How the state forced small-scale farmers to grow cement and bricks

In August, President Abdel Fattah al-Sisi warned people against encroaching on agricultural lands with a notably sharp tone. The president’s warning was not new, for there is a long history of push and pull between small-scale farmers and the state on the subject of encroachment. It perhaps started in 1966, when a law was passed to ban the construction of buildings on agricultural land. But the president’s recent warnings caused something of a controversy because he threatened to summon the military, a threat that brings to mind the efforts of Mohamed Ali and his successors to quell peasant uprisings. Sisi’s threat targets the most solid social base of the July 1952 regime. So in order to understand that threat, we need to revisit the long history of conflict between the state and small-scale farmers. 

In recent decades, the government has put small-scale farmers under fire for building on farmlands. This discourse has cast permanent suspicion on them: “Those greedy peasants are not concerned over our dwindling agricultural lands! They threaten Egypt’s food security!” In recent decades, the government has repeatedly highlighted the importance of preserving agricultural lands and curbing rural migration to the city. 

Undoubtedly, corruption and cronyism played a central role in the practices of building on agricultural lands. But this corruption was caused by the state’s absence and its inability to formally regulate and plan urban spaces, even though the state has an arsenal of institutions and laws that allow it to be the most prominent player in urban planning. 

Nonetheless, corruption is not the only reason that small farmers have built on their agricultural lands, especially the lands on the outskirts of major cities. Rather, there are complex reasons rooted in the development pattern of the Egyptian state since July 1952. The economic transformations that Egypt has witnessed from 1952 until now encouraged the proliferation of these practices. The failure of Egypt’s development plans, in both periods of central planning and post-Infitah neoliberalization, was a major force behind the rise of real estate speculation across the country. 

But in reality, the state’s interventions and approaches to land management in Egypt all encourage the opposite. By looking at the history of the state’s relationship with small-scale farmers, we can answer two questions. The first is, why do farmers build on agricultural lands? Or more accurately, why did farmers play an increasingly strong role in the real estate sector in the aftermath of the Infitah? And the second question is, how did the failure of Egypt’s development model contribute to accelerating the process of building on agricultural lands? 

In Europe, modernization was associated with turning the factory into the primary source of capitalist accumulation, at the expense of the land. Feudal Europe transformed into an industrial Europe. Agricultural land remained an important component of the production structure, but the standing that land used to occupy gradually decreased. With mass rural migration to cities, land lost its value to the factory, which, with the advent of technological development in the 19th century, in turn became the maker of great profits. 

However, with countries that entered the stage of industrialization later, like Egypt, agricultural land remained a primary source of capital accumulation. Therefore, in Egypt, the struggle over land has been a struggle over existence and wealth in a context where almost all development models have failed. 

The struggle over land dates back to the establishment of modern Egypt during the reign of Mohamed Ali. One can say that the victory of Mohamed Ali in this conflict and his subsequent monopolization over the right to distribute land are what allowed him to build the Egyptian state. For the man to have exclusive control over the economy of the country, he had to have monopoly over the land. 

Various forms of land ownership, usufruct, and tenure rights had existed before Mohamed Ali. Despite having all the qualities of a strong statesman, Mohamed Ali could not obliterate all of these forms. And almost two centuries after the establishment of modern Egypt, land continues to be the pivotal point of conflict and the key factor in capital accumulation in Egypt. There are still complicated and layered conflicts between the state and society over land, its management, and its allocation. 

In her book Spontaneous Urbanization, Galila El Kadi estimates that the Egyptian state actually owns 96 percent of land. The dense concentration of people around a narrow valley contributed to this. However, what allowed the state to own all of this land is that, ever since its establishment, it did not care much for private property. In other words, the Egyptian state was not founded upon the right of private ownership. By maintaining a much narrower margin of private ownership, the state was able to control society. 

Private real estate ownership in Egypt was only effectively established in the first two decades of the twentieth century at the insistence of British colonial powers. The first laws regarding private property were promulgated in 1882 at the start of British occupation, which deliberately pushed for private property rights because of their centrality to capitalist accumulation. By allowing foreign and Egyptian companies that work in real estate and agricultural development to buy lands from the government, private property ownership came to force in Egypt. 

