Why agriculture is losing its place in Egypt’s economy

For decades, agriculture has been a fundamental pillar of Egypt’s economy. According to World Bank data, the sector’s share of GDP peaked at 28.81% in 1974 and has declined sharply since, to just 11% in 2025.

Although figures show that the value added by agriculture rose from $1.27 billion in 1965 to $42.25 billion in 2020, it is not keeping pace with other sectors and now accounts for a much smaller share of the economy.

What is causing this decline? It’s a mix of Egypt’s resource use, policy changes, and environmental challenges.

POLICY AND INVESTMENT

According to Atef Andrawes, Professor of Public Economics and Finance at Alexandria University’s Faculty of Commerce, the decline of agriculture is mainly because of natural structural changes associated with urbanization, faster growth of industries and services such as tourism, real estate, and telecommunications, fragmentation of agricultural land, and population growth outpacing the expansion of agricultural land.

Andrawes also points to the open-door and economic liberalization policies introduced from the 1980s onward, which directed investment toward higher-profit sectors with faster capital turnover, including real estate and tourism.

However, this decline should not be interpreted as a loss of agriculture’s economic or strategic importance, says Dr. Doaa Soliman, Research Professor at the Agricultural Economics Research Institute at the Agricultural Research Center in Egypt.

“To a significant extent, it reflects the expansion of other sectors and the broader transformation of Egypt’s economic structure, while agriculture has remained a fundamental productive and strategic sector.”

She adds that the sector is closely linked to food security, employment, rural incomes, food processing, value chains, and trade.

“The impact of agricultural investment goes beyond its immediate contribution to economic output. Development research has shown that directing greater investment toward agriculture can have a particularly strong impact on reducing poverty and improving rural incomes compared with investment in some other sectors.”

However, agriculture has historically received less investment than its strategic importance and economic potential would suggest. Foreign direct investment in the sector has remained below 1% of total FDI inflows for extended periods.

“This points to an important gap between the strategic importance of agriculture and its ability to attract productive capital and investment at the scale required to unlock its full potential,” says Dr. Soliman.

Structural constraints, including limited access to suitable financing and weaknesses in infrastructure and agricultural services, compound this investment gap.

CLIMATE AND ENVIRONMENTAL CHANGES

“Water scarcity and water management remain among the biggest structural challenges facing agriculture in Egypt,” says Abdulrahman Yassin, CEO and Founder of Greenfields Agrotechnology. In the past, Yassin adds, farmers relied on flood irrigation, which degraded the land and led to some crops being barred from export. 

Climate change is another major challenge, reducing agricultural productivity. Weather fluctuations directly affect crops, making them more vulnerable to fungal diseases, thereby lowering productivity and increasing pest-control costs. 

Yassin explains that modern agricultural technologies, including weather stations used by large companies, now provide 10-day weather forecasts, helping major farms protect their crops and maintain productivity.

“Unfortunately, this technology is costly and currently accessible only to large companies; the state should ideally step in to support smaller farmers with similar tools.”

Andrawes explains that Egypt’s per capita share of water from fresh and non-conventional sources is currently around 771 cubic meters annually. Egypt relies on the Nile for more than 98% of its water needs. At the same time, the  Grand Ethiopian Renaissance Dam (GERD) has created additional pressure on the stability of the country’s estimated 55.5 billion cubic meters of Nile water.

Total domestic water demand is around 88.5 billion cubic meters annually, while the UN water poverty standard would require a supply of 112 billion cubic meters or more, depending on population size. This compares with traditional renewable resources of no more than 65.3 billion cubic meters, including Egypt’s Nile allocation, fresh groundwater, and rainfall.

The gap is partly addressed by reusing approximately 23.2 billion cubic meters of treated drainage water annually, as of January 2026. Agriculture remains the largest water user, accounting for 82% of total water consumption from traditional and non-conventional sources.

Andrawes also points to land degradation caused by groundwater over-extraction, intensive use of fertilizers and pesticides, and continued reliance on traditional flood irrigation. These pressures are contributing to rising soil salinity in the Nile Delta, which accounts for more than one-third of Egypt’s agricultural land.

Sea-level rise also poses a direct threat to the northern Delta, further increasing soil salinity and weakening the region’s agricultural production capacity. “If things continue as they are, food crop yields are expected to fall by more than 10% by 2050,” Andrawes says.

Dr. Soliman identifies land degradation as another distinct challenge that directly affects the sustainability of Egypt’s agricultural resources.

