder and a little food every year. This quite probably increased their need for credit, which came from the rich peasants. Further, in the 1960s, only those owning at least five work animals could participate in government and animal insurance schemes, and therefore qualify for 150 kg of forage at state-subsidized prices. Only those with more than 15 feddans could acquire selected seed, while farmers with less than five feddans were prohibited from planting highly profitable fruit trees unless they could get enough of their small neighbors to cooperate with them in a joint venture.
The “kulak/bureaucrat” cooperative system has additional important features. Not only input prices, but also some output prices are fixed by the government and enforced by the coops. Government price and purchasing policies are the principal means of rural tax-collection. Certain crops are, in theory, sold exclusively to the government at prices of only 20-25 percent of the international price. Since farmers are assigned quotas of these crops, either the government or urban consumers get the difference. (In general, the difference goes to the government for cotton, to urban consumers for wheat (although domestic wheat currently comprises only around 10 percent of urban consumption) and to both (although increasingly to urban consumers) for rice.) There are two serious problems here. First, not all agricultural outputs have controlled prices.  In particular, vegetables, fruits, full-season clover, and milk and meat products are not controlled. Second, the lack of honest and competent cadres combine with the cooperatives’ power relations to allow richer farmers to evade the regulations and to shift into the more profitable, uncontrolled crops. In addition to the higher profits accruing to the rich peasants, the gap between rich and poor is further aggravated by the fact that supplies of subsistence foods decline and their prices increase with a very detrimental impact on the nutritional standards of the poor peasantry.
The effect on the landless laborers is less certain. Fruit trees require relatively little labor; indeed, this is a principal reason why landowners, especially absentees, plant orchards. (It is no accident that the farms of Sayyid Mar‘i and of Sadat himself are orchards.) On the other hand, vegetables and flowers, more commonly favored by rurally resident capitalists, are labor intensive crops.
These price policies and the resulting crop allocations have had a significantly detrimental effect on the national economy. Insofar as cotton, the principal export crop, has been reduced, Egypt has lost scarce foreign exchange. The reductions in wheat production and the necessity to keep wheat consumption more or less stable, since it is the principal cereal of the urban classes, contributed to the increasing burden of wheat imports. Some economists have estimated the losses of the contradictory system of controlling some but not all crops to be roughly the equivalent of the balance of payments deficit in the 1960s.  These problems have intensified under Sadat.
There was some pressure from within the Arab Socialist Union, largely from socialist intellectuals, for a policy of mobilizing the poor peasantry and landless workers to restrain corruption and to ensure that government directives were carried out. Indeed, in the aftermath of the Qamshish incident, when a minor official of the Arab Socialist Union was murdered by agents of a large landlord who had successfully evaded land reform and engaged in a number of other illegal abuses, the left faction of the government, led by ‘Ali Sabri, launched a campaign against “rural feudalism.” It discovered numerous abuses, evasions, and corrupt practices. Dismissals, and even arrests, of culpable individuals followed. But the remedies remained strictly within the social and ideological boundaries of the regime: greater authority was to be granted to centrally appointed managers, and various “conflict of interest” statutes were promulgated in Law 51 on Agricultural Cooperatives in August 1969. Such measures were, as Baker notes, of “primarily hortatory character, with virtually no chance of implementation even if Nasser had lived.”  Given the character of the national regime, the outlook of the agricultural technocrats acting as local managers, and the balance of forces in the villages, such an outcome is hardly surprising.
The Limits of the State Capitalist Approach
A brief look at the agricultural investment policies of the Nasser regime reveals the limitations and contradictions of the state-capitalist/technocratic approach to agricultural development. Three aspects of agricultural investment policies under Nasser stand out: 1) the construction of the Aswan High Dam; 2) the emphasis on land reclamation; and 3) the relative neglect of drainage. Agriculture was not neglected under Nasser: the share of agricultural investment in total public capital expenditure rose from 11.6 percent in 1952-1953 to 16.8 percent in 1967-1968.  Some sources estimate agriculture’s share in public-sector investment as high as 25 percent in the mid-1960s, when the Aswan Dam is included. Although there was a substantial increase in the use of fertilizers (126 percent over the 1952- 67 period), pesticides, and livestock, most capital formation was in the hydraulic system (75 percent of total capital in 1967, as against 70 percent in 1950). This is hardly surprising, given that the Aswan Dam accounted for roughly one third of all capital formation during this period.
