Egyp­tian sugar pro­duc­tion to in­crease by 7% in MY 2017/2018: GAIN Re­port

THE GOVERN­MENT IN­CREAS­ING THE SUP­PLY PRICE OF SUG­AR­CANE AND BEETS WILL RE­SULT IN AN E PANSION IN TO­TAL HAR­VESTED AR­EAS TO MEET DE­MANDS, AC­CORD­ING TO GAIN TO­TAL DO­MES­TIC SUGAR CON­SUMP­TION IN MY 1 1 WILL IN­CREASE BY %

The Daily News Egypt - - Business - By Reem Hosam El-din

The sugar cri­sis, which has been cast­ing its shadow for sev­eral months over the Egyp­tian mar­ket, has been re­solved at last. Now that the govern­ment has made sugar avail­able in the Egyp­tian mar­ket, sugar re­serves are fore­cast to in­crease in the coun­try dur­ing the up­com­ing months of the new fis­cal year.This is ex­pected to re­sult in higher sugar im­ports and more sugar avail­abil­ity in the mar­ket. The Egyp­tian govern­ment is now buy­ing at higher prices, en­cour­ag­ing farm­ers to in­crease their pro­duc­tion in or­der to avoid an­other year of short sup­ply.

The an­nual re­port, is­sued by the Global Agri­cul­tural In­for­ma­tion Net­work (GAIN) of the US Depart­ment of Agri­cul­ture’s For­eign Agri­cul­tural Ser­vices (FAS) for 2017, has fore­cast that to­tal raw sugar pro­duc­tion in Egypt is ex­pected to in­crease by 7%, or 150,000 met­ric tonnes (MT), in mar­ket­ing year (MY) 2017/2018, to even­tu­ally reach 2.42 mil­lion met­ric tonnes (MMT).

FAS Cairo at­tributes this in­crease to an ex­pan­sion of the to­tal ar­eas to be har­vested, which will be driven by an in­crease in the govern­ment’s sup­ply price.

To­tal do­mes­tic con­sump­tion in MY 2017/18 is fore­cast to in­crease by 3.3%—that is, to 3.05 MMT, com­pared to 2.950 MMT in the pre­vi­ous year. Sugar im­ports are fore­cast to re­main sta­ble at 830,000 MT, while ex­ports are ex­pected to drop by 33% to 200,000 MT.

Ac­cord­ing to the re­port by GAIN, the cul­ti­vated lands are dis­trib­uted on sug­ar­cane and beet crops.

When it comes to sug­ar­cane, it is widely cul­ti­vated in trop­i­cal and tem­per­ate re­gions in Egypt, such as Up­per Egypt.Sug­ar­cane is planted on a nar­row strip of land along the banks of the Nile, and it is specif­i­cally planted in spring and au­tumn. Dur­ing spring, the crop is cul­ti­vated be­tween Fe­bru­ary and March, while in au­tumn, it is cul­ti­vated from Septem­ber through Oc­to­ber.The crop takes 11 to 12 months to grow.

FAS Cairo fore­casts that the cul­ti­vated ar­eas of sug­ar­cane will in­crease by 9% in MY 2017/2018.This means that cul­ti­vated ar­eas will in­crease from 100,000 hectares (ha) to 119,000 ha. These ar­eas are ex­pected to pro­duce about 12.580 MMT of sug­ar­cane.

How­ever, the govern­ment’s adop­tion of a pol­icy to en­cour­age farm­ers to grow beets over sug­ar­canes in or­der to ra­tio­nalise the use of wa­ter has been ap­par­ently in­ef­fec­tive.The govern­ment’s at­trac­tive sup­ply price of sug­ar­cane makes it the cash crop of choice in Up­per Egypt; hence, the econ­omy of Up­per Egypt is so heav­ily de­pen­dent on sug­ar­cane pro­duc­tion that dis­rup­tions to the ar­eas planted with the crop would im­pact the liv­ing con­di­tions of 150,000 fam­i­lies that de­pend on it.Also af­fected would be a plethora of an­cil­lary busi­nesses in­clud­ing in­put providers, ir­ri­ga­tion providers, lo­gis­tics,met­al­lurgy,as well as all non-com­mer­cial ac­tiv­i­ties, such as ed­u­ca­tion and health­care.The frame of mind of such an im­por­tant eco­nomic pil­lar can be summed up by what a farmer re­marked to FAS Cairo dur­ing a visit to the area: “we grow sug­ar­cane be­cause our fathers and their fathers used to grow it,and we can­not change this.”

