Nivex Farms for Agriculture Investment & Exporting achieved sales of $180m in the past export season failing to realise its target of $200m.
The chairperson of the company, Nabil Yacoub, said that the target was first set at EGP 200m between September 2016 and May 2017, but importers in foreign markets reduced their offers, knowing that the flotation of the pound meant more profits for Egyptian manufacturers.
The Central Bank of Egypt (CBE) floated the local currency in November 2016, pushing the exchange rate to EGP 17.85 to the dollar, up from EGP 8.88 before the decision.
The flotation of the pound opened the door to new exporters last year, which made them offer low prices at the beginning of the export season, forcing the market to work at the same prices throughout the season.
Yacoub said that Nivex managed to cover the demand of its clients abroad without entering new markets, noting that the flotation decision serves the exports sector, thanks to the lower prices and better competitiveness of the Egyptian products abroad.
The previous seasons witnessed a decline in the value of exports due to the weak competition of Egyptian products against the products of other countries, which was driven by higher domestic production costs.
Nivex sought to increase its exports in 2017 by 10%, but the results at the end of the year came in contrast to expectations at $180m only.
The company owns about feddans used in export crops and leases a similar amount from the armed forces to meet the demand of its clients. Exports is at 90% from the total production and the remaining 10% is injected into the domestic market.
Yacoub said that the decline in exports was in the value not the quantity, explaining that the market is working normally, but the value of currency itself moves up and down due to the volatility of the global market.
He pointed out that the decline in growth rates in the sector of exports of agricultural crops during the last season, led to a decline in the value of the euro, while the Egyptian companies reduced the selling prices to be able to compete with other products.
He added that the high cost of production input, transportation, and decline in tourism all hinder the way to achieve the target in 2017.
Yacoub noted that the company is unable to raise its prices abroad to stay in the competition with Spain, Morocco, and Israel, pointing out that the companies that deal with the European market will raise their exports in 2018 to compensate for the low prices and move into larger markets.
He praised the new export subsidy program approved by the government, saying it is good enough to put exports on the beginning of development, but needs more effort and cooperation with companies to develop strong plans to open new markets.
Many countries, including Arab states, he explained, provide more support. Morocco, for instance, provides lands on usufruct scheme to investors for 99 years, next to subsidising production input and shipping, he added.
He called on the government to facilitate all the difficult measures suffered by the agricultural sector so as to be able to compete with greater strength globally.
Yacoub also asked the government to ink a scheme to open new markets for Egyptian onions and grapes, noting that the export agreement with China has not been activated on grapes so far.
He also said that the government should define the objectives of the agricultural sector, so that it can develop in a comprehensive manner, and encourage the private sector to pump more investments to increase the exports.
Yacoub said that the agricultural crops, whether local or exported, face several problems warns a collapse despite the current strength. “Egypt is essentially an agricultural country, but recent legislation and procedures are not in its favor,” he stressed.
The Ministry of Petroleum raised the price of diesel twice in one year, the first in November 2016 by 30.5% then again by over 50%.
Yacoub pointed out that transportation is one of the main problems facing the sector after the hike of fuel prices, where fuel is needed to move production input of seeds and fertilisers through to shipping the crops to the packaging terminals then abroad or to the local market.
He pointed out that the transportation sector is vital for agricultural crops and the deterioration of it conditions and rising costs represent 80% of the challenges facing the sector causing many companies to exit the market.
He pointed out that toll on dessert roads operated by the armed forces have become very high and constantly increasing.
The fall of tourism revenues forced the agricultural products exports to decline, Yacoub said, explaining that goods were often shipped to European countries on passenger flights.
He added that the decline in the number of tourist inflow to Egypt caused the number of planes and flights to come down, which meant reducing the quantity of crops shipped on these flights.
Meanwhile, Yacoub said that the African market is big but requires a realistic plan that considers the strong competition there from countries like Senegal.
He explained that the opening of new markets is not a simple step, especially in the presence of obstacles in the external market, the most important of which is the agricultural quarantine authorities in these markets that often demand certain requirements that the Egyptian products cannot fulfill.
As for East Asian markets, he said that they can also absorb large quantities of citrus and vegetables, but they need strong transport traffic to speed up access to increase competitiveness.