Egypt’s Sugar Market: From Shortage to Soaring Prices
Updated 12/12/2023 8:00:00 AM
The sugar industry is one of the strategic industries related to food commodities. In Egypt, sugar production relies on two crops: sugarcane and sugar beet. The economy of Upper Egypt is significantly impacted by the production of sugarcane. However, Egypt has a gap between the production and consumption of sugar, and recently, the sugar market in Egypt has been facing a price surge. Therefore, the authorities have been trying to mitigate this price fluctuation to stabilize the sugar market.
Importing Sugar to Decrease Supply-Demand Gap
Egypt’s sugar production reached around 2.76 million tons in fiscal year (FY) 2022/2023, while its consumption was about 3.68 million tons during the same period, according to the United States Department of Agriculture’s (USDA) annual sugar report on Egypt, published in April 2023. Meanwhile, the country’s sugar production covers between 87.5% and 90% of its demands, while the remaining consumption is met by imports, El Ahram Newspaper quoted Hussein Al-Fendi, head of the Sugar Division at the Federation of Egyptian Industries, as saying in November 2023.
The country imports raw sugar in order to decrease the gap between supply and demand. This comes after Minister of Supply and Internal Trade Ali Moselhi announced in September the import of 200,000 tons of raw sugar.
In 2022, Egypt imported around $200 million worth of cane or beet sugar and chemically pure sucrose in solid form, most of which were from Brazil. Meanwhile, the country exported around $189 million worth of cane or beet sugar and chemically pure sucrose in solid form, most of which were to Türkiye, according to the International Trade Center’s (ITC) Trade Map.
In FY 2022/2023, the amount of sugar produced from sugarcane hit 47% of total sugar output, while 53% came from sugar beets, according to the USDA's report. However, “Egypt does not produce beet seeds locally due to requirements in terms of temperature and sunlight... As a result, Egypt depends on seed varieties imported from Germany, Denmark, the Netherlands, France, and Sweden, which have a less-than-optimal performance in the Egyptian production areas,” the report highlighted.
Sugar Cultivation in Numbers
In Egypt, around 77% of the areas allocated for sugarcane are concentrated in Upper Egypt, impacting the livelihoods of around 200,000 families that work in growing sugarcane, according to the USDA's report.
This comes as Egypt cultivates areas exceeding 300,000 acres of sugar cane and 650,000 acres of sugar beets annually, according to data from the Sugar Crops Council of the Ministry of Agriculture. In March 2023, the country increased procurement prices for the local sugar beets this season by EGP 75 per ton in order to encourage Egyptian farmers to boost the crop’s cultivation. This year, Egypt has cultivated a total of 620,000 feddans of sugar beets, which are 10,000 feddans higher than in 2022, El Ahram Newspaper reported.
In 2022, Egypt launched the largest sugar production factory in the world, and began operations at the Canal Sugar Factory in Minya Governorate. Nirmeen El Sayyad, UN Women Project Manager at the American University in Cairo (AUC) and an economic expert, tells Arab Finance: "The newly established sugar plants will increase their production in the upcoming years for domestic consumption and export purposes. The industry and its performance will be a reflection of the overall economic stability in key performance indicators; once stability is established, the sugar industry will resume its development and growth as projected, especially with regard to boosting sugar exports."
Challenges Facing Egypt’s Sugar Industry
Recently, the prices of sugar in Egypt have fluctuated to unprecedented levels, Ahmed, a 33-year-old citizen, tells Arab Finance: “The price of 1 kilogram of sugar at the wholesome sale markets stands at EGP 42 to 53.” Meanwhile, Mohamed, a supermarket owner, tells Arab Finance: “The price of 1 kilogram is EGP 55, with a little profit margin and difficulty in securing the product.”
This comes as prices of non-subsidized sugar saw a 126.1% inflation during November 2023, compared to November 2022, according to CAPMAS’ monthly bulletin of the consumer price index (CPI) issued in December. El Sayyad explains that “Egypt successfully opened the largest sugar production plant earlier last year, and despite this fact, the sugar prices underwent unstable prices as well as inconsistent presence in the markets. The instability in the sugar prices is a reflection of what is going on in the Egyptian market as a whole, reflecting instability, no transparency, and negative outlook predictions.”
Accordingly, the price fluctuation can be stabilized by the government acting as a regulator and monitoring body for domestic markets, according to El Sayyad.
In order to mitigate the fluctuation in prices, Egypt has been taking steps to face the issue. This comes as sugar companies, upon government directives, boosted their sugar output and distribution to decrease the sugar shortage in Egypt, the Ministry of Food Supply and Internal Trade announced on December 5th.
To increase the availability of sugar, the Minister of Supply issued on December 7th a ministerial decree to make sugar available on ration cards to increase supply. According to the decree, the country adds 2 kilograms of sugar to the ration card that has 4 or more beneficiaries registered, and 1 kilo of free sugar to every ration card that has 3 or fewer beneficiaries registered, in addition to the value of the subsidy specified on the ration card. The sugar on the ration car is sold for EGP 27 per kilo.
At the end of November, Moselhi announced the official price of sugar at EGP 27 per kilo, urging citizens not to purchase if prices are higher.
The sugar industry in Egypt does not only face fluctuations in prices but also faces the challenge of water supply. However, using recent techniques can help the country face this. “Maintaining and introducing innovative water irrigation techniques is key to maintaining sugarcane production levels. Additionally, the overall ecosystem factors have a direct impact on domestic markets, including sugar production and prices. Achieving macro- and micro-economic stability will contribute to price and production stability,” El Sayyad points out.
Despite the challenges and the fluctuating prices, the sugar crop cultivation and sugar industry remain significant for Egypt. Although the country is seeing a gap between supply and demand, Egypt has been merging this gap through imports, while encouraging sugar crop cultivation.
By Sarah Samir
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