Presentation prepared by Kibrom Abay, Fadi Abdelradi, Clemens Breisinger, Xinshen Diao, Paul Dorosh, Karl Pauw, Josee Randriamamonjy, Mariam Raouf, and James Thurlow, Fadi is with the Cairo University, all others with the International Food Policy Research Institute, Washington, DC. This is part of the Global Crisis Country Series.

1. Version: 14 August 2022
Egypt
Impacts of the Ukraine and Global
Crisis on Food Systems and Poverty
Kibrom Abay, Fadi Abdelradi, Clemens Breisinger, Xinshen Diao, Paul Dorosh, Karl Pauw, Josee
Randriamamonjy, Mariam Raouf, and James Thurlow
International Food Policy Research Institute, Washington DC
These country studies are conducted by IFPRI with financial support from
BMGF, FCDO, and USAID. All studies use data and models developed with ongoing
support from BMGF, USAID and the CGIAR’s “Foresight and Metrics” initiative. The
Egypt case study benefits from working with CGIAR’s “National Policies and
Strategies” initiative, IFPRI’s Egypt country program, and researchers from the
Faculty of Agriculture, Cairo University, and the Institute of National Planning.
Kibrom Abay (k.abay@cgiar.org) | Xinshen Diao (x.diao@cgiar.org) |
Paul Dorosh (p.dorosh@cgiar.org) | James Thurlow (j.thurlow@cgiar.org)

2. Version: 14 August 2022
Overview
• Series of country case studies
• Economywide modeling
• Capture world market shocks
• Estimate impacts on economy, agri-food
system, poverty, food security, etc.
• Simulate policy responses
• Three phases of analysis:
1. Initial data collection and impact assessment
2. Data revisions and analysis of broad policy options
• Cash transfers, food aid, and fertilizer subsidies
• Fiscal implications for national governments
3. In-country engagement and tailored policy analysis
Impact
assessment
Policy
analysis
Country coverage
Countries with IFPRI RIAPA models
May June
July

3. Version: 14 August 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations World Price Shocks
Source: World Bank Pink Sheets
Global data
11%
-13%
100%
56%
34%
88%
101%
Maize Rice Wheat Palm oil Crude oil Natural gas Fertilizer
Change in real world prices (June 2021 to April 2022)
30 Jun 2021 - 31 Jan 2022 31 Jan 2022 - 30 Apr 2022
30 Jun 2021 - 30 Apr 2022
How important are food and fertilizer imports in
local market?
How important are fertilizer and petrol exports
to the economy?

4. Version: 14 August 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
How important are food and fertilizer imports in
local market?
How important are fertilizer and petrol exports
to the economy?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Supply and Demand
Supply
(% by source)
Demand
(% by use)
Egypt data
Source: IFPRI Egypt RIAPA Model
92%
33%
41%
64%
8%
61%
56%
29%
7%
Maize Wheat Edible oils Oil products
Exports
Final use
Input use
+ Others = 100%
+ + +
0.9% 0.5% 1.1% 10.0%
Products’share of the
value of total demand
throughout the economy
Note: Wheat includes wheat grains and flour in Demand. Oil products include crude oil, petroleum,
and other oil products.
39%
47%
77%
90%
61%
53%
23%
10%
Maize Wheat Edible oils Oil products
Imports
Domestic

5. Version: 14 August 2022
Shocks | World Food, Fuel and Fertilizer Prices
World price
Trade share
Direct use
Indirect use
Incomes
How big is the increase in world price?
Which sectors use the affected products as
inputs?
Which other sectors are affected via supply chains?
What kinds of workers and households earn
incomes within the affected sectors?
Final use Which households consume the affected products?
Impact Channel Considerations Consumption Baskets
Egypt data
Source: IFPRI Egypt RIAPA Model
3.1% 4.4% 1.9% 4.8% 2.7%
30.9% 32.7%
30.6%
36.6%
30.2%
66.0% 65.9% 69.2%
62.2%
69.1%
All households Rural Urban Poor Nonpoor
Composition of household consumption spending
Cereals & edible oils Other foods Non-food goods & services
How important are food and fertilizer imports in
local market?
How important are fertilizer and petrol exports
to the economy?
Note: Breads are Egyptian main staples, and they are included in processed food and not in cereals &
edible oils group. The high subsidies on breads have made cereals & edible oils a very small portion of
consumers’ total expenditures especially in urban area.

