Agribusiness to Egypt

(Last updated: 18 Jul 2007)

Trends and opportunities

The market

Egypt is a country known for its traditional agricultural practices and activities, including basin irrigation, organic manure, crop rotation and intensification. Although less than five per cent of the surface area of Egypt is arable, agriculture continues to account for over one-third of the nation’s workforce being very labour-intensive.

The major obstacles facing Egyptian agriculture are the limited arable land and water supply. Agriculture uses 80 per cent of the country’s water – the bulk of this being provided by the river Nile. Most of the country gets little or no effective rainfall but in the northern coastal region about 10 per cent of the arable land receives rain. This drives governmental agricultural policy and research programs towards high production, which requires increasing crop intensification, greater input efficiency, reduced negative environmental effects, a greater knowledge base and efficient management of resources.

Agricultural policy reform includes removing controls on input and output prices, eliminating the crop quota structure and delivery system, governmental control of crop rotation, and privatisation of domestic and export markets for products including rice, cotton and sugar cane.

Meat and livestock

Generally, Egyptians prefer beef to other types of meat; and fresh beef to frozen beef. However, since a great deal of beef is consumed in stews, price and not quality is the major concern. The more affluent segment of the population tends to think of imported frozen meat as an inferior product. The exception to this is the very limited amount of high quality beef imported for consumption in hotels and restaurants. This market is expected to grow in the future – both with the rise in tourism and with an increasing number of Egyptian consumers realising the benefits of better quality meat. One of the Egyptian requirements is for imported beef to contain no more than seven per cent fat content.

Dairy

Cheese is an important part of the Egyptian diet and many people eat some cheese at least with one meal a day. Annual consumption of cheese is around six kilograms per capita. Consumption of cheddar and mozzarella cheese (both natural and processed) is steadily growing due to the increased number of fast food (pizza and hamburger) restaurants.

The most important cheese produced in Egypt is feta of which two types are produced. The first type is an inexpensive white cheese produced from imported skim milk powder and vegetable oil (palm oil). The second is a more expensive white cheese, which is produced from fresh milk.

Egypt does not have a significant milk powder production. Imported skimmed milk powder and whey powder are used mainly for the production of feta cheese, yoghurt and ice cream. There are also small quantities of skim milk powder and whey utilised in the production of chocolate and pastries. Limited quantities of full fat milk powder are also imported and sold for direct human consumption.

The private sector imports virtually all of Egypt’s dry milk requirements.

Grains and pulses

Egypt’s premier crops include cotton, berseem clover (similar to Lucerne), maize, rice and wheat, which together account for around 80 per cent of the cropped area. Egyptians are known to have the world’s highest per capita wheat consumption.

Pulses, especially faba beans, are a major source of protein with the national dish ‘foul’ being made from faba bean. The government of Egypt commenced a ration system in public cooperative shops. The government subsidised basic food items, such as faba beans and lentils, to support public consumption. This was partly due to the Egyptian pound devaluation and the general increase in prices, especially food items.

Traditionally the top export destination for US wheat, Egypt has been opting for cheaper supplies from Eastern Europe and Asia. 

Vegetable oil

The annual consumption of vegetable oil in Egypt is roughly 800,000 MT/year. Soybean oil goes up and down based on competitive prices for palm oil and availability of local cottonseed oil.  New private local crushers will greatly increase the availability of soybean oil. 

Palm oil is used mostly for margarine and soap and imported by the semi-private Food Industries Holding Company (FIHC) for domestic production and for modest exports. Good quality refining will be crucial to the marketing of soybean oil as Egypt expands domestic production. 

Palm stearin and tallow are used in the production of soap.

Horticulture

The export value of select horticultural crops, including table grapes, strawberries, fine green beans and cut flowers is expected to grow at an average of US$62 million per year for the next 12 years. Egypt makes only a minute contribution to the global value of wholesale floral products, which amounts to around US$25 billion.

