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Egypt Food and Drink Report Q4 2008
Business Monitor International, Oct 2008, Pages: 61
The Egypt Food Drink Report provides independent forecasts and competitive intelligence on Egypt's food and drink industry.
Recent months have seen major developments taking place in Egypt’s food production sector, as discussed in BMI’s recently published Egypt Food & Drink Report for Q408. In a major step forward, in July following years of negotiations, the European Union (EU) reached a preliminary trade agreement with Egypt that will considerably liberalise trade in agricultural products. The long-awaited trade deal should provide a significant boost to Egypt's all-important agricultural sector. Agriculture plays a vital role in the Egyptian economy, with the government placing a significant emphasis on this sector, as it accounts for almost 20% of GDP and employs nearly 30% of the working population.
Under the terms of the agreement, Egypt will also cut import duties on European produced foods such as confectionery, chocolate and bakery products, although alcoholic drinks, tobacco and pork were exempt from the agreement. This free trade agreement falls under the rubric of the Union for the Mediterranean. This latest agreement is expected to form the basis of a future binding agreement, which should further bolster Egypt's agricultural sector's export opportunities.
Currently BMI is forecasting that Egypt’s food and drink exports will grow by 59.4% between 2007 and 2012, which is not only a reflection of the free trade agreement, but also the country’s improving food and drink processing industry. Regional trade agreements such as the Greater Arab Free Trade Area (GAFTA) have also given producers access to a far larger market. Having gone into effect in 2005, GAFTA has gradually lowered customs on locally produced food across a broad range of Middle Eastern countries. These have been the main export markets for Egyptian producers, given the similarity of diets and lack of language barrier, with labelling regulation a major problem for smaller producers. Meanwhile, Africa is quickly becoming another key export market, thanks to its proximity and a lack of domestic production, with Kenya and Sudan currently the two biggest importers.
In anther important trade development, in August the Egyptian government announced that it will resume rice exports at the start of September 2008, a reversal of an earlier policy statement which had said that it would suspend exports until April 2009 as a means of keeping down domestic prices. According to the country's trade minister, exports could reach 1mn tonnes in the 2008-2009 crop year. In explaining his government's initial decision, Egypt's trade minister, Rachid Mohamed Rachid, said 'We were a bit concerned huge increases in price would suck most of the production quantities out of Egypt and that is why we did something we were not very happy to do for a period of time'.
Sharply rising food prices have been the cause of growing unrest in Egypt over this past year, with the government taking a number of measures to deal with the mounting public discontent. With inflation having hit 20% in June of this year and food prices skyrocketing, there has been created a dire situation in the country, with this issue set to remain in the headlines for some time to come.
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