There are nine sug­ar­cane re­finer­ies in Up­per Egypt that have a pro­duc­tion ca­pac­ity of around 10,200 MMT of sug­ar­cane, which re­quires a to­tal area of at least 120,000 ha in or­der to op­er­ate.

The govern­ment has tried im­ple­ment­ing poli­cies to re­duce the ar­eas cul­ti­vated with sug­ar­cane due to the crop’s high wa­ter con­sump­tion; how­ever, these have been un­suc­cess­ful. Poli­cies de­signed to move pro­duc­tion away from sug­ar­cane find them­selves squeezed be­tween the ham­mer of wa­ter scarcity and the anvil of sugar pro­ces­sors’ de­mand for raw ma­te­rial.

FAS Cairo fore­casts MY 2017/18 sugar beet area har­vested to in­crease by 10%, or 20,000 ha, to reach 224,000 ha. With an in­creased area comes a con­comi­tant in­crease in pro­duc­tion, ex­pected to reach 9.5 MMT, an in­crease of 3.4% or 313,000 MT. FAS Cairo es­ti­mates the area har­vested in MY 2015/16 to stand at 204,000 ha.The in­crease in the area and the sub­se­quent pro­duc­tion is at­trib­uted to the in­crease in govern­ment’s sub­sidised sup­ply price, which will en­cour­age farm­ers to grow sugar beets over other crops.

Egypt does not pro­duce beet seeds lo­cally be­cause of the re­quire­ments of tem­per­a­ture and sun­light. Among other con­di­tions, seed pro­duc­tion re­quires pack­ing the roots at 8 de­grees Cel­sius for three months and day­light du­ra­tion of 16-18 hours.As a re­sult, Egypt de­pends on seed va­ri­eties im­ported from Ger­many, Den­mark, Nether­lands, France, and Swe­den.

FAS Cairo fore­casts re­fined sugar pro­duc­tion in MY 2017/18 to in­crease by 7% or 150,000 MT to reach 2.42 MMT, as com­pared to the MY 2016/17 es­ti­mate of 2.27 MMT. Beet sugar pro­duc­tion in MY 2017/18 is fore­cast to in­crease by 4% or 50,000 MT, reach­ing 1.32 MMT as com­pared to 1.27 MMT the pre­vi­ous year. Sugar from sug­ar­cane is ex­pected to in­crease by 10% or 100,000 MT to reach 1.1 MMT com­pared to 1.0 MMT in the pre­vi­ous MY.

FAS Cairo at­tributes the in­crease in pro­duc­tion to an in­crease in to­tal area planted in both sugar beets and sug­ar­cane.The growth in planted area is driven by the govern­ment’s de­ci­sion to in­crease the sup­ply price for sug­ar­cane and beets, which will en­cour­age farm­ers, es­pe­cially those who plant sug­ar­cane, to in­crease their pro­duc­tion and de­liver it to the mills. In April 2017, two months af­ter the on­set of the sug­ar­cane har­vest, sug­ar­cane pro­ces­sors in Up­per Egypt re­gion re­ported an in­crease of 10% in the de­liv­ery of sug­ar­cane to re­finer­ies as com­pared to same pe­riod in 2016. In MY 2015/16, some farm­ers pre­ferred to sell some of or all their crops to juice shops and mo­lasses pro­duc­ers be­cause of the higher prices of­fered, as com­pared to the govern­ment’s sup­ply price.