One especially important consequence of the High Dam for food supply was to enable a shift from autumn (nili) to summer maize. This allowed an increase of yields of some 20 percent. The increased water also allowed a shift from cotton to sugar in parts of the Sa‘id and from wheat to rice in parts of the Delta. Yields of the major crops rose dramatically. Nevertheless, there were two fundamental flaws in the agricultural investment policies: the relative neglect of drainage, and the concentration on land reclamation. The drainage problem may be divided into the problems of lands converted from basin to perennial irrigation as a result of the High Dam, and difficulties facing lands already cropped year-round. As a result of shortages of funds and engineers, the government simply ignored drainage construction, postponing such works in their plans to 1970-1971.  There were investments in public drains and pumping stations in the Delta. This was inadequate, however, because the water supply increased dramatically, peasants’ practices were based on centuries of water scarcity, water was free, and there was no construction of auxiliary, small-scale drains to connect with the main drains. 
A second problem of Nasserist investment policy was the concentration on land reclamation. Given the high cropping ratios and high rural population densities, the regime’s technicians hoped that Egypt could “escape the confines of the Nile Valley” by such policies.  Consequently, heavy investments (some 154 million pounds out of total agricultural-sector investment of 208 million in the 1960-1965 five-year plan)  were allocated to reclamation schemes such as Tahrir province on the western edge of the Delta. The results have been disappointing: Costs per reclaimed feddan have been estimated at between 480 and 1,000 pounds, in contrast to official government estimates of 165 pounds. (This is in contrast to the per feddan cost of tile drainage of roughly 46-50 pounds). Returns have been limited by low crop yields, in turn the result of salinity (neglect of drainage, once again), and poor soil structure. Unlike the arid US Southwest or the Negev, “when you talk about deserts in Egypt, you’re talking about blowing sand.”  The total area actually reclaimed is disputed, but by 1972 “only 518,00 (reclaimed) feddans were being cultivated,” of which only 345,000 feddans were “marginally productive.”  This should be contrasted with the estimate of between 20,000 and 40,000 feddans of high-quality lands which are lost every year to urban encroachment, roads, military bases and the like. 
One may ask why such egregious blunders were made. At one level, the explanation is simple: miscalculation. For instance, it was thought that the Aswan Dam would cause the water table to fall; it was believed that the new lands would be as fertile as the old, etc. But these are only part of the story. Further elements in an explanation would include the extreme scarcity of funds, especially after the June war imposed a rising burden of military expenditures on the regime. In the face of severe capital constraints, with very pressing current problems, it is perhaps natural that drainage should take a back seat. But land reclamation also has a very long pay-off period, so such myopia cannot explain the choice of land reclamation over drainage.
Such failures were at least in part the result of the nature of the regime, its social base and its bureaucratic/military mentality. Villagers in the old lands are divided by class, clan and family antagonisms. They would have to be induced to cooperate with one another to install drainage, rationalize water use and improve public sanitation. This regime was highly unlikely to confront willingly such complex and intractable social problems of production on the old lands. Nor was it likely to provide decentralized incentive mechanisms to induce farmers to install their own field drains. The engineers of the bureaucracy naturally tended to think of the fundamentally social problems of Egyptian agriculture as essentially technical ones. In a centralized government structure, highly centralized responses were most attractive. New lands could be planned from the top down; the labor was to be imported; one did not have to deal with a preexisting and complex balance of local power. In the face of serious social and technical constraints, there was a great temptation to deny the existence of such constraints. This “sky is the limit” approach was reinforced by the symbolism of the High Dam, which came to represent Egyptian nationalism and resistance to foreign domination.
The Sadat Years: Toward a Fully Capitalist Agriculture?