After the 1952 revolution, the first land reform law was among the new state’s earliest legislation. The concept of a land reform law was not invented by Gamal Abdel Nasser and his associates. As argued by many researchers, it was an idea supported by the British occupation itself. However, the Nasserite state, through its three main laws on agrarian reform, reclaimed the land monopolist role for itself. According to Galila El Kady, the state distributed about 800,000 acres of land to small-scale farmers, but it kept almost one million acres for itself. 

In his book, A Study in the Political Economy of Agrarian Transition, Mahmoud Abdel Fadil argues that, contrary to popular belief, the greatest impact of the agrarian reform program was not the distributional aspect. In fact, the redistribution of land only included small and medium-sized farmers and excluded landless farmers. The reform program only distributed 818,000 acres between 1952 and 1970, or about 12.5 percent of the agricultural lands, to 343,000 families that have about 1.7 million individuals, which was only 9 percent of the total rural population at that time. 

But the agrarian reform did improve the income and legal status of tenant farmers. Before Nasser, large landowners would rent their lands at high prices. With the first agrarian reform law in 1952, agricultural rents were fixed. The fixing of rents meant that the process of extracting economic value from rural areas was halted, at least partially, because the law weakened the power of wealthy elders in the countryside, whose lands were now a burden rather than a source of extracting high rents. For this reason, many of the large landowners rushed to sell their lands before they were distributed or got constricted by the new rent prices. 

On the macroeconomic side, fixing land tenures was an incentive to redirect agricultural investments to the industrial sector, which was in line with Nasser’s industrialization and import substitution policies. 

On the other hand, the policies of the July 1952 regime continued to impoverish rural areas and compromise their value. The compulsory pricing and supply of agricultural crops exacerbated the process of extracting economic value from the countryside to the benefit of the urban center, where all industrial and administrative activities took place. The difference between the government price and the market price was an actual tax that the farmer paid out of his agricultural income to the state. And even with regards to crops that were not supplied to the government, the compulsory pricing system limited the profits that farmers would have accrued from selling to traders on the market. 

This economic value was extracted from the countryside for the urban center because most of the state’s administrative institutions and production centers were in urban areas. This value was used to finance the social welfare state, especially the food support directed to the city and the urban poor. In other words, small-scale farmers were indirectly the true financiers of the welfare state in Egypt. 

In the early 1970s, another struggle began over the state’s real estate monopoly. President Anwar al-Sadat’s regime tried to sever itself from the Nasser experiment. New laws were passed under pressure from agricultural landlords and the bourgeois strata in state institutions, including the Arab Socialist Union, the Parliament and the Cabinet. 

Among those decisions was the lifting of the guardianship imposed on agricultural lands, which led to the sale of almost 600,000 acres of land to the private sector. The Ministry of Endowments also reclaimed lands that were put under guardianship during the Nasser era. 

Almost four decades after July 1952, farmers lost their only gain from the agrarian reform program: the fixing of land tenancy. In 1992, in the context of accelerated neoliberal transformations since the 1970s, Parliament approved the new tenancy law, which abolished rent control on agricultural land. 

With the effective implementation of the law in 1997, the systematic impoverishment of smaller farmers began. The capitalist agribusiness model began to dominate, especially in the newly reclaimed lands that were designated for that purpose. The Nile Valley and Delta resisted this great transformation to an extent. 

The continued economic impoverishment of the countryside, where the majority of the Egyptian population (57 percent) still lives, engendered a continuous rural-to-urban migration in pursuit of economic opportunities in low-wage service sectors, which still failed to absorb the huge labor surplus migrating from the countryside, despite the economic boom of the 1980s. 

The Egyptian state tried to deal with the mass influx of migrants from rural areas. So it built several industrial zones around Cairo with the aim of reducing the population in the capital — cities like 6th of October, Sadat City, 10th of Ramadan and others that were specifically built to serve this need. 

But the government’s solution to this new demand was not adequate. It did not build affordable social housing, for example. Instead, it built new housing units intended for the urban middle class and gated communities for the upper class. Ultimately, this led to uneven urban development in both the existing neighborhoods and the new cities. According to the 2017 census, there are about 11.7 million unused housing units in Egypt. Theoretically, this is enough to house 50 million Egyptians, which is half the population. Despite this, the construction of informal settlements and houses on agricultural lands continues in order to meet the needs of millions of poor residents.

