How Wall Street banks impoverished Egypt’s small farmers

More than 85 percent of Egypt’s poor live in rural areas. Like all Egyptians, they are participating in the protests held throughout the country, and are expecting that a new Egyptian government will meet their urgent needs.

Farming communities were not always so poor. They suffer because the regime of former President Hosni Mubarak caved into the demands of Wall Street banks.

In 1991, Egypt signed an agreement with the International Monetary Fund and the World Bank to privatize the public sector. This process of selling off nationalized industries and inviting the biggest and most predatory foreign banks to make “structural adjustments” to the Egyptian economy was vastly accelerated in 2004.

Public factories were privatized and parts were sold to cronies of then-President Mubarak at discounted prices. Markets were opened to exploitation by foreign companies. Meanwhile, the cost of necessities like bread and cooking oil skyrocketed, while both the standard of living and working conditions in Egypt plunged.

This was especially devastating for the countryside, where farming communities relied on government subsidies to guarantee the economic viability of their fields. These crucial subsidies for small farmers were discontinued and agribusiness was subsidized instead.

Saad Taweed, an engineer and a founder of the Egyptian Socialist Party, explained, “Fertilizer and insecticide that farmers used came from cooperatives. Now they come through commercial companies with U.S. and international companies being the dominant ones. This has lead to a doubling of the price.

“The cooperatives used to extend the insecticide and fertilizer to the farmers as a loan and the farmers would pay this back at the end of the season when they were paid for their crops. Now a commercial bank extends the loans at high interest rates,” stated Taweed.

“Rent for land tilled by small farmers was kept low by law. Since 1992, however,” he said, “all rented lands were taken back by the owners, who are mostly absentee landlords living in town.

“Rent has gone up 50 times since then, so some farmers, instead of renting for one year, can only rent the land for one crop.”

Taweed called this impoverishment of Egypt’s small farmers “the work of USAID and the World Bank, privatizing and making open market prices for everything.”