“Protecting agricultural land requires more than preventing encroachment; it also requires continuous investment in soil fertility, drainage systems, irrigation efficiency, and measures to control salinity and other forms of degradation.”

Modernizing irrigation systems, rehabilitating and lining canals, improving drainage, and safely treating and reusing agricultural drainage water can help protect land while improving water efficiency. But weaknesses in rural infrastructure and services, including roads, transportation, storage, cold chains, energy, sanitation, digital services, and agricultural extension, can limit farmers’ access to markets and finance.

“Roads, transportation, storage and cold chain facilities, energy, sanitation, digital services and agricultural extension are not separate from agricultural production; they are part of the economic infrastructure that determines farmers’ ability to access markets, obtain finance and generate greater value from their production,” says Dr. Soliman.

Egypt, therefore, needs a more integrated approach to resource management, investment, and rural development, focused on improving land and water productivity, reducing risks, raising farmers’ incomes, and strengthening agricultural value chains, Dr. Soliman adds.

WHAT GULF CAPITAL IS ACTUALLY BUYING

The most impactful Gulf investments in Egypt’s agricultural sector are those that integrate production with infrastructure, processing, and exports, rather than focusing solely on land acquisition.

The New Delta project, valued at about $15 billion, aims to transform 2.2 million feddans (an Egyptian unit of area equivalent to 1.038 acres) of desert west of the Nile into agricultural land, creating opportunities for private-sector investment across infrastructure, production, manufacturing, transport, storage, and packaging.

“This project is expected to create tens of thousands of direct jobs in agriculture, irrigation, and engineering, in addition to indirect jobs in supply chains, food industries, and logistics. However, the sustainability of water resources and the funding necessary to complete the project remain among the biggest challenges facing it,” says Andrawes.

Andrawes also points to a $1 billion UAE-Egyptian agricultural investment partnership, with the UAE holding a 70% share and Egypt 30%, as well as multi-billion-dollar Gulf investments in livestock production and land reclamation in Toshka and East Owainat.

“The greatest impact on raising productivity, supporting farmers, and creating rural jobs comes from investments that include: local food processing close to production areas, shared modern irrigation systems, post-harvest cold chains and storage, and contract farming mechanisms that guarantee smallholders stable markets and fair prices, rather than focusing solely on acquiring new land managed in isolation from surrounding local communities.”

Yassin says agricultural investment in Egypt is shifting beyond land acquisition toward integrating agriculture with industry to meet global demand, generate foreign currency, and create jobs.

“Further investment is going into upgrading Egypt’s port infrastructure to handle larger quantities more efficiently, reducing losses and helping Egyptian crops reach global markets faster and at higher quality,” Yassin says. “Also important is the establishment of factories on Egyptian land to provide agricultural services such as fertilizer production and solar panels.”

NEED FOR REFORMS AND INVESTMENTS

Experts say that bringing agriculture back as a main part of Egypt’s economy will take both reforms and new investments. Some steps include using more drip and sprinkler irrigation, reusing treated wastewater, growing less rice and sugarcane, and encouraging farmers to work together through cooperatives and voluntary consolidation.

Andrawes suggests adapting to climate change by growing crops that can handle drought, saline soil, and heat. He recommends planting more wheat in areas better suited to the changing climate, using short-season varieties in Upper Egypt, and accelerating major land reclamation projects such as the New Delta, Toshka, and East Owainat, and linking them to processing and export chains. 

Dr. Soliman believes restoring agriculture’s role in Egypt’s economy requires “rebuilding the sector on a more productive and competitive foundation, with a stronger capacity to generate value added.”

Priorities should, she adds, include strengthening the institutional and legislative framework for agricultural investment, simplifying procedures, reducing the number of entities involved, and providing clear rules governing agricultural land and investment. 

“Financing should also not be limited to large producers and investors who can provide conventional collateral,” Dr. Soliman says, calling for mechanisms that allow smaller groups to establish rural enterprises, diversify incomes, and create jobs.

Turning the agricultural investment map into an integrated information and service platform would also be important.

“Agricultural investors, whether small farmers, large investors or exporters, need easy access to information on investment opportunities, available land, crops, markets, services, incentives, legislation and regulatory procedures.”

Finally, she says that reforms should also include investing in people and building agricultural knowledge.

“Egypt needs farmers who are capable of adopting new technologies, researchers who can generate applicable knowledge, extension professionals who can transfer that knowledge, and strong agricultural organizations capable of bringing producers together and connecting them with markets.”