4. Major Agricultural Policy Issues in the Near East Region

4.1 Natural Resources Use and Management

Managing natural resources in an efficient and sustainable manner is now one of the most critical issues for food production in the Region. Most countries of the Region have invested heavily in irrigation over the past half century. Wherever land and water are available, large irrigation schemes have been established requiring heavy public investments, such as in Pakistan, Iran, Turkey, Egypt, Syria, Morocco and Sudan. Small and medium schemes were also established in all countries.

Recent assessments show that performance of irrigation in terms of water productivity and irrigation efficiency is low, as a result of bad irrigation water management. Surface irrigation methods still prevail and account for 80-90% of the irrigated area (98% in Iran, 96% in Tajikistan, 87% in Morocco, etc.) Surface irrigation methods coupled with bad practices are resulting in the loss of large amounts of the applied water.

Modern irrigation methods such as sprinkler and drip irrigations have been introduced in the Region, but they still account for limited areas with the exception of Cyprus and Jordan where the total irrigated areas are small. The Gulf countries, particularly Saudi Arabia also have more than 2/3 of their irrigated areas equipped with modern systems, particularly central pivots. However, even where these systems have been introduced, their efficiency is generally low in comparison with the potential because of bad on-farm management. The overall irrigation efficiency in the Region is estimated at 45-50%, inferring to the loss of nearly 50% of the amounts of water used for irrigation. Although part of this water loss is recycled, the rest is lost irreversibly; in addition, it results in lowering of water quality, degrading the environment (soil and water), and decreasing profits for farmers.

The cost of water and the adoption of modern technology constitute a real issue in many countries of the Region. The adoption rate of a system will depend to a large extent on the rate of return on each technology. The financial returns of new technology are function of the amount of water saved and the cost of water to the farmers. For instance, in Yemen, the high investment cost of $ 3,100 to $ 4,000 per ha is difficult to recover with a low value of saved water resulting from high diesel subsidies. The cost of produce is the other factor determining the level of investment in modern irrigation technology. When the profit made by farmers from selling their production is low, they are less inclined to invest.

An FAO report (FAO, 2000a) estimates the irrigation efficiency of a group of 93 developing countries to range from 26 percent in areas of abundant water (Latin America) to 50 percent in the Near East Region, where water use calls for higher efficiencies. The forecast is for irrigation efficiency for these countries as a group to rise from 43 percent in 1995/7 to 50 percent by 2030.

In the Near East Region, most countries where irrigated agriculture is already important, water for expansion will have to come mainly from efficiency savings on existing schemes. Given the need to boost agricultural productivity and growth in these countries, the importance of investing in water saving technologies and practices is clear.

The common feature of irrigation schemes throughout the world has been to subsidize the cost of water sold to farmers. This causes inadequate resources for system maintenance, on one hand, and excessive demand for water, on the other. If the cost recovery rate was raised, farmers would have to adjust their cropping pattern and their technologies, so as to demand less water and/or accept fewer benefits from irrigation. This may however have adverse effects on the production of some crops of national interest

4.2 Sustainability and Environmental Issues

Managing pollution and other environmental issues are one of the main concerns of the Near East Region. The most threatening is the scourge of salt, where Southern Iraq is a clear example. The share of salt-affected area in the total irrigated area is 26 percent, 30 percent, and 33 percent in Pakistan, Iran and Egypt respectively. The problem is also noticed in the Gulf countries. Pakistan and the Aral Sea basin countries have two of the world's most intractable salt problems.

The situation is further aggravated with the often excessive use of fertilizers and pesticides as result of crop intensification and subsidized input prices. The use of fertilizers and pesticides has recently declined however there is a real need to encourage more use of bio-fertilizers and bio-pesticides in order to limit environmental damage.

Over cutting of woody vegetation for fuel wood and roofing in Afghanistan has caused severe soil erosion and has resulted in environmental degradation. The situation has been further exacerbated during the war years. Excessive irrigation and lack of drainage in Azerbaijan have significantly increased salinity in approximately two thirds of irrigated area. Moreover, the excessive use of chemicals contributed to soil and water pollution and the past intensive deforestation caused land erosion of almost 40% of the land.