The seeds of agricultural crisis were planted during the 10 Nasser years; they have matured in the climate of the Sadat era. The responses so far taken are contradictory. The social complex of selective price controls, rich peasant dominance of cooperatives, corrupt quantitative allocation of inputs, and evasion of crop quotas has continued unabated. Agriculture’s share in total investment has fallen from 25 percent in the mid-1960s to 7 percent in 1975, with little change since then.  Yet, at the same time, farmers have expanded fruit, vegetable, and livestock production, and mechanization has accelerated since 1973. Rural labor appears to be in a relatively stronger position than ever before, but such a situation seems unlikely to persist. It is clear that the government would like to dismantle many of the old controls and to move toward a more purely capitalist agriculture. Such a move will not be easy because of the shrinking of the international market for Egyptian exports, the legacy of Nasserist policies and the contradictions of the process itself.
Perhaps the worst immediate problem is that the neglect of drainage has begun to bear its insidious fruits. By the mid-1970s, some 80 percent of the most productive lands in the country had been affected. A soil survey revealed that roughly 50 percent of the best lands had deteriorated to the extent that they are now classified as “medium or poor soils.” The problem had been recognized in the late 1960s. Due to the large investments needed, and due to the very tight capital constraint after the June war, the government sought, and obtained, IBRD loans for drainage installation. But construction has lagged behind schedule due to the lack of cement, overloaded ports, inadequate equipment, and labor bottlenecks. This last problem is especially acute: engineers and skilled labor increasingly have been taking higher-paying jobs in OPEC countries.
The agricultural trade problem is multi-faceted, but its essence is fairly simple.  The increased percentage of the population in the cities has raised the domestic demand for wheat and rice. The economic liberalization has joined with this urban growth to raise demand for milk, meat, and other high-income elasticity goods. In effect, middle-class urban demand, pent up under Nasser, has been released under Sadat. The price explosion for wheat in 1972-1974, resulting from the acceleration of inflation in the West and the devaluation of the dollar, greatly increased the per-unit cost of imports. At the same time, the complex of selective price controls and coop corruption lowered cotton production (the principal export) and reduced the production of wheat and rice. The problems of drainage and the lack of fodder for animals inhibited the growth of crop yield.
The regime’s current strategy to deal with these problems is largely a market solution. The regime continues to give relatively low priority to agriculture.  One occasionally still hears grandiose land reclamation schemes, usually now centering on the Sinai. However, other voices in the regime, including, significantly, presidential confidante Sayyid Mar‘i, favor “vertical expansion.” There are plans to push ahead with the construction of a drainage network; it is not evident how the transportation and skilled labor bottlenecks, which have impeded its construction to date, will be overcome. There is substantial pressure both from within the Ministry of Agriculture and from international lending agencies to dismantle the selective price-control system. So far little has been done. 
The main hope, apart from improved drainage and incentives, appears to be a reallocation of cropping patterns. Shifting to higher-value crops, especially vegetables, has long been advocated by observers of the Egyptian economy.  Such a policy would make the most intensive use of land, and also provide badly-needed employment.  Agricultural planners do not seem to envision the development of large-scale, year-round exports to Europe; the already highly-protectionist agricultural trade policy of the EEC is only likely to worsen when/if additional Mediterranean countries, like Spain and Greece, are admitted to full membership. Because Egypt can grow some crops (e.g., grapes) when the Spaniards and the Italians cannot, they do hope to be able to make some off-season exports to Western Europe. The main market for horticultural exports, though, seems to be the Gulf and/or the domestic market. The agricultural sector will cater to the demands of wealthier, largely Arab, consumers.
Regardless of the final consumers, the “vegetable option” faces horrendous marketing problems. The current physical infrastructure is utterly inadequate even for the current level of vegetable output, much less for a greatly expanded volume of fresh produce. Cairo has one principal wholesale vegetable market (at Rawd al-Farag).  Built in the late 1940s, when the population of the city was only 2.5 million, it is surrounded by a high wall and has basically two entrances, each just wide enough to let two trucks in abreast. Packing and handling are entirely unmechanized; as a result, considerable damage is done to the produce, especially to the fresh vegetables which come on donkey carts packed in hand crafted palm or bamboo crates. Such woeful inadequacies are repeated at every level, from the overcrowded road network to the jammed ports. Remedying these problems would be necessary for any large-scale expansion of vegetable production; such remedies would require large amounts of unavailable foreign exchange. 
