The Egyptian potato sector has enjoyed a mutually beneficial relationship with the UK for a number of years. Traditionally, the UK receives new-season, high-quality new potatoes throughout the winter months and in return, Egyptian producers are rewarded with steady demand and high prices.
However, times are changing and the relationship is now becoming more uncertain. New technology has enabled the UK to extend its potato season and reduce its reliance on imports, while Egypt is looking closely at other European markets, most notably Germany and Italy, for growth.
Potatoes are an incredibly important cash crop for Egypt, but smaller volumes this year could put the sector under pressure. According to early 2009 forecasts, the crop could be down by around 10 per cent this season.
“The Egyptians are planning a smaller crop, as some of their traditionally strong markets have a reduced demand for 2009,” says Chris Hooton, export manager for Greenvale AP. “This is due to a number of reasons; first, the economic situation and particularly the exchange markets have made the crops more expensive. Second, the crops within producing countries are both plentiful and will be stored longer.”
But it was business as usual for the start of the 2009 season, says Dr Ihab Tadros, chairman of the Egyptian Producers’ Consortium (EPC). The company is on course to receive its first shipments of new-season potatoes in mid-January and Tadros anticipates that EPC will maintain its market share in the UK. “We handle almost half of the potato volumes coming in from Egypt and that is not expected to change this season,” he tells FPJ.
EPC began working with Nahdet Misr last season and enjoyed a successful deal. “We will continue the relationship in 2009,” Tadros says. The two firms have invested in a state-of-the-art packhouse in the Monofin area, which at full capacity can handle 300 tonnes of potatoes a day.
However, concerns about the poor exchange rate are casting a shadow over the season. “Our costs have risen between 20-25 per cent because of the fall in sterling in recent weeks,” Tadros says. “The only consolation is that Egypt’s European competitors such as Spain, Cyprus and Italy are also facing increased costs.”
The economic situation could also result in lower demand for new potatoes, Tadros claims. “Some consumers perceive new potatoes as a luxurious item and they may switch to cheaper potatoes,” he says.
“The UK is a very particular market for Egypt,” Hooton explains. “We have a long history at Greenvale of supporting this business and will continue to do so. Well-managed, cost-conscious suppliers will have a long-term future within the UK and this business must be looked at over a three- to five-year window with its associated peaks and troughs.”
Greenvale imports a wide range of varieties, including Nicola and Maris Peer. It has added more to its range in the last three years, such as Lady Balfour, Vales Emerald and newer variety Sofia.
Other sources claim that the Egyptian potato business has become less interesting to the UK in recent years. “There are a few mainline importers whose primary business is with a few of the retailers, but the interest in ‘dirty’ potatoes for the wholesale and catering sector has all but disappeared with the change of buying habits,” says one source, who declined to be named.
Indeed, it seems that demand for Egyptian new potatoes is weakening year on year. Exports have hovered around 20,000t for the past few years and, during the 2008 season, early sources predicted that Egyptian exports to the UK would rally and the market would import 25,000t. However, the final tally was closer to 20,000t.
“Despite the lower volumes, 2008 was a good season for both importers and exporters,” insists Tadros. “Prices were relatively good for the season and there were no cases of brown rot at all.”
Egypt is Africa’s largest potato producer and one of the top exporters in the world. Since the early 1960s, irrigated potato production has increased at an impressive rate of more than five per cent each year. Between 1990 and 2007, annual production rose from 1.6 million tonnes to approximately 2.6mt.
The Egyptian government hopes to increase potato production in the country by 60 per cent over the next decade. Crop yields have increased substantially in recent years, thanks to the introduction of higher yielding varieties, as well as improvements in disease control and fertilisation.
The government is also keen for domestic potato consumption to rise and is trying to encourage the Egyptian population to move away from bread and the associated higher wheat prices towards cheaper potatoes.
Exports, which have achieved high prices in recent years, are also being actively encouraged. Egyptian potatoes were banned from the EU during spells in the 1990s due to brown rot and, in order to overcome the ban, producers began growing potatoes on newly reclaimed areas (NRAs). According to recent sources, more than 112,000 acres of virgin land has been reclaimed to produce potatoes and the sector is hungry for more land to be used to grow spuds. In recent years, producers have been planting in the Wadi-El Natroun area, located 62 miles from Cairo, with success.
Brown rot has not been detected among imports for two years, but sources say there is still a resistance to Egyptian potato shipments. This resistance has resulted in UK importers looking to other areas, including Israel, to supply potatoes in recent years and this trend is likely to continue. However, Hooton argues that there will be other countries coming into the frame that would not normally be associated with potato production within the UK, for instance Turkey, in addition to other Middle Eastern countries.
Exports to the UK may be falling, but overall shipments have jumped from 156,000t in 2000 to 390,000t in 2005. Germany is a key market for Egypt, as is Lebanon, Italy and Egypt’s Arab neighbours Kuwait and the UAE.
Egypt’s potato trade with the EU enjoyed a boost last July, when tariffs on certain agricultural products, including potatoes, were removed. Previously, Egypt was allowed to export 250,000t of potatoes duty-free and if exports went beyond that level, the sector faced a 60 per cent duty reduction.
The 2008 agreement removes the limit on the amount of potatoes that Egypt can export to the EU, but it is uncertain whether the new regulations will apply year round and further details are expected to be released this month.
Growers looking to increase shipments to Europe face a number of challenges. These include water availability within Egypt and, in the short term, volatile economic exchange markets. In addition, Hooton says Egypt must remain a low-cost, professional supplier, but longer term, many of the external factors such as currency issues will put pressure on them to compete.
Hooton argues that there will always begrowth potential for high-quality, well-managedcrops that are aggressively priced. However, 2009 will be a difficult year due to the ongoing economic situation. Hooton says the Egyptians must ensure high-quality, controlled tonnages if the returns are going to be maintained.“The euro particularly has a large influence on the imports from Europe and this may well impact upon countries further afield who rely upon the dollar,” he says. “Cost control will be key for the coming seasons, as will the ability to be flexible and being well placed to deliver customer requirements.”
A GOOD YEAR FOR POTATOES
Potatoes enjoyed the spotlight last year when the United Nations declared 2008 the International Year of the Potato.
The UN is seeking to promote the development of sustainable potato-based systems that enhance the wellbeing of producers and consumers, and help realise the potato’s full potential as a “food of the future”.
The potato is the number-one non-grain food commodity, with production reaching a record 325 million tonnes in 2007.
Ease of cultivation has made the potato a valuable cash crop for millions of farmers. Consumption is expanding in developing countries, which account for more than half of the global harvest. However, only a fraction of total production is traded and the potato is perceived as a food security crop.
China is the world’s biggest potato producer and agricultural experts have recommended that spuds become the major food crop on much of the country’s arable land. And India has plans to double its potato production.
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