The soils of Pakistan have been deteriorated over the years. The organic matter in the soil is as low as 0.3 to 0.5 percent against the normative value of 1.5 percent. Planting without proper crop rotations has depleted the soils, which has adversely affected the productivity of Indus agriculture. Thus soil degradation is a serious threat to the food security.

The past intensive use of chemical fertilizers and crop protection chemicals in Central Asian Countries has resulted in heavy contamination of soil and ground water. This environmental damage was exacerbated by poor irrigation methods and lack of drainage facilities.

4.3 Rural Poverty

Statistics on poverty, especially rural poverty, are not readily available for all countries in the Near East Region. Furthermore, while headcount poverty indices have been estimated for a few countries, the base years and national poverty lines vary from country to country and therefore any comparison across countries should be treated with caution.

Despite these shortcomings, based on World Bank and local country data, the most conservative estimates indicate that in 2001 about 55 million rural people live in abject poverty in the Near East and North Africa (with incomes of close to or less than USD 1 per day). Previous IFAD estimates based on higher poverty lines (closer to the USD 2 per day baseline) gave about 81 million rural poor living in the Region (IFAD 2002).

In ECO Region, the disparity in the share of different areas and social classes in consumption or income of the countries are quite considerable. The number of people living under 1$ a day are ranging from 1.5% to approximately 20% excluding Afghanistan where necessary data is unavailable. In most of the countries of the Region the share of the poorest 20% in national income or consumption is less than 9%, while the share of richest 20% is more than 40%.

In the whole Region, access to physical and social infrastructure is biased in favour the urban areas. As a result, social indicators of the rural sector continue to lag behind those of the urban sector. The situation regarding access to safe drinking water and sanitation facilities is far worse in rural areas than in the towns and cities. In Syria, for example, 96% of the urban population has access to sanitation compared with only 31% of the rural population. In Morocco, 98% of the urban population has access to safe water compared with 34% of the rural population. Illiteracy rates are still high in many countries, especially for women. In Yemen, some 80% of women and 35% of men are illiterate, while in Morocco the percentages are about 66% for women and 40% for men. Illiteracy is concentrated mainly in the rural areas; in most countries, illiteracy rates are almost twice as high in the rural areas than in the urban areas.

Overall, poverty in rural areas is much more widespread than in urban areas and is predominantly among farming and pastoral households that depend on agriculture as a primary source of food and livelihoods. Poverty is conditioned primarily by lack of access to the limited soil and water resources and by low productivity, and is aggravated by highly unpredictable rainfall, relatively few crop and livestock options, and continuing natural resource degradation. Therefore, better distribution of income and assets at national level may lead to reducing poverty and enhancing the food security situation in the Region. This should be of considerable importance for future development plans. 4.4 Food Security

According to the World Food Summit of 1996, food security has four pillars, namely, availability, stability, access, and nutritional intake. In 1969-70, food production within the NE Region was almost adequate to meet demand; the self-sufficiency ratio (SSR) for all cereals was nearly 90%. However, the food gap continued to widen over the last three decades, due to failure of the expanding agricultural production (growing at 2.9% annually) to keep pace with the rapid growth in demand, so SSRs declined. According to FAO estimates this trend is expected to continue as shown in the table below. By the year 2010, all the Near East sub-Regions would have relatively large food deficits, with the exception of Turkey which has large agricultural resources, Table 1.

Table 1: Food Deficit in the Near East Region in 2010

Source: FAO Agriculture Toward 2010

On average for the NE Region, production has grown consistently though less than the growth in demand. Increases in crop production are achieved either by expanding cultivated area, by raising crop yields or by increasing cropping intensity. Over the years cultivation has spread onto more arid and marginal land. Apart from the Sudan and possibly Turkey, little cultivable land remains uncultivated. Agricultural output growth has become increasingly dependent upon intensifying production per hectare, and irrigation development has been very important in this respect, given the aridity of much of the Region. Nevertheless, agricultural productivity in the Region is relatively low in comparison to the world average (Appendix 5)

The production contribution to food demand in the various sub-regions of the Near East, in relation to the size of their populations, differs considerably. Central Asia with 45 percent of the Region's population would account only for 22 per cent of the food gap. On the other hand, the Arabian Peninsula with only 7.5 of the Region's population would be responsible for 24 percent of that gap.