Another option is to try to increase the export of cotton and rice for foreign exchange, along with increasing fruit and vegetable production. This is often combined with recommendations to reduce full-season clover and to reduce the number of work animals. This would release the land planted in clover for other uses, and allow livestock production to become oriented to meat and dairy production, rather than traction power. These remaining animals would be fattened on maize and sorghum. Mechanization of land preparation, threshing and irrigation work would make this all possible. Indeed, the government is committed to mechanization: The Five-Year Plan calls for the complete mechanization of agriculture by 1990. Such policies are widely supported by external aid agencies, such as USAID and the World Bank.
Although this argument is appealing at first glance, the alleged production gains may be illusory: the evidence for mechanization’s independent contribution to increasing land yields is very weak. Further, it seems clear that farmers will not get rid of their animals, both because government price policies favor animal husbandry and because of the animals’ multiple functions for small holders. In addition to traction power, the animals provide highly profitable milk, meat and cheese for sale. Those who do not sell the cheese consume it directly. Such cheese is a primary protein source for the fellahin; buffalo cheese has twice as much butterfat content as cattle cheese. The animals constitute a kind of insurance. If farmers have a bad year or are faced with a major financial crisis, they can sell the animals. It is likely that owning at least a share of such animals is necessary if a farmer wishes to lease additional land. The fact that peasant-owned work animals are so deeply embedded in the current social structure militates against any large reduction in their numbers and a consequent release of fodder land for other uses.
Nevertheless, mechanization is proceeding fairly rapidly. The number of locally assembled tractors has doubled from 1973 to 1977; tractors were imported so rapidly after 1973 (from 1,500 in 1973 to 6,061 in 1977) that the market was oversold; the government has promoted the purchase of tractors in a variety of ways: over 90 percent of imported tractors were purchased at the old, grossly overvalued exchange rate. Loans for tractor purchases bear an interest of 8 to 11 percent (while rural inflation is at least 30 percent per year), and diesel fuel is heavily subsidized, costing only 3 to 5 piasters per liter.  Such policies not only favor importers, wholesalers, and other middlemen; tractors are often owned by relatively small landowners (holding between two and eight feddans), who supplement their incomes by renting tractors to other farmers. As a result of these rental practices and the increased numbers of tractors and threshers, land preparation and threshing are now almost entirely mechanized in some Delta provinces. Upper Egypt, as usual, lags behind.
The principal reason for this change is an alleged “labor shortage.” There is evidence of increasingly tight rural labor markets. Real wages of agricultural workers have risen rapidly recently: from 1968-1972 to 1978, average daily wage rates have risen some 350 percent, while the rural consumer price index has risen only 200 percent.  Workers usually stop work at around 12 or 2 pm and demand such “fringes” as meals, tea and cigarettes. The factors underlying such changes are rural to urban migration, stimulated by the construction boom and by urban food subsidies; overseas migration; spreading rural education; and the military draft. Except for migration to OPEC countries, each of these forces can be traced to state capitalist policies. Given continued population growth and weak industrial development, the labor shortage may prove to be temporary.
The extension of education, the guarantee of government jobs to college graduates, and the great expansion of the government role in the economy were central to Nasserist state capitalism. Such policies have had a cumulative effect, stimulating a movement from fields to offices, rather than from fields to factories. Workers refuse to work as long, as meticulously, and for as little pay as formerly. They carry this heightened consciousness abroad; one study of Egyptian workers overseas notes that “Egyptians are more ready to invoke labor laws against their employers than are other nationals.”  Here, too, Nasser’s policies may have played a role: his labor laws in industry greatly reduced the force of that classic instrument of capitalist work discipline, “the sack.”