6. Version: 14 August 2022
Shocks | Fertilizer Prices and Response
Fertilizer
exports &
imports
Price
Demand
Response
How important are fertilizer trade in the
economy?
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Fertilizer Supply and Demand
Impact Channel Considerations
96%
71%
4%
29%
Supply Demand
Imports
Exports
Domestic
Intermediates
Source: IFPRI Egypt RIAPA Model
• Supply of fertilizer is dominated by domestic
production
• Domestic fertilizer price could rise much more
modestly than import prices
• Almost 30% of fertilizer is for exports
• Higher world prices benefit fertilizer
manufacturers

7. Version: 14 August 2022
Shocks | Fertilizer Prices and Response
Fertilizer
exports &
imports
Price
Demand
Response
How important are fertilizer trade in the
economy?
How big is the domestic fertilizer price increase?
How do farmers react to rising fertilizer prices?
(i.e., price elasticity of fertilizer demand)
How do yields change with reduced fertilizer use?
(i.e., fertilizer response ratio)
Share of Fertilizer Cost in Crop Output
Impact Channel Considerations
Source: IFPRI Egypt RIAPA Model
• Almost all crops applied fertilizer (adoption rate close to 100%)
• Smallholders received 2 bags of subsidized fertilizer from the
government
• Additional use of fertilizer paid at market prices
• Shares of fertilizer cost in total output value of individual crops vary
due to fertilizer use intensity and amount of fertilizer purchased from
the market
Maize
Sorghum & millet
Rice
Wheat
Goundnuts
Oilseeds
Root crops
Vegetables
Sugarcane
Cotton
Other crops

8. Version: 14 August 2022
Results | Selected Macroeconomic Indicators
• Positive terms of trade shock
• Egypt exports natural gas and some fertilizer and
petrol
• Positive effect of higher natural gas, fertilizer and
petrol export prices outweighs negative effect of
higher food, fertilizer, crude oil and oil product
import prices
• Real exchange rate is largely unaffected
• Rising food prices have positive effect because
lowered domestic demand causes prices for
domestic non-tradable goods to fall
• Consumer price rises
• Due to higher import prices, but mainly due to
rising fuel prices
• Government revenues increase
• Mainly as a result of higher export prices for petrol
Source: IFPRI Egypt RIAPA Model
-0.8%
2.0%
3.2%
0.1%
4.2%
8.2%
2.6%
1.1%
1.6%
4.8%
2.3%
5.0%
9.9%
Terms of trade
Real exchange rate
CPI
Gov't revenues
Percentage change in selected macro indicators due to
food, fuel and fertilizer shocks (%)
Food prices Fuel prices Fertilizer prices & response

9. Version: 14 August 2022
Results | GDP and Employment
• National GDP and employment are not greatly
affected
• Positive terms-of-trade shock
• Gains from petrol and fertilizer exports are offset
by losses in the rest of the economy in GDP
• However, GDP and employment fall in both on-
farm and off-farm of agri-food system
• GDP declines more in off-farm agri-food sectors
• Larger job losses in off-farm sectors, because of
increases in cost of food processing and food-
related services that reduced their demand
• GDP and Employment outside agri-food system
are slightly positively affected
• Modest gains in GDP led by fertilizer and petrol
exports
• More gains in employment led by more labor-
intensive non-tradable service sectors
Source: IFPRI Egypt RIAPA Model
0.0%
-0.7%
-0.5%
-0.9%
0.2%
0.1%
-0.9%
-0.2%
-2.2%
0.6%
-2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Change in GDP and employment due to food, fuel
and fertilizer shocks (%)
GDP Employment
Note: Model results are for 2022. Employment includes farmers, paid and non-paid workers, and
self-employed persons.

10. Version: 14 August 2022
Results | Drivers of Differential GDP Impacts
• Agriculture GDP losses driven mostly by fertilizer
shocks
• Production of many cereal and cash crops is fertilizer
intensive
• Agriculture GDP losses are mainly from crop production
• Higher food prices have little effect on agricultural
production
• Off-farm agri-food GDP is more adversely affected by
higher food prices
• Higher prices for agricultural products raise costs for food
processing and food services and thus, lowering demand
for them
• GDP gains outside the agri-food system driven mainly
by higher fuel prices
• From increased exports of natural gas and petrol
• A small positive impact from increases in domestic
fertilizer production
Source: IFPRI Egypt RIAPA Model
-0.2%
-0.5%
-0.1%
-0.1%
-0.1%
0.1%
0.0%
-0.4%
-0.4%
-0.3%
0.0%
-0.7%
-0.5%
-0.9%
0.2%
Whole economy
Whole AFS
Agriculture
Off-farm
Outside AFS
Agri-food
system
Percentage change in real GDP due to food, fuel and
fertilizer shocks (%)
Food prices Fuel prices Fertilizer prices & response
Note: About 40 percent of the effect on agriculture GDP under “fertilizer prices and response” is directly from rising fertilizer
prices, while the remaining less than 60 percent is from the productivity shock caused by a decline in the use of fertilizer.