About 70% of agricultural areas in the Region are arid or semi-arid. Scarce and erratic rainfall, coupled with climatic shifts and an increasing number of dry years, are severely impairing stability of food production. Despite all exerted efforts to improve water-use efficiency, available water is still insufficient to further expand irrigated agriculture. Rainfall in much of the Near East is not only sparse but also highly variable. As a result crop production varies greatly from year to year, with corresponding changes in the size of the food gap.

Most of the Near East countries are net food importers with high dependence on food imports. For the Region as whole, imports of cereals, as a proportion of the total annual consumption, expanded from 15% in 1970-75 to 37% in 1995-2001. The import dependence varies considerably between countries. In 1995-2000, for instance, Egypt, Algeria and Yemen imported about 44%, 70% and 90% of their requirements of wheat and wheat flour, the staple food in these countries.

With regard to the nutritional status, countries of the Near East made a significant progress in raising the Per capita food consumption^[9] in terms of kcal/person/day, which is the key variable used for measuring and evaluating the evolution of the world food situation all over the World including countries of the Near East and North Africa and countries in the transition. As shown in (table 3) below, the levels of average national food consumption per person in the Near East and North Africa is likely to increase from 3006 kcal in 1997/99 to 3090 kcal in 2015 and close to 3170 kcal by 2030. This is much better than Sub- Saharan Africa and Latin America and the Caribbean, Table 2.

Table 2: Per Capita Food Consumption (kcal/person/day)

© FAO, World Agriculture: towards 2015/2030, p.30

However, like all averages, this indicator does not tell the whole story, as it conceals large differences among different groups within the same country. While the average DEI in Turkey reached 3,343 k-calories, it was only half that amount in both Afghanistan and Tajikistan, and ranged between 2,196 k-calories or 66% and 2,931 k-calories or 88% for the other 7 countries. To complete the picture, the Appendix (6), gives estimates of numbers and percentages of undernourished people in Near East Region (average for the period 1998-2000). It shows that, while the overall percentage of undernourished people in Near East Region is below the same for developing countries, large variations exist among member countries. This percentage ranged between 0% for United Arab Emirates and Libya to more than 70% in Somalia.

4.5 Policy Reforms and Liberalizations

Almost all countries in the Near East have entered a process of market-oriented economic reforms, albeit with varying degrees of commitment and success and amidst considerable economic, political and social difficulties in some instances. Governments have in general moved away from past practices of large-scale procurement of cereals from producers at high guaranteed prices. Annual increments in support or procurement prices have deliberately been kept low in many countries of the Region.

Parastatals monopolies on procurement and marketing have also been lifted and the private sector encouraged competing with the parastatals in these activities. Similar trends, notably reduced subsidies and increased private sector handling of retailing, are apparent in inputs such as fertilizers. Policy reforms implemented in Egypt in the past four years are a leading example of this process. Key reforms implemented include: ending restrictions on cropping patterns; revoking obligatory deliveries of, inter alia, wheat and rice; freeing up restrictions on private transportation and milling of rice; and rescinding the ban on the marketing and lifting of controls on bread production. Major liberalization programmes along similar lines are in progress in several NE countries.

In assessing the extent of the reform process carried out in the economic sectors in general and agriculture in particular, Near East could be clustered into three major groups: Morocco, Turkey, Egypt, Jordan and Sudan have taken several measures to liberalize their agricultural sectors. Saudi Arabia and some other oil-exporting countries, which have been supporting domestic production through direct government subsidies and high producer prices, are reviewing their support programmes. Syria and Algeria and the central Asian countries have recently started liberalizing their agriculture sectors and government intervention till prevails. This is particularly true for the former socialist states, especially with respect to some food products. Examples of such intervention include the guaranteed purchase prices for wheat and the subsidies paid for the manufacture and distribution of farm inputs and agricultural machinery in Iran, the guaranteed purchase prices of grains and the input subsidy programmes for seeds, fertilizers and chemicals in Kazakhstan, the support for producer prices and the subsidies for inputs and credit in Turkey, the delay in the phasing out of the administered price programme for wheat in Pakistan.