FAS Cairo fore­casts re­fined sugar pro­duc­tion in MY 2017/18 to in­crease by 7% or 150,000 MT to reach 2.42 MMT, as com­pared to the MY 2016/17 es­ti­mate of 2.27 MMT. Of this to­tal fore­cast, 1.32 MMT of sugar will be derived from sugar beets, while 1.1 MMT will be sourced from sug­ar­cane. Beet sugar pro­duc­tion in MY 2017/18 is fore­cast to in­crease by 4% or 50,000 MT, reach­ing 1.32 MMT as com­pared to 1.27 MMT the pre­vi­ous year, as men­tioned pre­vi­ously. Sugar from sug­ar­cane is ex­pected to in­crease by 10% or 100,000 MT to reach 1.1 MMT com­pared to 1.0 MMT in the pre­vi­ous MY.

FAS Cairo at­tributes the in­crease in pro­duc­tion to an in­crease in to­tal area planted in both sugar beets and sug­ar­cane.The growth in planted area is driven by the govern­ment’s de­ci­sion to in­crease the sup­ply price for sug­ar­cane and beets, which will en­cour­age farm­ers, es­pe­cially those who plant sug­ar­cane,to in­crease their pro­duc­tion and de­liver it to the mills. In April 2017, two months af­ter the on­set of the cane har­vest, sugar cane pro­ces­sors in Up­per Egypt re­gion re­ported an in­crease of ten per­cent in the de­liv­ery of cane to re­finer­ies as com­pared to same pe­riod in 2016. In MY 2015/16, some farm­ers pre­ferred to sell some or all their crop to juice shops and mo­lasses pro­duc­ers due to the higher prices of­fered, as com­pared to the govern­ment’s sup­ply price.

FAS Cairo ex­pects to­tal do­mes­tic con­sump­tion in MY 2017/18 to in­crease by 3.4% or 100,000 MMT to reach 3.050 MMT. Con­sump­tion in MY 2016/17 is es­ti­mated at 2.950 MMT. The in­crease is at­trib­uted to the an­nual pop­u­la­tion in­crease. Ad­di­tion­ally, Egyp­tians are ex­pected to in­crease their sugar con­sump­tion to meet caloric needs, sub­sti­tut­ing sugar for other key com­modi­ties, such as poul­try and beef, as a re­sult of an re­cent in­crease in the price of food.

Egypt con­tin­ues to pro­vide re­fined sugar to food sub­sidy ben­e­fi­cia­ries at prices below the free mar­ket prices. Egyp­tian cit­i­zen ben­e­fi­cia­ries are re­ceiv­ing a monthly cash trans­fer of EGP 21 ($1.17) per per­son through a smart card sys­tem.A fam­ily of four is ex­pected get a monthly cash trans­fer of EGP 84 ($4.7), en­abling them to meet their sugar needs, as well as pur­chase other food com­modi­ties.

In terms of sugar trade, Egypt’s sugar im­ports in MY 2017/18 are fore­cast to re­main sta­ble at 830,000 MMT. In MY 2016/17, the ma­jor­ity of sugar im­ports were im­ported through Hold­ing Com­pany for Food In­dus­tries (HCFI) and the Min­istry of De­fence’s Na­tional Ser­vice Projects Or­ga­ni­za­tion (NSPO). FAS Cairo be­lieves that HCFI and NSPO will con­tinue to lead and im­port most of the sugar needed to bridge the gap be­tween do­mes­tic pro­duc­tion and con­sump­tion. The de­val­u­a­tion of the Egyp­tian pound to the US dol­lar made it harder for im­porters to buy from in­ter­na­tional sup­pli­ers. Ac­cord­ing to GAIN’s fore­cast, Brazil is likely to re­main Egypt’s main raw sugar sup­plier in MY 2017/18, while Su­dan and Kenya re­ceive 50% of Egypt’s sugar ex­ports and are ex­pected to re­main the main ex­port des­ti­na­tions in MY 2017/18. It is worth not­ing that Egypt ex­ports sugar to the ma­jor­ity of Arab and some African coun­tries.

SU­DAN AND KENYA RE­CEIVE % OF EGYPT S SUGAR E PORTS AND ARE E PECTED TO RE­MAIN THE MAIN E PORT DES­TI­NA­TIONS IN MAR­KET­ING YEAR 1 1

Newspapers in English

Newspapers from Egypt

© PressReader. All rights reserved.