With the overcrowding of cities, especially Cairo, entire suburbs and neighborhoods sprang up on adjacent agricultural lands, driven by the poverty of peasants and the failure of social housing programs and the new cities to absorb the enormous demand for housing. 

In his book Understanding Cairo: The Logic of a City Out of Control, David Sims explains that the informal housing sector — primarily established by dividing lands and building on them away from the national housing projects — was the primary source of housing in Cairo. According to Sims, the new cities absorbed only 15 percent of the population increase in Cairo between 1996 and 2006, whereas informal urban development absorbed 79 percent of the population increase in the same period. 

Parallel to this, another wave of informal urbanization began. This time, it encompassed villages too, not just agricultural lands adjacent to the city. Villages became vulnerable to intensified population growth and the state’s inability to provide cheap housing. Suburbs of Cairo like Faisal were no longer sufficient to meet the demands of informal housing due to high prices and real estate speculation. Many workers preferred to build houses in their original villages and pay for the daily commute between cities and rural towns. This led to a construction boom in rural areas, mostly without permits or any intervention from the state. This boom actually lifted a large segment of small-scale farmers out of poverty, and some of them turned into real estate speculators, which only contributed to the expansion and continuation of this business. 

But perhaps the most important contribution to this state of affairs was the new rent law, which raised the prices of rent exponentially and made it quite difficult for both newcomers and existing residents to rent an apartment in the city. The continuous impoverishment of small-scale farmers and the unprofitability of small-scale agriculture are the decisive factors that forced farmers to build on their lands. The “cordon of buildings” came to represent a relief and a blessing. Lands closest to government-approved urban spaces were the most expensive. And thus, both the formal and informal arrangements for urban planning played a strong role in aggravating the practices of real estate speculation in rural areas. 

In recent decades, there were two methods of land allocation for urban development. The first is controlled by the government as the largest landowner in Egypt. The state’s institutions involved are the Armed Forces, the Ministry of Housing, the New Urban Communities Authority, and other local agencies. Usually, these institutions divided the land in favor of private real estate developers who have expanded the residential sector since the 1980s with the main intention of developing cities in desert lands. Alternatively, the state allocated lands to housing cooperatives that obtained them at incredibly cheap prices, which allowed them to play a major role in land speculation in the 1980s and 1990s. 

The second method is informal settlement, in which small landholders played a significant role, especially in the outskirts of major cities. The land division process itself does not need much capital. It was enough that the owner would hang a banner stating that the land is for sale. Then he would sell it to contractors or people wishing to build individual houses. In her book, Galika El Kadi distinguishes between three types of landowners that divided their land: poor farmers forced to sell off small plots of land that are not sufficient for agricultural activity, absentee landowners that do not engage in agricultural activities, the educated heirs of farmers who no longer want to pursue their parents’ line of work. 

To facilitate building on agricultural land, landowners resorted to various tricks that the state was aware of and often supported. For example, red brick factories played a large role in the encroachment saga in the 1970s. Factory owners would pay farmers LE5,000 for each layer of silt removed from an acre of land, so that it could be used in the manufacturing of red bricks — a practice that persists until today. Red brick is still the most widely used material in construction work in Egypt, according to Galila El Kadi. After removing the layer of silt, the land was no longer viable for agriculture, which paved the way for its transformation into prime real estate.

The accelerated process of building on agricultural land was driven by two factors. The first of which was the comparative advantage of farmland over desertland. Farmlands are closer to the urban center than desert lands, and they are also more closely connected to energy grids, the Nile, and railways. For this reason, they are more easily accessible and cheaper in terms of construction, housing, and all industrial and residential uses. The second factor was an economic shift. The increasing migration to the Gulf made real estate investment seem more worthwhile as a storehouse for workers’ savings abroad. It was also the best and most efficient way to satisfy the growing demand for housing, especially as migrant workers wished to live close to their towns and villages upon returning from the Gulf, not leave to the remote desert cities. 