Nevertheless, most countries in the Region provide heavy subsidies, both operational and investment, to irrigation water. In some countries water is provided to farmers at zero cost while in the majority water charges rarely cover operation and maintenance costs. Removal or reduction of such subsidy is a very delicate social and political issue in almost all countries of the Region.

4.6 Trade Liberalization and Market Development

Many countries of the Near East countries are currently opening their agricultural markets at three distinct but interacting levels: unilateral liberalization as discussed above, regional integration schemes and multilateral trade liberalization.

At the regional and sub regional level, several Regional Trading Agreements (RTAs) have been established with objectives to liberalize regional trade including that in agriculture. The vast majority of these agreements are among Arab countries (Table 3). They include the Agreement for Facilitation and Promotion of Intra-Arab Trade, the Council for Arab Economic Unity (CAEU), the Economic Co-operation Organization (ECO), the Gulf Co-operation Council (GCC) and the Arab Maghreb Union (AMU) and Recently the Arab Free Trade Area (AFTA). All these groupings have in common the objective of promoting intra-regional trade, including agricultural trade, and co-operation between member countries.

Despite all these regional and sub-regional integration agreements, the performance of intra-regional trade including agricultural trade remained low and stagnant. This is more or less a common phenomenon in the developing countries, the Near East being no exception. Nevertheless, for the NE as a whole, there is a potential for intra-regional trade in agricultural products that has not been fully exploited and which could be particularly beneficial in view of the small size of their domestic markets. All such trading efforts have come up against structural and policy obstacles.

The major constraints for intra-regional trade include inadequate international transport and communication facilities and poor information about markets and investment opportunities. Moreover, the existence of administrative and procedural obstacles to trade and absence or inadequacy of a system for standardized packing, grading and quality control systems at the regional level continue to frustrate efforts to expand trade and establish transparent information systems. Improvement and harmonization of inspection and certification systems are among the missing ingredients for promotion of intra and extra-regional trade. Inadequate financing and guaranteeing of regional exports/imports has also been a factor.

Table 3: Major Regional Trade Agreements in the Near East

¹ Members of the Arab League include Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen.

At the multilateral trade level, many NE countries have acceded to the WTO and made commitments to liberalize their agriculture under its various Agreements, particularly the Agreement on Agriculture (AoA). These developments hold important implications for intra- and extra-Regional trade, use of agricultural resources and sustainability of agricultural development in the NE countries.

Of the 30 countries of the NE Region, 16 are currently members and 9 are observers of WTO. The accession to WTO is gaining ground and most of the remaining countries are seriously considering applying for membership. In general, NE countries have not been faced with undue difficulties in meeting their AoA commitments during the period 1995-2002. Information on Sanitary and Phytosanitary Measures (SPS) in NE countries is scanty and often not available. Most of the NE countries have yet to develop or enact laws on property rights in line with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The institutional support to address WTO issues is generally weak and in some cases even non-existent.

One of the salient features of the overall international agricultural trade in the near east Region is high dependency on food import. For the Region as whole, imports of cereals, as a proportion of the total annual consumption, expanded from 15% in 1970-75 to 37% in 1995-2001.The import dependence varies considerably between countries. In 1995-2000, for instance, Egypt, Algeria and Yemen imported about 44%, 70% and 90% of their requirements of wheat and wheat flour, the staple food in these countries. Such dependence was disquieting to policy makers, who feared that reliance on foreign supplies was 'too risky' whether economically or politically.

High dependence on food imports means that countries are exposed to some risks. Ability to import is, therefore, an essential component of a sustainable food security in the Region. Because of this high import dependence, the Uruguay Round Agreement has prompted widespread concern in the Region, as it is expected to reduce subsidized food exports and results in some increase in world food prices. Although oil exporters are unlikely to face significant challenges to their ability to import food, the non-oil exporters face greater challenges. The Low-Income-Food-Deficit countries (LIFDCs) in the Region in particular are facing difficulties in developing adequate foreign exchange earnings to finance food imports.

