Interview: Alaa Diab
How can Egypt’s agriculture sector be made more attractive to foreign investment?
ALAA DIAB: Agriculture is one of the most important sectors for business and economic growth in Egypt. Its significant potential stems from the country’s geographic location between Africa, Europe and the Middle East, as well as a favourable climate, good soil quality and abundant manpower. Egypt needs to bank on these resources in order to attract investment. As trade agreements come into place, they will also have a major impact on the ease and efficiency of trade over time, increasing the strategic value of investments in Egypt. Value-added food manufacturing is also important to penetrating high potential markets such as those of sub-Saharan Africa, where a lack of infrastructure and inefficient logistics can create delays that cause a significant proportion of fresh produce to spoil.
The government is moving to boost agricultural growth and plans to make 1.5m feddans (630,000 ha) available for private-sector agricultural development. Another project that will be a fillip to the market is the creation of 100,000 acres of covered plantations. However, notwithstanding the significant efforts under way to make the sector more attractive to investment, additional steps must be taken with regard to the root structure of the sector as a whole.
How are infrastructure and logistics affecting the ability of growers to compete in terms of exports?
DIAB: There are several tiers of growers, from the small grower who has between half an acre and five acres; the medium grower with 20, 30 or 50 acres; and large companies with hundreds or thousands of acres. For the small grower, infrastructural support is key because they lack the capacity to pack and grade their produce in line with market requirements. This calls for investment in logistics and grading centres similar to co-operatives in Europe. Initiatives of this kind would also help to reduce wasted produce, levels of which can be as high as 40-50% due to the lack of supply chains linking the field to the consumer. Increasing efficiency in this area would reduce the markup charged by middlemen, thereby increasing affordability for the end consumer.
Medium and small growers both need assistance with accessing export markets. To this end, the government is embarking on a project to set up logistical centres in each of the governorates. There is also interest in investment in the management of wholesale markets for export, which is a way private sector funds could ease access to international markets. At present, a grower in Upper Egypt has to go through the intermediary system to get produce to Cairo’s wholesale markets, but the time and cost markups at each step along the way makes the produce uncompetitive by the time it reaches its destination.
What challenges does the limited availability of water present to agricultural producers?
DIAB: Egypt has a lot of assets when it comes to agriculture, but one key challenge is water. While the Grand Ethiopian Renaissance dam often makes the headlines, the primary driver for water shortage in Egypt is population growth. Improving irrigation methods would help to rationalise water usage, and growing crops that use less water, or have a shorter growth period, could also reduce demand. Technological advancements in areas like desalination and water collection could also increase the availability of water for agricultural use. Egypt needs a more balanced agricultural policy that safeguards strategic crops and takes into account the most efficient use of water, land and labour. The government is working to limit the cultivation of high-consumption crops like rice. There is talk of limiting sugarcane as well, but it is important to bear in mind that producers of sugarcane supply the sugar factories. Thus, lower cultivation of sugarcane would disrupt steady income and may lead to it being substituted with produce that is more susceptible to market volatility.
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