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Egypt Agribusiness Report Q2 2011

Egypt Agribusiness Report Q2 2011

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Additional Information

Price	$530.00
Publisher	Business Monitor International
Date of Report	Feb 17, 2011

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Quick Overview

BMI View: Although the current tensions in Egypt are largely political in nature, food price inflation is a strong underlying reason. With grain prices currently elevated and rising, the Egyptian pound depreciating (increasing the cost of imports) and the livestock sector still hindered by disease concerns, food prices will likely remain elevated in the country over the short term. The Egyptian government is attempting several measures to increase production of grains and livestock by trying to acquire land and importing live cattle. However, a rising and increasingly wealthy population will continue to put a strain on production balances in a country (and region) that is known for its inability to produce surpluses of even staple goods.
Key Trends
?? Beef production growth to 2014/15: 30% to 426,000 tonnes. The government is expected to help convince farmers to increase herd sizes through live cattle imports Increasing consolidation and commercialisation of the sector, should also help boost production.
?? Corn consumption growth to 2015: 23% to 14mn tonnes. The demand for corn is closely linked to the livestock industry, which often uses corn as a relatively cheap source of feedstock. Consumption will also grow due to the increasing prevalence of corn as a mix constituent of baladi bread.
?? Wheat consumption growth to 2015: 15% to 20mn tonnes. Egyptians are some of the highest per capita consumers of wheat in the world. As such, the main growth driver should be population increases due to the saturation of the market.
?? 2011 Real GDP Growth: 5.1% (same in 2010; predicted to average 5.2% from 2010 until 2015). ?? Headline Inflation: 10.3% year-on-year in December 2010 (up from 13.2% y-o-y in December 2009).
Industry Developments As concerns over Egypt's 2011/12 wheat crop continue to surface, the US Department of Agriculture in Cairo has suggested that it will raise its forecasts for Egyptian wheat imports to above 10mn this year, as yields are threatening to fall due to a lack of available seeds. The potential for imports, which have yet to be announced by the government, would help mitigate rising tightness in the domestic rice market as the government has been encountering problems sufficient rice stocks and is hoping to use wheat as a substitute. Nonetheless, the possibility of Egypt importing large quantities of wheat has the potential to spur global prices even further. Wheat prices over the medium term should remain sensitive to large import tenders.
Dairy is among the better performing of Egypt's agribusiness subsectors, with numerous investment and employment opportunities throughout the value chain and, increasingly, in the manufacture of processed dairy goods. In June 2010, a public share offer by Egyptian dairy goods and juice maker Juhayna Food Industries, worth EGP192mn (US$34mn), was oversubscribed by 6.8 times. Juhayna is said to be a leader in Egypt's packaged dairy goods sector with a 65% market share, according to some sources. The total initial public offering represents 39.6% of the capital of the company, which has said it will use the extra funds to expand food output, including investments in dairy production.
Traditionally, Egypt has been a net rice exporter, with the majority of exports going to regional partners such as Syria, Turkey, Jordan and Saudi Arabia. However, as production is being cut domestically, Egypt must increasingly look abroad to meet its rice demand. To this end, in April 2010, a unit of Egyptian private equity firm Citadel Capital signed a 30-year lease agreement for land in Sudan to build the country's first large-scale commercial rice farm. The land was leased by El-Nahda for Integrated Solutions and covers 60,000 feddans (25,210 hectares).

