The poultry industry in Egypt has suffered several successive crises that threaten its continuity, the latest of which was the detention of poultry feed in ports due to the foreign currency crisis and the complications of banks’ letters of credit amid a government move to contain these crises that threaten the entire industry.
Crises have been cascading since the outbreak of the Russian-Ukrainian War, which affected most emerging market economies, especially Egypt, which made drastic decisions to counter the effects resulting from the crisis, including halting letters of credit for imported goods to counter the lack of dollar liquidity, which in turn caused the seizure of fodder in ports and halting its import, making it scarce in the market.
The Central Bank of Egypt (CBE) also stopped dealing with collection documents in import operations, instead using letters of credit with everything except for 15 basic commodities.
This created a crisis for importers due to their inability to provide foreign currency. The decision caused the accumulation of goods in Egyptian ports, and its effects began to be reflected in the local market, especially concerning the scarcity of some commodities and the tendency of merchants to raise their prices at record rates in all commercial sectors.
Moreover, the cancelled collection documents allowed importers to transfer the value of their goods to suppliers after submitting documents listing specific amounts and the date of their collection that could be paid in instalments.
In the case of letters of credit, the bank is an intermediary between the importer and the supplier, guaranteeing the first to obtain commodities that conform to the specifications and assisting the supplier in obtaining all their rights, as the importer pays the entire value of the commercial transaction to the bank before completing the process.
According to estimates by the Ministry of Agriculture and Land Reclaimation, Egypt imports about 75% of its feed and raw materials for the poultry industry. The imports come from the US, Brazil, and Ukraine.
This crisis affected the poultry industry in Egypt in terms of price hikes and poultry producers running out entirely of supplies, creating a situation in which Egypt may very well lose a very important source of protein and food.
Consequently, the government is seeking to solve this crisis, especially in light of a global trend to preserve food security by increasing local production of all agricultural crops and protecting many local industries, especially the poultry industry.
According to an official report issued by the Information Centre of the agriculture ministry that Daily News Egypt acquired, the volume of investments in the poultry industry in Egypt amounts to about EGP 100bn. The industry also employs about three million workers.
The country’s total number of poultry establishments is about 38,000, including farms, feed factories, slaughterhouses, and outlets selling veterinary medicines and vaccines.
The total volume of commercial poultry production in Egypt officially amounts to about 1.4 billion birds and 13 billion table eggs annually.
State support vital to poultry industry
Abdulaziz Al-Sayed — Head of the Poultry Division at the Cairo Chambers of Commerce — said that the state has already taken measures to release feed shipments, but there is a monopoly by importers, pointing out that there is an insane rise in the price of a tonne of feed due to that monopoly.
He explained that once the state releases feed shipments, they go to importers across the country who hike the prices.
He demanded that these monopolists and exploiters should be held accountable by the responsible authorities, pointing out that rapid action must be taken by the Agency for the Prevention of Monopolistic Practices.
Al-Sayed added that about 900,000 tonnes of feed and raw materials were released last week, but the market needs more than two million tonnes now, which means a deficit ranging between 50-60%, indicating that the industry needs about one million tonnes of corn and 500,000 tonnes of soybeans per month.
He also pointed out the need for the state to support this vital industry that contributes to the provision of protein to the Egyptian market and employs thousands of workers, explaining that it is necessary to reconsider activating a daily release instead of a weekly one and providing the necessary dollar liquidity, especially since the industry’s situation has turned from a crisis into a disaster.
One of the farm owners in Qalyubiya said that the cost of poultry production has become high, as producing one kg of poultry initially is about EGP 30, by the time it reaches the final consumer, it increased to about EGP 48, indicating that there are farm owners and merchants about to exit the industry due to the high cost of production.
Meanwhile, a poultry store owner in Cairo said that the margin of profitability is eroding, especially after the rise in prices, pointing out that the price per kg is rising at an almost daily rate and has now reached about EGP 42 from the farm, which will inevitably increase once it gets to the store, explaining that consumers’ purchasing power is diminishing.