Another feature of agricultural trade in the Region is the strong economic ties with the developed countries. The bulk of the NE agricultural exports are destined to developed country markets, of which EU is by far the largest. Therefore, conditions of market access to these countries are of critical importance in defining the trading opportunities for NE agricultural exports. Support to agriculture in these countries and the increasingly higher safety and quality standards they adopt as well as the gradual erosion of trade preferences constitute the main difficulties that face the NE countries in their endeavour to improve their access to the developed country markets.

Despite progress made in the implementation of the Uruguay Round Agreements, support to agriculture in the OECD countries continues to be high ($310 billion in 2001). Tariff peaks still persist in several products (e.g. in meat and horticultural products), and tariff escalation (higher tariff on more processed products, which given greater protection to the processing industry of the importing country) still prevails in several important product chains (e.g. vegetables, fruit, meat and hides and skins). In addition, most of the fruit and vegetables in the EU are protected by the 'entry price' system (implying high tariffs if the export price exceeds an established trigger level during certain periods of the year), while most of the Near East's exports of fruit and vegetables to the EU are take place under a tariff quota system preferential access for specified quantities.

All these issues are now a subject of negotiations in the current WTO negotiations on agriculture. The general commitment, as agreed in the Doha WTO Ministerial Conference, is to undertake negotiations on agriculture aimed at substantial improvements in market access; reduction of all forms of export subsidies; and substantial reductions in trade-distorting domestic support. Given the difficulty experience in the on-going negotiations, none of these commitments to negotiate has yet resulted into actual trade commitments for individual countries.

In the on-going WTO negotiations on agriculture the NE countries look for a real improvement in market access, especially for those products with a high growth potential and high value. Thus, they have an interest in reducing border protection and tariff escalation in the developed and developing countries. Strengthening negotiating capacities of NE countries and coordinating and harmonizing their positions on WTO issues are essential ingredients for achieving some tangible progress in this front.

4.7 Comparative Advantages and Competitiveness of the Agriculture

In the growing competitive global environment and due to the scarcity of land and water resources, the Region needs to produce and trade according to its comparative advantage. It means improving its relative efficiency in production which depends on three factors: (1) technology (which determines production possibilities and influences rates of product transformation), (2) resource endowments (which affect the value of domestic resources, such as land, labour, water and capital), (3) international prices (which directly determine the value of tradable inputs and outputs and indirectly influence the value of domestic resources).

More over, the Region needs to pursue a competitive strategy for promoting exports of key agricultural commodities like cotton, fruits and vegetable. This needs a set of policy action that include a sound macroeconomic policies to provide competitive environment; trade barriers should be minimized and access to new markets should be sought; export oriented policy should be adopted; and human and physical capital should be accumulated. The rules of the game are changing with globalization of the economies. It relies on global economy, where any firm or industry can easily access to raw material and cheap labour, because transportation cost have come down considerably during recent years. This is particularly true for high value commodities such as cotton. The locational advantage is not as relevant as it used to be. To be competitive, firms and industry must know and understand their markets and their customers; they must know what competition is doing, must improve quality of the product and look for market creation. Marketing choices have become more important than production choice and this will be even more in this millennium.

The liberalization of world markets offers a great opportunity for Near East, if countries of the Region continue and accelerate the process of restructuring their economies and agriculture sectors. Such restructuring must include the development of agribusinesses, applying modern technologies and management principles. The strategy should concentrate on crop production where potential exist for removing both the physical and market constraints, especially the high transaction cost to market. At the same time policies and programmes should be put in place to diversify production base and to grow higher value crops for exports. Production of high value crops (fruits, vegetable, medicinal and aromatic crops) provides an attractive opportunity. Governments should establish quality controls and testing systems to ensure consistently high quality of the products.