Opportunities

Productivity gains since the mid-1980's, achieved through long-term government commitments to policy reform and liberalisation coupled with assistance from donors (particularly USAID), have helped sharply increase grain and vegetable production, closing the gap between domestic food supply and demand. Nevertheless, Egypt remains a large importer of agricultural commodities especially after the new government scheme of subsidising pulses and other food items for local consumption.

Australian exports are mainly live animals, wheat, fresh vegetables, coal, butter, milk and cream. Australia supplies significant quantities of many agricultural commodities including:

• Wheat
• Pulses (faba beans, lentils and chick peas)
• Sugar
• Live cattle and sheep
• Meat and dairy products

Australia is also well regarded for its agricultural technology, farm management, horticulture and quality produce. There are significant opportunities for Australian agribusiness providers in a wide range of fields including:

• Agribusiness management
• Crop production technology
• Irrigation and water management technology
• Harvesting and post harvest handling
• Cool storage
• Transport
• Marketing

Egyptian landowners are particularly looking to Australians as joint venture partners but there are opportunities for direct sales as well.

Competitive environment

New Zealand and Australia are the major suppliers of butter to Egypt. However, for the first time small amounts of butter were imported recently from Ethiopia.

Poland, New Zealand and Sweden are the main suppliers of milk powder to Egypt.

Malaysia is the source for about 300,000 MT of imported stearin and the USA supplies tallow.

Tariffs, regulations and customs

Egyptian customs regulations are complicated and rigid in areas such as duty rates and are designed to eliminate trading loopholes. Authorities don’t have to explain or justify their decisions and there’s no formal appeal process. Customs procedures are subjective when it comes to identifying which tariff category a commodity fits into.

Although tariff levels have fallen in recent times, as a result of Egypt adhering to World Trade Organization rules, the government now levies an ad valorem service fee on imported shipments in return for inspection, listing, classification and re-examination of shipments. In addition to the customs tariff, a sales tax ranging between five per cent and 25 per cent is added to the final customs value of the imported item. However, most food and agricultural (livestock, dairy) products are exempt from this tax.

Pesticide residues and other contaminate regulations

Regulations governing pesticides, pesticide registration and use, are the responsibility of the Ministry of Agriculture. The Division of Pesticide Residues and Environmental Pollution (DREP), an office of the Central Agricultural Pesticides Laboratory (CAPL), is charged with analysing pesticides and chemical contaminants in foods. CAPL is a laboratory within the Agricultural Research Centre (ARC).  The Centre also makes recommendations to the Ministry of Agriculture on matters pertaining to pesticide legislation and regulations. 

All pesticides must be registered before they can be used.  The registration process includes the following:

• An application submitted to the Pesticides Committee (PC) of the Ministry of Agriculture showing the following information:
• Registration certificate valid for the country of origin
• Toxicological data prepared by the FAO/WHO Joint Meeting on pesticide residues
• Copies of all environmental impact studies
• Field and laboratory evaluation results and recommendations
• Label
• Upon review, the PC refers the application to the Recommendation Committee, which sets the recommended usage rates.
• The Recommendation Committee then forwards the application to the Research Station for field evaluations and monitoring. 

Egyptian standards for pesticide residues in food are derived from FAO and WHO standards.

Import procedures

It often takes at least two weeks for the product to complete all customs formalities. The rejection of a product for any reason quickly throws the consignment off track. Getting the product back on track is both time-consuming (occasionally in excess of three months or more) and expensive. There are no guarantees or assurances in appealing a rejection and in the end, authorities may still refuse to clear the product.

The initial import procedure includes the following:

• The assignment of a shipping agent (a GOE entity and separate from the vessel shipping agent)
• Arrival of the consignment at port and a comparison of the invoice and bill of lading with the ship’s manifest
• Issuance of a title transfer document to the importer
• The unloading of the consignment
• The purchase and completion of the importation form and registration of the consignment with customs
• Initial tariff classification of the product

Egyptian companies often rely on customs brokers, or their own staff to check on shipments and to clear products through customs.

