Fitch Solutions: We are optimistic about the future of agricultural investment in Egypt, but the country will remain a major importer

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Increase in maize production in light of the expected growth of poultry and animal production

 

Fitch Solutions said in its last quarterly report for the current year that it adopts an optimistic view of the agricultural investment sector in Egypt, despite the fact that it is likely to remain a major importer of many agricultural products.
The report indicates that the Egyptian government is still committed to enhancing domestic agricultural production, and investments are expected to grow in the fiscal year 2021/22, as the government plans to enhance local food security due to the concerns highlighted by the epidemic, noting what was stated by the Minister of Planning and Economic Development, Hala Al-Saeed, On increasing public investments in agriculture to 35.5 billion pounds in 2020/21, after it was 33.9 billion pounds in 2019/20.

Fitch Solutions expects that the severe shocks of Covid-19 will subside during the remainder of 2021, with the increase in the growth of the Egyptian economy, compared to other countries in the region, in the short and long term.
She said that Egypt is one of the countries where the real GDP did not decline in 2020, rather it achieved a growth of 3.6 percent, and it expects the growth rate to reach about 4.3 percent in the period from 2021 to 2025.

 

Government programs support the growth of corn and wheat production, but the growth of imports will be greater

The report finds that higher demand for meat and dairy products will be associated with higher incomes and stable growth in GDP, as well as population growth.
The report expects the expansion of domestic investment over the next five years, as companies seek to benefit from the increasing domestic demand and exports, especially to the Middle East and North Africa.

Fitch expects poultry production to increase by 4.2% from 2021 to 2025.
The report expects a decline in crop production in Egypt during the same period, and imports from the European Union will increase, as Egypt is one of the largest importers of grain in the world. It is also expected that wheat and corn imports will increase, which will lead to an increase in the deficit in the coming years, and as a result of this deficit, the company expects an increase in demand. on corn and wheat production from 2021 to 2025.
Fitch expects wheat production to increase by 0.9% from 2020/21 to 2024/25, to reach 9.2 million tons in 2024. With government programs, the World Bank-financed irrigation modernization project in 2013 aims to increase the efficiency of the irrigation system by 75 percent. %.
The Minister of Planning indicated that the area allocated for growing wheat will witness an increase of 200,000 feddans, and the area allocated to oilseeds will increase by 220,000 feddans during the five years.
The report shows that, according to the Food and Agriculture Organization of the United Nations, the recent reform of the food subsidy system in Egypt led to a decline in wheat consumption between 15 and 35%.
The report pointed out that Egypt’s goal towards self-sufficiency in wheat production remains elusive and imports will continue, and it expects Egypt to remain one of the largest importers of wheat in the world in the coming years.
Fitch Solutions expects the demand for maize to expand from the rest of the grains due to updates in irrigation techniques and an increase in local demand for maize after moving away from water-intensive crops such as rice in light of water scarcity concerns, and what the Agricultural Research Center in Egypt is doing using high-yielding seeds that Consumes less water and delivers high productivity.
She pointed out that corn imports will continue to rise, as she expects a recovery in the livestock production sectors in Egypt, especially the poultry wealth, which mainly depends on corn as animal feed. She also expects an increase in corn production by 1.6 percent during the current fiscal year.
The report highlights the increasing concerns regarding Egyptian water security with the approaching construction of the Grand Ethiopian Renaissance Dam and the risks that Egypt will face regarding the Nile water supply, which will lead to a sharp decline in rice production in the coming years, and Egyptian imports of rice will increase to compensate for the high demand.

 

4.3% average growth of the Egyptian economy between 2021 and 2025

Fitch expects rice consumption to rise by 0.9% from 2021 to 2025 to reach 4.5 million tons in 2025 due to a decline in bread consumption following the government’s new food subsidy plan.
The report added: “Rice production will be negatively affected in the country and in this regard the Egyptian government is making a desperate attempt to reduce water consumption by limiting the area of ​​cultivable rice production and banning production outside the designated areas.”
The report pointed out the continuation of government efforts to enhance local sugar production and the readiness to partner with the United Arab Emirates to produce up to one million tons of sugar annually by 2022/23.

The government is seeking to increase the local area of ​​sugar beet cultivation by 40,000 feddans, to reach 600,000 feddans in 2020/2021.

Fitch explained that the Egyptian government imposed a new sugar export tariff of about $165 per ton in an attempt to ensure domestic supply and demand levels.
With regard to the production of fertilizers, the report expects a number of investments that will be made soon and are planned to be implemented in Egypt, which will lead to an increase in production levels in the coming years.

 

 

Written by – Hala Mosbeh

The article “Fitch Solutions”: We are optimistic about the future of agricultural investment in Egypt, but the country will remain a major importer. It was written in Al Borsa newspaper.