4.8 Institutional Reform

More countries of the Region are turning to institutional reform and capacity building as a means for effecting development and growth. The new thinking in the role of institutions in the NE emphasizes on re-designing the development process and on building appropriate institutions for generating growth. The process includes the following:

4.8.1 The changing role of the state

The new roles of the state are not expected to be at the frontier of producing goods and services nor rowing at the grass-roots level of policy design and implementation. On the contrary, the new roles of the state are expected to "steer" the design and implementation of development, working hand in hand with other private and local agent rather than working for the beneficiaries of development. Redefining the role of the state in an open-market environment implies the extensive withdrawal of the state from traditional roles and the assumption of new roles in relation to reinforcing, completing and regulating markets. This automatically questions the long interventionist legacy of nearly all countries in the NE and raises the need both for refining and redefining the concept of public goods. This transformation views the state as:

- The major impetus for providing coordination of the overall thrust towards growth and development generated by the private agents.

- The highest institution which sets the vision and strategy and creates the overall framework for their achievement.

- The institutional regulator that established the necessary conditions for markets to operate and intervenes to correct markets failures. Such intervention must be focused as much as possible to the negative effects that need to be addressed, avoiding interventions that distort the market.

- The provider of the types of public goods that cannot be appropriately provided by the private sector. Research, especially agricultural is a good example in this respect, as private agents would be less eager to invest in research as they can usually capture a small fraction of its benefits. Therefore the state has a role in providing incentives for investments in research. Agricultural extension services constitute another example.

- The political instance that allows pursuing socially desirable goals and mediate among conflicting social interests, such as the establishment of welfare and social security networks, adoption of policies for redistribution of income and assets, preservation and promotion of cultural and social endowments, etc.

There are no clear-cut rules setting the boundaries of the new role of the state. This depends on the peculiarities in each country, past experiences and the state of structural adjustment. Generally, as a rule of thumb, the state should avoid doing anything that the can be done more efficiently by private agents.

4.8.2 Improving Rural People's Organization

In stark contrast to developed countries, government in developing Regions almost invariably played a significant and often paternalistic and controlling role in the development of rural and/or agricultural organizations, including cooperatives. The result has been the emergence of a relatively small number of rural organizations, with weak inter-organizational linkages characterized by low levels of member participation, high levels of dependency on government assistance and support and poor business performance. Moreover, under the new structural adjustment programmes and market liberalization, the enabling environment for these weak rural structures is rapidly deteriorating.

Recent experience of IFAD and other United Nations agencies (FAO, UNDP, UNICEF, WFP) in supporting pilot community-based participation (sometimes initiated by existing local organizations) indicates that there is great potential for replication, up-scaling and further support to participatory approaches (IFAD 2002). In addition, with a more participatory approach, the decentralization and devolving of authority at all levels become more necessary as a means of giving community-based institutions stronger voice in the development process and of moving decision-making closer to the people. In practical terms the need is for the identification of the institutional strengthening, re-orientation and other training which will be necessary for government staff, and methods of ensuring that beneficiary participation can play a significant part in the implementation of the new projects.

Indeed, FAO's experience gained during the past decade in Africa and Asia in the implementation of People's Participation Programme (PPP) projects in Ghana, Kenya, Lesotho, Tanzania, Sierra Leone, Zambia, Zimbabwe, Sri Lanka, Pakistan and Thailand has provided new insights regarding the advantages of using more participatory "bottom-up" approaches to building rural people's self-help organizations, including farmer cooperatives, but starting with the small informal group as the basic building block. Though this "bottom-up" organization-building process takes more time, field evidence has clearly shown that the organizations formed are far more sustainable and self-reliant than their "top-down" government imposed counterparts.

The new thinking involves a holistic development approach as opposed to the partial and selective approaches of the previous decades. In terms of content it covers all resources, i.e. human, physical, financial and social. In terms of scope it emphasizes on economic efficiency without failing to take into account non-economic concerns, such as poverty, equity, short-term externalities and long-term internalization of such externalities. Concerning processes, the new thinking emphasizes on linkages and integration and adopts a broader interpretation of the agents involved. The new paradigms require processes for working with the people rather than working for the people. Finally, the new thinking sets forward the global perspective of development to the extent that growth at Regional and country level is not immune to the external environment.