The following documents must be presented to the customs office in order for a shipment to be released:

• Bill of Lading or Letter of Guarantee
• Commercial invoice
• Packing lists
• Weight list
• Insurance policy
• Certificate of origin countersigned by the Chamber of Commerce and notarised by the Egyptian Embassy or Consulate in the country of origin
• Import/export permit of the importer
• If the importer is an agent of a foreign manufacturer, the latter has to present an Agency
• Authorization Certificate for the products being imported
• Form 11 from a local bank advising that payment has been transferred to the supplier. This form guarantees payment to the supplier
• Food certificates

(Source: US Global Agriculture Information Network)

Industry standards

There is a complex array of standards and specifications for many food products.  Exporters should always check that their products meet these requirements prior to finalising a deal.

Domestic food and agriculture industries must comply with the specifications of Egyptian standard definitions. The Egyptian Organization for Standardization and Quality Control (EOS) in the Ministry of Industry has sole responsibility for establishing, adopting and publishing food standards and codes of practice.

The Ministry of Health and the Ministry of Foreign Trade apply all standards. Anyone who wants to have a new specification established and included on the list of approved Egyptian specifications must present proof that the desired specification standard already exists and is approved for use in some other 'acceptable' country.

In cases where no mandatory Egyptian standard exists, the following standards are acceptable:

• International Standards
• European Standards (EN) - in the absence of EN standards, British, German, and French standards may be applied
• American Standards
• Japanese Standards
• Codex Standards

In the absence of an Egyptian or international standard, authorities often refer to the Analysis Certificate accompanying the product.  If no suitable standard exists for a product, a committee may be formed to develop a new standard.  However, it may take up to two years or more for the new standard to be implemented after it is approved.

The Food Institute of the Ministry of Health is responsible for registering and approving all speciality and dietary foods. Importers are required to submit a form in order to obtain a license for dietary products. The validity period of the license varies from one to five years depending on the product. After the expiration date of the license, the importer has to submit a new request for license renewal. It takes four to six months to register a product and the renewal of the license costs about $500.  However,  if a similar local dietary product is available in the market, registration for an imported product is not approved.

The General Authority for Veterinary Services, an affiliate of the Egyptian Ministry of Agriculture is the main inspection body for livestock production. The law stipulates that animals must be slaughtered in government slaughterhouses, where attempts are made at regulation and quality control. Each carcass must have a government stamp in order for it to be transported or sold in butcher shops.

The Ministry of Health and Ministry of Home Trade and Supplies apply shelf life standards and product specifications to food and agricultural products. Any product that exceeds its established shelf life is considered no longer fit for human consumption and is subject to confiscation. 

Labelling and packaging requirements

Egypt maintains restrictive labelling requirements for imports of food products:

• There are no specific size or placement requirements for labels. However, labels with all required information must be placed on every package weighing 50 grams or more.
• Labels can be printed on the package or be of a permanent adhesive type.
• Labels and must be inserted inside the package as well as on the outside carton.
• Information on the label cannot be erased, scratched, or altered in any way. 
• With the exception of the production and expiration dates, information printed in English (or other foreign language) is not allowed. Dates are accepted in English, but the word 'production' and 'expiry' must be written in Arabic. Arabic labelling is mandatory. 
• Products cannot show more than one date of manufacture or expiration on the package. 
• Colours used on the inner and outer package should not be harmful to human health and should be fixed. If the colour can be easily altered, its use is not permitted.

All labels must include the following information:

• Name and address of manufacturer
• Brand or trade mark, if appropriate
• Country of origin
• Type of product and grade
• Name and address of importer
• Production and expiration dates.  Production and expiration dates may be mentioned separately on the top of the package.  They can be applied by laser, imposed, or printed. In such cases, there is no need to repeat them on the label.
• Product use instructions (optional)
• Product ingredients
• Storage instructions or temperature
• Net weight  
• Gross weight and total number of the packages per case or carton
• If the product contains preservatives, the percentage of each preservative should be indicated
• If the product is meat or poultry, the following statement must appear: 'Slaughtered according to the Islamic ritual' or 'Halal slaughtered'

Dairy factories are required to label their products indicating whether the product is produced from fresh or powdered milk or both. The labelling law requires processors to indicate the percentage of powdered milk in the mixture, calculated on the basis of its weight after restoration. This law applies to pasteurised milk, sterilised milk, ice cream, cheese and yoghurt.