In the absence of viable independent trade unions, market forces are behind these recent changes in labor, and the balance may shift against labor in the near future. The rural population continues to grow, and there may well be a net return of Egyptians from abroad when the OPEC countries complete the so-called “construction phase” of their development.  The construction boom, overwhelmingly based on luxury consumption, is also likely to be short-lived. There is a catastrophic urban housing shortage in Egypt,  but remedying it would require either effective demand from the poor or a vast program of public housing construction. Neither seems at all likely under the current regime.
The labor displaced by agricultural mechanization could be employed in industry. In capitalist Third World countries, labor-intensive industrial development has been strongly export-oriented, as in Taiwan, South Korea or Singapore. But the international conjuncture frustrates such a path. The regime’s inability to tap the expanded resources of the nouveaux riches and the resurgent middle (and upper) classes, and to channel them away from conspicuous consumption and capital flight into productive investment, reduces the local capital which would be necessary for such a strategy. At the same time, continued political instability, infrastructural problems and worker consciousness reduce Egypt’s attractiveness for multinational industrial (and agricultural) investment.
A tentative generalization and summary of recent trends suggests the following: 1) the current motor of change in rural Egypt may usefully be viewed as the contradictions of state capitalist development. 2) The position of rich peasants and “closet pashas” has been strengthened and consolidated. The expansion of fruit orchards (typically by absentee capitalists), of agricultural mechanization (often on a custom-hire basis), of meat and milk production for middle-class and foreign tourist consumption — all indicated an acceleration of capitalist development in agriculture during the last five years. 3) In a contradictory direction, the legacy of Nasserist policies and the OPEC boom have strengthened rural labor’s hand, to which mechanization, fruit planting and meat production are, at least in part, a response. 4) These capitalist developments are likely to generate further contradictions and a further sharpening of class conflict, because of the international economic conjuncture, the continued (indeed, increasing) economic dependence of the Egyptian bourgeoisie, and the weakness of the current regime.
 FAO Production Yearbook 1977.
 My arguments in this section are presented in more detail in a series of earlier articles: “Primitive Accumulation in Egypt, 1798-1882,” Review 1/2 (Fall 1977); “Technical and Social Change in Egyptian Agriculture, 1890-1914,” Economic Development and Cultural Change 26/4 (July 1978); “Land and Labor on Egyptian Cotton Farms, 1880-1940,” Agricultural History 52/4 (October 1978); “Agricultural Technology and Rural Social Classes in Egypt, 1920-1939,” Middle Eastern Studies, forthcoming.
 I argue this point in more detail in “The Political Economy of Gutswirtschaft: A Comparative Analysis of East Elbian Germany, Egypt and Chile,” Comparative Studies in Society and History, forthcoming.
 The percentage of cultivated land which was leased changed from 21 percent in 1939 to 62 percent in 1948. Agricultural Census of Egypt, 1939, 1949.
 See Raymond William Baker, Egypt’s Uncertain Revolution Under Nasser and Sadat (Cambridge, MA, 1978).
 See Baker, ibid., and Bent Hansen, “Arab Socialism in Egypt,” World Development 3/4 (April 1975).
 There is a large literature on land reform. Among the most informative studies are Mahmoud Abdel-Fadil, Development, Income Distribution, and Social Change in Rural Egypt (1952-1970) (Cambridge, 1975); Eprime Eshag and M. A. Kamal, “Agrarian Reform in the UAR (Egypt),” Bulletin of the Oxford University Institute of Economics and Statistics 30/2 (May 1968); Samir Radwan, Agrarian Reform and Rural Poverty: Egypt, 1952-1975 (Geneva, 1978); and Gabriel Saab, The Egyptian Agrarian Reform, 1952-1962 (London, 1967).
 Abdel-Fadil, op cit.
 See the sources cited in footnote 7, especially Abdel-Fadil. See also Michel Kamal, “Feodaux, Paysans Riches et Fellahs,” Democratic Nouvelle, April 1968.
 Radwan, op cit.
 For generally favorable views of cooperatives, see H. A. el-Tobgy, Contemporary Egyptian Agriculture, second edition (Cairo, 1976); Eshag and Kamal, op cit.