11. Version: 14 August 2022
Results | Household Consumption
Source: IFPRI Egypt RIAPA Model
• Household consumption falls
• Households do not benefit from rising gas and fuel prices
(windfall revenues mainly accrue to the government)
• Most households are hit twice, by rising prices and falling
incomes
• Rising fuel and food prices are drivers of consumption losses
• Importance of shocks differs across population groups:
• Rural and poor households are affected much more than urban
households
• Fuel shocks have larger impact on rural and poor households
than on urban households
• Some urban households’ incomes gain from increases in fertilizer
and petrol manufacturing and related services, while all
households are negatively affected by higher domestic fuel prices
that increase transaction cost margins for many products
• Food prices have a similar negative impact on all households
• Fertilizer shocks benefit urban and nonpoor households
• Fertilizer production and related services increase, benefiting
some urban households from the income side
-0.6%
-0.7%
-0.5%
-0.7%
-0.6%
-0.6%
-0.9%
-0.9%
-0.5%
0.3%
0.5%
0.4%
-0.9%
-1.5%
-0.3%
-1.5%
-0.7%
National
Rural
Urban
Poor
Nonpoor
Percentage change in real consumption
Food prices Fuel prices Fertilizer prices & response

12. Version: 14 August 2022
Results | Changes in Inequality
• Differential effects on poor/nonpoor households are
driving changes in inequality :
• Fuel shock has largest negatively impact for poorer
households in lower quintiles
• Food price shocks affect all households with a similar
impact across income distribution
• Fertilizer shocks have positive impact for the households
in top quintiles with little impact on the first three lower
quintiles
• The effects of Combined shocks are dominated by fuel
shocks
• Overall, inequality is rising
• Large consumption losses in poor households of lower
quintiles lead to raising income inequality significantly
Source: IFPRI Egypt RIAPA Model
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
Q1 Q2 Q3 Q4 Q5
Percentage change in quintile consumption
Food prices
Fuel prices
Fertilizer prices & response
Combined food, fuel and fertilizer shocks

13. Version: 14 August 2022
Share of population
falling into poverty
Results | Poverty
• Poverty rises significantly
• Headcount rate up by 1.8% points
• 1.76 million more people pushed into poverty
• Larger increase in poverty in rural areas
• More than 80% of increased poor population
resides in rural areas
• Larger increase in rural poverty headcount rate
• Rural population more than urban population
• Mainly driven by food price shocks
Source: IFPRI Egypt RIAPA Model
1.8%
1.2%
2.2%
1.8%
0.7%
2.5%
National
Urban
Rural
Change in poverty headcount rate (%-point)
Food prices Fuel prices Fertilizer prices & response
18%
82%
Urban
Rural
Note: The national poverty line is 32.5% in 2017/18. The
poverty rate is higher in rural areas, about 38%, than in urban,
about 25%.
1,760
523
1,283
1,763
316
1,447
National
Urban
Rural
Change in poor population (1000s)
Food prices Fuel prices Fertilizer prices & response

14. Version: 14 August 2022
• Global price shocks have differential effects on the costs of six food
groups for a healthy reference diet
• Reference diet is the EAT-Lancet’s “healthy” diet thresholds for
the six major food groups
• Rising prices for edible oils (in added fats) and for wheat (in
staples) push up their costs, while falling incomes reduce
demand for fruits, dairy, and protein foods, and thus, lower
their costs
• The real cost for the referenced healthy diet is largely
unaffected
Results | Diet Quality
Source: IFPRI Egypt RIAPA Model
• Rising food prices and falling incomes cause diet quality to
worsen for many households
• Prior to the crisis, many households did not have
consumption levels and diversity needed for a healthy diet
• Rising food prices worsen diet quality and cause 18% of
people to become deprived in at least one additional food
group for a healthy diet. Many such people are not
necessarily poor.
• Percentage of people with deteriorated diet quality is high
in both rural and urban areas
-0.1%
0.2%
-0.3%
-0.5%
-1.0%
1.4%
Net change in
cost of healthy
diet
Contributions of
food groups to
change
Change in the real cost of a healthy
reference diet caused by rising world
prices (%)
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
10.7%
15.7%
19.3%
11.1%
38.5%
4.7%
Shares of six food groups
in total cost of a healthy
diet prior to the crisis
Added fats
Proteins
Dairy
Fruits
Vegetables
Staples
17%
19%
16%
18%
19%
17%
National
Urban
Rural
Share of population to become deprived in at least
one additional food group for a healthy diet (%)
Food prices Fuel prices Fertilizer prices & response

15. Version: 14 August 2022
Headlines
• Food, fuel and fertilizer shocks do not greatly affect GDP and
employment in Egypt
• GDP and total employment are largely unaffected by the rising food,
fuel and fertilizer prices because Egypt exports natural gas, produces
both petroleum and fertilizer
• However, agri-food system is adversely affected by high fertilizer
prices
• More job losses occurred in off-farm agri-food system due to rising
cost of food processing and food related services that reduced
demand for them
• Rural and poor households are especially vulnerable
• Larger income losses due to higher fertilizer prices
• Greater increase in poverty (esp. number of poor people)
• Larger contribution to the deterioration in diet quality
• Next steps
• The government of Egypt has launched major fiscal and monetary
policy instruments to limit the crises’ adverse effects. Evaluate these
policy options that are likely to have important impacts for Egypt’s
economy and households will be the focus of the next-stage analysis
Impact
assessment
Policy
analysis
Country coverage
May June
August