Tests and inspections

Tests and analyses are conducted on all imported food products upon arrival at ports. Tests and analyses are conducted to assure that the product is fit for human consumption, free from contagious diseases and in compliance with Egyptian product specifications.  The following tests are mandatory on all imported food products upon arrival:

• Laboratory tests and analysis by the Ministry of Health
• Ministry of Agriculture veterinary inspection of dairy, fish, meat, and poultry products
• Labelling and product compliance with Egyptian standards enforced by the General Organization for Export and Import Control (GOEIC) of the Ministry of Foreign Trade.

All tests are conducted in government laboratories.  Tests and analyses by private laboratories are not permitted or acceptable.

Since inspection is now centralised in GOEIC, a committee is formed with representatives from the Ministry of Agriculture, Health, and GOEIC. Each ministry performs its analysis on the same product sample and issues its results to GOEIC.  If one ministry rejects the product, GOEIC, in turn, also rejects the product.

The number of samples withdrawn have been reduced as a result of centralising the inspection process with GOEIC. Importers are supposed to be notified of all test results within seven days after samples have been drawn. However, for canned products, mineral water and frozen products, tests results must be submitted within 14 days after samples have been drawn.

A product may be rejected for the following reasons:

• Not fit for human consumption
• Incorrect labelling
• Prohibited colors, additives, or preservatives
• Incorrect or missing certificates (however, authorities usually allow importers extra time to submit corrected documents)
• Failure to comply with Egyptian product specifications
• Less than 50 per cent of the established shelf-life remains for the product

If a product is rejected, it may be re-exported from the port of entry or confiscated at the port of entry.

If the rejection is due to unsatisfactory laboratory tests, the importer has the right to have the product re-tested three times. The appeal for reconsideration should be submitted to GOEIC within seven days. 

Product sampling

All product samples should be representative of the consignment and should be drawn during the unloading process.  A committee is formed to withdraw random samples. One representative sample (specified in size) is drawn from each consignment and respective inspection agencies have that sample for testing. However, each agency conducts its own laboratory tests.  Tests maybe conducted by three different laboratories.

Cleanliness must be assured when samples are taken to avoid contamination. Also, the committee is supposed to take the necessary steps to assure the soundness of the product samples while they are being transported to the laboratory for analysis.  All sample information is indicated on the Form of Examination Results.

The following provisions are to be taken into consideration when samples are withdrawn:

• The consignment should be treated as a single shipment
• The samples should be divided according to batch size and type of product
• The samples should be distributed among the laboratories so as to avoid repetition
• All label information should be presented on the Sample Analysis Form.

If a consignment is imported from various origins or product sources, each should have a distinctive and confidential number.

Food certificates

A number of certificates are required for all imported food products:

• Certificate of origin
• Health certificate
• Veterinary certificate (for meat, poultry, fish and dairy products)
• Islamic halal certificate, if applicable (for animal products)
• Temperature certificate (for frozen, deep frozen and chilled products)
• Analysis certificate, if applicable

All the above certificates should be countersigned by the Chamber of Commerce and notarised by the Egyptian Embassy or Consulate in the country of origin, or any other Arab Consulate if there is no Egyptian Embassy or Consulate in the country of origin.

Importers must present one set of all import documents to the General Organization for Export and Import Control.

There are additional special requirements related to the importation of meat and live animals including:

• An importer must submit a request to the General Administration for Veterinary Services indicating: the number of animals or type of and meat being imported, country of origin, shipping port, expected date of shipment arrival, and means of transportation.
• The General Administration for Veterinary Services examines the request according to the epidemiological status of the country of origin. If the epidemiological status permits importation, the importer is issued a permit.  The permit is valid for one month. The importer can renew the approval if importation does not occur within one month. No fees are charged for the approval permit.
• Products must be shipped directly from the country of origin to Egypt.
• Products must be packaged in appropriate bags as required by the Egyptian standards
• Release by the veterinary authorities depends heavily on the veterinary pre-approval license. If there is any discrepancy between the pre-approval license and the shipping documents, the product will be rejected. Importers should be completely familiar with all of the information required for the pre-approval license and instruct their suppliers accordingly. Importers should check with the Veterinary Authority of the Ministry of Agriculture for more information and instructions.

