Qalaa Holdings’ Dina Farms aims to achieve 38% growth in sales to reach EGP 790m in 2017, up from EGP 570m in 2016.
Managing director of the company, Raouf Tawfik, said that Dina Farms intends to export 2,400 tonnes of oranges to Europe in 2017, along with the production of 100 feddans of grapes, so as to support dollar proceeds.
He added that the company channels all of its production of packaged milk and fresh fruits to local markets, noting that the products are free from preservatives, which shortens their expiration dates.
Tawfik said that the company relies 100% on the production of its farms, unlike other companies that buy raw milk from different sources.
He pointed out that the company has one of the largest livestock farms in Africa, with over 14,000 cows, including 8,000 Holsteins, that produce milk.
He noted that prices of raw milk rose by 49% to reach EGP 5.68 per liter, up from EGP 3.8 per liter in December 2015. At the same time, the cost of feed per cattle increased by 104% to EGP 92 per day—up from EGP 45.
Moreover, the prices of corn and soybeans increased to EGP 4,200 and EGP 8,500 respectively, compared to EGP 1,800 and EGP 4,000 in 2016.
Tawfik said that the milk pricing formula is made up of two parts: feed and fixed costs.
He added that the increased cost of feed came on the back of the depreciation of the national currency on the unofficial market, stressing that it was not linked to the flotation—unlike vaccines, which doubled in price in November.
He noted that the flotation secured transparency and stability needed by investors to calculate the costs of operation and taxes.
Furthermore, he added that the flotation prompted self-sufficiency in some products that cost less to import than to produce, including milk powder.
He explained that the cost of producing a tonne of milk powder last year stood at over EGP 35,000. Yet, following the flotation, it now costs EGP 40,000, selling at EGP 42,000-46,000.
Tawfik said that the high price of milk powder—driven by the cost of imports—revived the sales of local farms.
He explained that production of milk powder is safe for all farms, as it can preserve the production if not the entire supply is sold. He pointed out that Dina Farms’ dairy factory receives 25% of the production per day, selling the rest to local factories.
He added that the company is seeking to raise its production capacity through projects that are still under study.
Tawfik said that amongst the challenges facing the sector is the limited number of organised farms, which would allow raising the quantity and quality of milk.
He added that the future lies only a few steps ahead—following the government’s recent economic reform measures in the sector of food investments—especially as the exchange rate attracts farmers to export.
He pointed out that the company’s strategy this year is based on securing alternatives for imported goods—especially corn. He explained that the cost of cultivating a tonne of corn stands at EGP 3,300—EGP 700 less than importing—which has driven the company to cultivate 5,700 feddans (5,916 acres) with corn this year.
Dina Farms has 9,600 feddans (9,963 acres) of land on the Cairo-Alexandria Desert road, along with a leased farm consisting of 2,100 feddans (2,179 acres) in Nubaria, Alexandria.
The current cultivated area of corn amounts to 520,000 feddans (539,700 acres). Each feddan (1.038 acres) produces 2.5 tonnes on average. The needs of the market amount to 4m-5m tonnes per year.