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Egypt Agribusiness Report Q4 2009
Business Monitor International, Aug 2009, Pages: 57
Business Monitor International's Egypt Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Egypt's agribusiness service.
The latest Egypt Agribusiness Report is published as the global recession continues to strangle economic fundamentals. However, analysts are growing increasingly optimistic that the contractions witnessed in many markets are bottoming out, leading to the prospect of improved dynamics through the remainder of 2009 and into 2010. In Egypt, agricultural initiatives aimed at improving self-sufficiency have begun to reap rewards, yet there remains room for much improvement.
The Egyptian agribusiness sector faces mounting challenges. In addition to the population expanding faster than any in the Arab world, the lack of domestically available water continues to undermine many attempts to increase productivity. Water usage per capita is 800 cubic metres, some way below the recognised water poverty line of 1,000 cubic metres. This means that agricultural producers face an uphill task in husbandry, as household water consumption increasingly competes with the needs of crops and livestock.
So as to encourage a greater level of agricultural production, the government has made significant efforts to improve productivity. The selling of state-owned enterprises, have helped prick private sentiment. Foreign direct investment flows have been liquid, although it should be noted that a large proportion of such capital is leveraged through firms with interests in sectors, such as tourism, which have suffered markedly during the financial crisis.
Meanwhile, graduates have been encouraged to get into husbandry with low interest loans and free animals to start them off; this has fuelled a marked upswing in those wanting to work rurally, particularly so considering the congestion of the major cities and diminishing employment potential. The disbursement of modern technology has helped the cultivation of a variety of fruits and vegetables to such a degree that exports to neighbouring countries are possible.
Among the main crops produced domestically, sugar is expected to post the strongest growth through to 2013, as planted area increases and as attempts to reduce the substantial import bill are implemented. Beet in particular will fuel the growth as a less moisture dependent crop than cane, thus less of a drain on water and irrigation. Egyptians are among the highest per capita sugar consumers in the world and while improving supply-side fundamentals are of course paramount, curbing such excessively high consumption could accelerate a move towards greater self-sufficiency.
Notwithstanding the large deficit, the 15.83% growth in sugar output remains the highlight of the current outlook, as the gains made in production through other goods are generally quite modest. Double-digit growth is not expected for any other crop throughout the five-year forecasting period. Consumption growth is forecast slightly more favourable dynamics, with beef, rice and milk consumption expanding by 18.26%, 27.96% and 17.32% respectively, as population growth and higher incomes stimulate demand.
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