Egyptian producers plan investments, but infrastructure hinders growth

By Eliot Beer

- Last updated on GMT

Egyptian producers plan investments, but infrastructure hinders growth

Related tags Fruit

Egypt’s Galina and Domty plan major expansions and IPOs, as the country suffers from currency and airfreight constraints on food exports, and falling rice and grain production.

Fruit and vegetable producer Galina-Agrofreeze – formally the Egyptian British Company for General Development – plans to double its exports to US$60m by 2016, increasing its international sales of produce from 4,000 tonnes to 8,000 tonnes a year, according to Daily News Egypt. Galina also plans to double its domestic production to 3,000 tonnes a year.

The firm’s CEO, Abdel Wahid Soliman, said an IPO was on the cards to finance the expansion. According to him, strawberry and artichoke products make up around half of Galina’s exports, with the rest made up mostly from beans, peas, mixed vegetables, cantaloupes and pomegranates.

Domty’s $13m factory

Also looking to grow is Domty, whose chairman Omar El-Domaty announced at a press conference a project to build a new US$13m factory in 6th October City. The factory will cover 27,000 square metres and create 500 jobs, with a capacity to produce 300 million units of various products every year.

Earlier this year Domty announced it intended to float on the Egyptian stock market in order to provide capital for its expansion plans – but did not set a firm date for its IPO. The firm did not specify how the new factory would be financed.

Less positive about prospects for expansion was Magdy El-Welely, CEO of El-Welely Group for Investment, who said his firm’s agricultural division had been forced to put US$9.45m-worth of projects on hold because of the Egyptian government’s restrictions on foreign currency deposits.

He told local Egyptian media the group had suspended a US$6.3m development to extract honey glucose from rice, as well as a US$3.15m project to recycle waste from rice production. Since the suspension of rice exports in 2014, El-Welely said the group’s rice mills are working at just 30% of their total capacity.

Rice and grain production fall

According to new data released this month from Egypt’s statistics bureau, the country’s rice production fell 4.5% last year, at 5.5m tonnes, while grain production fell 9% to 21.9m tonnes in 2013/14. But production of both fruits and vegetables rose 8.7% and 3% respectively, with 10.5m tonnes of fruit and 21.8m tonnes of vegetables produced in the year.

According to some firms, though, Egypt’s developing fresh produce sector may struggle to capitalise on its export opportunities, because of a lack of airfreight capacity. Ayman Al-Sheikh, deputy chairman of the Air Transport and Logistics Services division in the Alexandria Chamber of Commerce, said fruit and vegetable exports made up 20% of Egypt’s air cargo – but was struggling to grow further, in part because of a lack of space on aircraft.

He also said 20% of fresh produce exported as damaged because of the poor infrastructure of Egyptian airports – with poor-quality packaging contributing to problems with fruit and vegetable exports.  EgyptAir, which controls 80% of the country’s airfreight capacity, said it was investing in new freighter aircraft, including two Airbus A330-200F cargo planes.

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