 See Baker, op cit., ch. 8; Rene Dumont, Socialism and Development (trans. Andre Deutsch), ch. 8 (New York, 1973).
 See Abdel-Fadil, op cit., and USDA-Egyptian Ministry of Agriculture, Constraints to Increasing Agricultural Productivity, USDA Foreign Agricultural Economic Report 120, Washington, DC, 1976.
 Bent Hansen and Karim Nashashibi, Foreign Trade Regimes and Economic Development: Egypt (New York, 1975).
 Baker, op cit., pp. 213-214.
 These and the following figures are drawn from the IBRD’s Report on Egyptian Agriculture, 1978; from Samir Radwan, Capital Formation in Egyptian Industry and Agriculture, 1882-1967 (London, 1974); and Yusif Sayigh, The Economies of the Arab World (New York, 1978).
 A. Azim Abul-Atta, “The Conversion of Basin Irrigation to Perennial System in Egypt,” in E. Barton Worthington, ed., Arid Land Irrigation in Developing Countries: Environmental Problems and Effects (New York, 1976), p. 102.
 El-Tobgy, op cit., p. 49.
 John Waterbury, “The Nile Stops at Aswan, Part II: Domestic Hydropolitics,” American University Field Staff Reports, NE Africa Series 12/3 (1977), p. 16.
 Ibid., for reclamation costs; for drainage cost estimates, see Economic Report of the Arab World 5/5 (May 1971) and el-Tobgy, op cit.
 “Keeping Up With Demand: The Big Challenge for Egyptian Agriculture,” Foreign Agriculture, November 7, 1977, p. 4. The speaker was H. Reiter Webb, US agricultural attaché, Cairo.
 Waterbury, op cit., p. 17.
 Ibid,; el-Tobgy, op cit.
 IBRD, Report on Egyptian Agriculture.
 On Egyptian supply and demand, see, inter alia, Foreign Agriculture, October 13, 1975; December 1, 1975; and January 24, 1977. On the price explosion of 1973, see Fred Sanderson, “The Great Food Fumble,” in P. H. Abelson, ed., Food: Politics, Economics, Nutrition and Research (Washington, DC, 1975); Albert Eckstein and Dale Heien, “The 1973 Food Price Inflation,” American Journal of Agricultural Economics 60/2 (May 1978); I. M. Destler, “United States Food Policy, 1972-1976,” International Organization 32/3 (Summer 1978).
 IBRD, Report on Egyptian Agriculture.
 A recent decree has decentralized planning to the provincial level, making local administrators responsible for agricultural investment in their province. It remains to be seen whether this is a genuine decentralization or is merely a way for the central government to forget about agriculture. Al-Ahram, December 8, 1978.
 Saab, op cit. Rene Dumont, “Les Problems agraires de la RAU,” Politique Etrangere 2 (1968).
 Vegetables can be triple, or even more intensively, cropped under Egyptian conditions, and can require up to 60 man-days per crop.
 The following is based on my observations as a consultant to the Ministry of Agriculture during November 1977.
 Foreign agribusiness firms might provide such funds. In addition to the obvious risks of investing in such a politically volatile region, investors have been deterred by government price and tax policies. Most agribusiness investment so far has been limited to new lands (Coca-Cola and citrus), or to input supply (Ford, tractors, jeeps). See, e.g., William Scofield, “Foreign Investment in Egypt: Opportunities and Obstacles,” Foreign Agriculture, July 19, 1976; The Chase World Information Series on Agribusiness Potential in the Middle East and North Africa (New York, 1977).
 ERA 2000, Inc., Further Mechanization of Egyptian Agriculture, Gaithersburg, MD, 1979.
 Data from Center for Agricultural Economics Research, Ministry of Agriculture and Central Agency for Public Mobilization and Statistics.
 Stace Birks and Clive Sinclair, “Aspects of International Labor Migration in the Arab Near East: Implications for USAID Policy,” USAID mimeo, May 1979.
 Ibid. A recent report indicates that Saudi spending on construction will fall some 15 percent from 1980 to 1982.
 The need for over 300,000 new units per year is now publicly acknowledged. Egyptian Gazette, September 20, 1979.