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Egypt Agricultural SWOT ..................................................................................................................................................................................... 7
Egypt Political SWOT ........................................................................................................................................................................................... 8
Egypt Economic SWOT ......................................................................................................................................................................................... 9
Egypt Business Environment SWOT ..................................................................................................................................................................... 9
Industry Forecast Scenario ........................................................................................................................... 10
Egypt Rice Outlook .................................................................................................................................................................................................. 10
Table: Egypt – Rice Production, Consumption & Trade ..................................................................................................................................... 11
Table: Egypt – Rice Production, Consumption & Trade ..................................................................................................................................... 12
Egypt Livestock Outlook .......................................................................................................................................................................................... 14
Table: Egypt – Poultry Production, Consumption & Trade ................................................................................................................................ 15
Table: Egypt – Beef & Veal Production, Consumption & Trade ........................................................................................................................ 15
Table: Egypt – Poultry Production, Consumption & Trade ................................................................................................................................ 17
Table: Egypt – Beef & Veal Production, Consumption & Trade ......................................................................................................................... 18
Egypt Sugar Outlook ................................................................................................................................................................................................ 19
Table: Egypt – Sugar Production, Consumption & Trade .................................................................................................................................. 19
Table: Egypt – Sugar Production, Consumption & Trade .................................................................................................................................. 21
Egypt Dairy Outlook ................................................................................................................................................................................................ 22
Table: Egypt – Milk Production & Consumption ................................................................................................................................................ 23
Table: Egypt – Butter Production, Consumption & Trade .................................................................................................................................. 23
Table: Egypt – Cheese Production, Consumption & Trade ................................................................................................................................ 23
Table: Egypt – Whole Milk Powder Consumption & Trade ................................................................................................................................ 24
Table: Egypt – Milk Production & Consumption ................................................................................................................................................ 25
Table: Egypt – Butter Production, Consumption & Trade .................................................................................................................................. 26
Table: Egypt – Cheese Production, Consumption & Trade ................................................................................................................................ 26
Table: Egypt – Whole Milk Powder Consumption & Trade ................................................................................................................................ 26
Egypt Grains Outlook .............................................................................................................................................................................................. 28
Table: Egypt – Wheat Production, Consumption & Trade .................................................................................................................................. 29
Table: Egypt – Corn Production, Consumption & Trade.................................................................................................................................... 29
Table: Egypt – Wheat Production, Consumption & Trade .................................................................................................................................. 31
Table: Egypt – Corn Production, Consumption & Trade.................................................................................................................................... 31
Competitive Landscape ................................................................................................................................ 33
Table: Agricultural Commodity Producers & Traders ....................................................................................................................................... 33
Table: Agribusiness Suppliers ............................................................................................................................................................................ 34
Table: Integrated Agricultural Producers........................................................................................................................................................... 35
Commodity Price Analysis ............................................................................................................................ 36
Monthly Softs Update ............................................................................................................................................................................................... 36
Cocoa.................................................................................................................................................................................................................. 36
Table: Cocoa ...................................................................................................................................................................................................... 36
Coffee.................................................................................................................................................................................................................. 37
Table: Coffee ...................................................................................................................................................................................................... 37
Milk ..................................................................................................................................................................................................................... 38
Table: Milk ......................................................................................................................................................................................................... 38
Sugar .................................................................................................................................................................................................................. 39
Table: Sugar ....................................................................................................................................................................................................... 39
Grains Update ......................................................................................................................................................................................................... 40
Corn .................................................................................................................................................................................................................... 40
Table: Corn ........................................................................................................................................................................................................ 40
Rice ..................................................................................................................................................................................................................... 41
Table: Rice .......................................................................................................................................................................................................... 41
Soybean .............................................................................................................................................................................................................. 42
Table: Soybean ................................................................................................................................................................................................... 42
Wheat .................................................................................................................................................................................................................. 43
Table: Wheat....................................................................................................................................................................................................... 43
Downstream Supply Chain Analysis ............................................................................................................ 44
Industry Forecast Scenario ...................................................................................................................................................................................... 44
Consumer Outlook .............................................................................................................................................................................................. 44
Food......................................................................................................................................................................................................................... 46
Food Consumption .............................................................................................................................................................................................. 46
Table: Food Consumption Indicators ................................................................................................................................................................. 46
Mass Grocery Retail ................................................................................................................................................................................................ 47
Table: Mass Grocery Retail Sales ....................................................................................................................................................................... 47
Table: Grocery Retail Sales By Format (%) -- Historical Data & Forecasts ...................................................................................................... 48
Trade .................................................................................................................................................................................................................. 48
Table: Trade Indicators ...................................................................................................................................................................................... 49
Macroeconomic Forecast ........................................................................................................................................................................................ 50
Table: Egypt - Economic Activity, 2008-2015..................................................................................................................................................... 51
Industry Trend Analysis ............................................................................................................................... 52
Wheat Imports Could Further Buoy Prices ......................................................................................................................................................... 52
Table: Egypt – Wheat Production, Consumption & Trade .................................................................................................................................. 53
BMI Forecast Modelling ................................................................................................................................ 54
How We Generate Our Industry Forecasts .............................................................................................................................................................. 54