Batch number certificates

Batch number certificates are required for all food products in order to facilitate product sample withdrawal.  Each batch will be considered as a different item for sample withdrawal purposes.

Samples will be drawn from each batch having different production and expiration dates. Products with different dates are considered to be different items and should be identified as such on the Release Certificate and Batch Number Certificate.

Marketing your products and services

Market entry

Recommended market entry strategies into Egypt’s agribusiness sector vary depending on the following:

• Strategic importance of the sector
• Historical structure
• Fragmentation and competitive situation
• Complexity of the product
• Current availability of the product

Strategically important sectors in Egypt such as wheat, rice, and milk powder are usually, directly or indirectly, controlled by the government. Therefore, it is advisable to deal through a government or semi-government body in order to achieve a quick access to decision makers. A local agent is essential to do this. Appointing a distribution partner (already dealing in your type of products) can be an efficient way to decrease time-to-market.

Although current lack and insufficiency of the product in the market does create an opportunity for entry, it is important to remember that not only will it require an intensive educational/promotional effort, it might also fuel defensive actions of the local companies that are currently supplying products in the same category (eg. local milk suppliers and milk powder importers).

Foreign firms registered to make direct sales can sell directly within Egypt. However, most firms rely on Egyptian companies for wholesale and retail distribution, ensuring their effectiveness through staff training programs in Egypt and abroad.

Egyptian commercial agents are required for foreign firm bids on most civilian government tenders but are optional when selling to the private sector. Egyptian law requires that all commercial agents and importers be of Egyptian nationality. Agents also must have resided continuously in Egypt for at least five years and be certified by a local chamber of commerce or professional association.

Commission rates vary according to the type of product or service, volume of sales, and effort needed by the agent. The larger the volume of sales, the smaller the commission. For commodities such as rice, wheat, sugar, lumber or cotton, the commission ranges between 1-3 per cent, for foodstuffs 3-5 per cent, and for equipment about 10 per cent.

General advice on how to market your products in Egypt:

• The advertising environment in Egypt is still relatively undeveloped and can be cost-effective in marketing to end-consumers. In the Middle East, advertising activity is very seasonal with the major push being exercised during the month of Ramadan (which moves forward by approximately 10 days every year) when extremely long advertising breaks are aired. Eid Al-Adha and back-to school periods are other peak times to consider.
• Advertising should be specially designed for Egypt and not just translated from the Western original. Humorous and celebrity-related advertising has great appeal.
• Western appeal gives the products an additional advantage, especially given the Australian image is a ‘green and clean’ country with no negative political connotations (links with Israel, for example).
• Also, consider participating in exhibitions and trade fairs, as they are usually very well attended.

Links and industry contacts

Agribusiness-related resources

Agricultural Research Center (ARC) – www.claes.sci.eg/arc/arc.htm
Central Laboratory for Food and Feed – www.claes.sci.eg/arc/clff.HTM
Central Laboratory for Agriculture Expert Systems – www.claes.sci.eg
Foreign Agriculture Service – www.fas.usda.gov

Government, business and trade resources for Egypt

Arab Chamber – www.arabchamber.com/arab-countries/egypt
Central Agency For Public Mobilization And Statistics (CAPMAS) – www.capmas.gov.eg
Egypt State Information Services (ESIS) – www.uk.sis.gov.eg
Egyptian Exporters Association – www.expolink.org
Egyptian Ministry of Foreign Trade and Industry – www.moft.gov.eg/english/english.asp
Egyptian Organization for Standardization and Quality Control – www.eos.org.eg/En_web/en_home.htm

Media

ArabicNews.com – www.arabicnews.com