With expanding urbanization, it was only logical that both the informal and formal housing sectors would be sufficient for solving the housing crisis. However, the opposite happened. The lack of national public housing, via social housing projects or housing cooperatives, the common delay in delivering housing units, and the rampant corruption and favoritism practices in state-led housing initiatives all led to a hike in the prices of informal housing. Consequently, more construction on agricultural lands took place, especially in the outskirts of major cities like Cairo and Alexandria because they became more profitable. 

Mubarak’s regime was content to be satiated with worker remittances from the Gulf. Mubarak’s idea was to make up for the lost agricultural land with desert reclamation projects, so the government never genuinely intervened to stop the ensuing tragedy. 

Little by little, the economy shifted toward the real estate bubble, and everyone’s dream became owning a private house. This was the Egyptian version of the American Dream. We will all travel to the Gulf, make money, and come back to purchase land that we can build on. 

This is why Mubarak’s state dealt with the encroachment crisis with considerable complacency. For even though the media publicly denounced the encroachment practices, the regime knew that they were part of the corruption and patronage arrangements for the National Democratic Party, and an important entrypoint for political control and securing of loyalty in rural areas. It is not surprising, then, that Kamal al-Shazly and Ahmed Ezz, two of the NDP’s most prominent figures, are involved in cases of building on agricultural lands. Shazly himself was a key figure in facilitating the process of building houses on agricultural land in his hometown in Bagour, Menofia. 

When the January 2011 revolution broke out, construction on agricultural land boomed. According to Prime Minister Mostafa Madbouly, “Egypt lost 400,000 acres of the finest agricultural land in the world, 90,0000 of which since 2011.”

Today, after decades of building on agricultural lands, the state wants to turn a new page, fearing for Egypt’s food security. “If there is no decree to prevent informal construction on agricultural land, nobody will know its fate a few years down the line,” said Madbouly in a recent address. Therefore, the state will no longer tolerate such violations. 

But more importantly, the state wants to curb the informal sector. Construction without permits, encroachment on agricultural land, illegally building top floors, and other practices are not problems in and of themselves only. They are also a wasted tax resource that the state wants to take advantage of. The state wants to formalize everything related to real estate, to make it officially monitorable and taxable, and this is consistent with its relentless attempts to legalize everything in the economy. The reconciliation law and the upgrade of the registration system for real estate units, which will require the creation of a national identification certificate for each apartment or house, are all part of an endless effort to formalize and control the informal real estate sector. The government does not want to demolish the houses that were built on agricultural lands. It knows that this is impossible and will literally threaten the livelihoods of millions of people. Despite their rarity when compared to the amount of existing housing violations, scenes of demolitions and evictions actually provoked anger in many Egyptians. 

It would be an oversimplification to consider that the only goal for the reconciliation law is to collect money. Apart from this, it is part of the government’s strategy to control the real estate sector completely and pave the way for raising massive taxes from the inflated sector through the real estate tax laws that were previously passed. 

Nonetheless, the state is unable to address the structural causes that drive construction on agricultural land. Small farming is still a non-lucrative economic activity in Egypt. Therefore, small farmers will continue to turn their small plots of agricultural land into concrete for construction. That along with the inability of local agencies to control urban sprawl, not to mention the massive corruption and patronage networks that exist in bureaucratic institutions, will hamper the ambitious task of formalizing everything over night. 

Despite the government’s promises to build one million housing units, those units do not target rural inhabitants. Apparently, decision makers still regard the right to housing as something exclusive to urban dwellers. In addition to this, the absence of labor-intensive jobs that could absorb the population surplus in rural areas deprives farmers of any meaningful income, which would have otherwise discouraged them from building on their agricultural lands or becoming informal real estate speculators themselves. 

In conclusion, the state wants to end the crisis of construction on agricultural lands without answering the question of what prompted those farmers to spoil their land and build on it to begin with. But this is practically impossible if the economic relations between rural areas and urban centers, as well as the economic structure of Egypt as a whole, are not radically changed. And without a true ability to absorb the surplus labor in rural areas into remunerative economic activities with suitable housing options, construction and encroachment on agricultural land will continue.

Mohamed Ramadan 

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