CAIRO: Egyptians have a sweet tooth, and with an ever-growing population, demand for sugar is on the rise. To minimize the increasing reliance on imports, the government is embarking on a broad strategy to boost local sugar production
As a first step to protect local farmers, Egypt recently announced a series of measures to combat the “dumping of white, or refined sugar, in the local market by heavily subsidized sugar industries across Europe.
On Jan. 22, Egypt imposed an anti-dumping duty of LE 500 ($90) per ton. Dumping occurs when a manufacturer in one country exports a product to another country at a price significantly lower than in its home market, or below production costs.
In late February, Investment Minister Mahmoud Mohieldin said Egypt would buy sugar from farmers at LE 200 per ton, up from LE 182 in fiscal year 2007/08 but lower than the LE 250 per ton he initially recommended.
Egypt also said it would invest LE 600 million in the industry over the next three years – LE 200 million per year. At a conference in early March held by the International Sugar Organization (ISO) in Luxor, officials also said Egypt would decease sugar imports by 60 percent come 2012.
Nearly LE 360 million are being invested in the sector in 2009 and that figure may rise to LE 2.4 billion in 2010, Ahmed El-Rakaybi, chairman of the Food Industries Holding Company, told the ISO conference.
Egypt consumed 2.6 million tons of sugar in 2008, according to the Sugar Crop Research Institute (SCRI), but nearly 900,000 of these tons were imported from sugar-producing nations like Germany, Italy, France and Brazil. The remaining 1.7 million tons were cultivated and produced locally.
The SCRI is a sub-division of the Agricultural Research Center (ARC) at Cairo University, which was tasked with developing a strategic vision for Egypt’s sugar industry over the next 10 years.
Sugar rush
Both sugarcane and sugar beet are grown on some 238,000 hectares of land across the country, mainly in Upper Egypt and the Delta. However, Egypt is still one of the world’s largest sugar importers.
Egyptians already maintain one of the highest per capita consumption rates of sugar in the world at 34 kg per person a year. According to the United Nations Food and Agricultural Organization, the global average of sugar consumption per capita is 23 kg per year.
“Although it is still a developing country, Egypt’s direct consumption of sugar per capita is at a near saturation level, said Leonardo Bichara Rocha, economist at the ISO. This is a result of the high use of sugar in both tea and coffee across the Middle East, he added.
The growing demand for sugar, both white and in the form of sweetener, Rocha said, will come straight from the country’s soaring population – growing annually at roughly 1.5 percent – and not from rising income levels.
“Egypt’s population growth rate is above the world average, and that’s just naturally bringing more people that will consume more sugar, Rocha says. “If you have a bigger population, there will be more mouths to feed. Income effects at this point are insignificant.
If sugar production levels in Egypt remain the same, SCRI Director Samia El-Maghraby said, imports will rise substantially to an estimated 1.3 million tons by 2017, a staggering amount considering the surge in sugar prices globally.
The price of refined sugar traded in London has doubled since 2002, advancing 26 percent in 2009 alone to $400 (LE 2,248) per ton, according to Bloomberg.
Increasing local cultivation and production, as well as reducing reliance on imports, is key to stabilizing the sector in the coming decade, analysts say.
SCRI’s strategic vision for the sugar industry, which was presented to the Ministries of Trade, Investment and Agriculture, calls for running Egypt’s 13 sugar processing factories at full capacity. That must be accompanied by expanding the cultivation of sugar beet, which requires less irrigation than cane sugar, to newly reclaimed land, as well as developing mechanisms to increase the yield of the land already being used.
Even though local sugar production has increased from 78,000 hectares in 1980 to 238,000 in 2008, imports have also increased. Rocha is skeptical that merely promoting production will satisfy demand.
“Production has been increasing in Egypt slowly. That means consumption is rising, possibly slightly more than production, Rocha said. “Even with the opening of new refineries, imports are staying high. You are still seeing a rise in the overall imports to Egypt.
El-Maghraby also insists that if Egyptians lowered their daily sugar intake, the country could become 97 percent self-sufficient without opening another sugar processing factory.
“If we reduce our consumption by one spoonful per person every day, we can attain sufficiency, El-Maghraby said. “It’s that simple.