4.8.3 Organizational Setup of Policy Analysis Institutions

In the Near East Region only few institutions are specialized in agricultural policy analysis and that these functions are often entrusted to ministries' branches, with different hierarchy, more than to specialized institutions. In Egypt, Sudan and Yemen for example, the department of agricultural policies is one of the departments of the administration for Agricultural Planning. In Kuwait and Bahrain, the policy unit/department per se does not exist and its function is undertaken by the department of finance and the administration and department of international relations respectively.

Overall, the organizational functions and intra linkages between different departments entitled to policy analysis are neither clearly defined nor effective. Further more, within the Ministries of Agriculture the mandates and responsibilities among the different departments and units are overlapping. For example, in some countries of the Region, more than one ministry involved in agricultural activities e.g. Ministries of Irrigation, Animal Resources and Environment. These ministries lack effective institutional linkages among themselves. Moreover, the institutional capacity of the different departments and units in theses ministries is very weak. Policy and planning are carried out in a relative vacuum with respect to the needs perceived by the population because participatory community based approaches are not applied to the practice of policy analysis and planning.

Proper functions of policy analysis, similar to those of the NAPC in Syria, are often undertaken by sections of institutions like the Arabic Planning Institute of Kuwait and the Agricultural Research Centre and the National Planning Institute in Egypt. However, in many countries, having or not one or more institutions involved in agricultural policy analysis, agricultural policy analysis services for the decision makers are provided by various individuals and institutions (e.g. Universities, and Research centers).

4.8.4 Market Institutions

Missing markets for inputs and outputs have been experienced in many countries of the Near East Region. In fact this gap in the marketing system has for many years been proposed as a major argument justifying market interventions by the state. However, the recent transition to a market-oriented economy involves sizeable changes in marketing and trade institutions. The need is there to entrust and develop markets and market mechanisms as a basic tool for growth and development. This implies opening up markets, deregulation and abolition of barriers to market entry and exit, and allowing market forces to effect the distribution of limited resources among competing needs and uses. Maximizing economic efficiency will lead to rational costs and returns, sustainable economic behaviour and non-discriminating and non-distorting policies and decision making.

In an open-market system, with free entry and exist, the price is a rationing device i.e. getting prices right. Therefore, if prices are artificially low, the actual cost for consumers is reduced and their effective demand increase. Recently, new institutional models have been developed. These models aim at rectifying this imbalance by reducing excess institutional burdens on prices, internalizing the full cost of products and services and reducing the gap between external and domestic prices.

Despite the fact that these models fall into well known policy areas such as access to inputs and markets, access to credit, access to resources, infrastructure development, R&E, training, people's participation and gender priorities, they create a completely new and highly demanding framework of policy analysis and the raise highly the persistent needs capacity institutional and capacity buildings.

4.8.5 Property Rights

The pricing system is a device for the exchange of property rights. These rights imply that only the particular entitled person has the authority to decide how the resource should be used. Therefore open-markets and freely functioning pricing systems cannot be established unless property rights to resources are established. It would also seem improbable that people and other agents using resources would be inclined to rationalize the use and conserve resources without entitlement to such resources. This raises the importance of clear property rights and the need to 'legalize' ownership of resources and informal rights, as well as regulate how such rights can be exercised. This is particularly related to land rights as access to land and security of tenure and access are critical elements in alleviating rural poverty and moving toward a world where food security and the absence of hunger are a reality for all. This problem needs special attention in the countries in transition, and has a serious negative impact on the maintenance and development of land and irrigation facilities as well as on pastures and overgrazing in many areas of the Region. This was recognized by the governments of the world at the 1996 World Food Summit in Rome.

4.8.6 Pro-Poor Orientation of Rural Financial Services

A conducive environment to tackle this issue is fast emerging. Government authorities are now more prepared to concede that the rural population include very poor for whom financial resources and services must be provided. This will facilitate growth with equity through opportunities for income generation for the poorest. A firm foundation to design and implement structured initiatives for provision of micro credit and savings services linked with group activities and traditional community-based activities is being built up through ongoing and planned pilot initiatives supported by other donors (IFAD 2002).