No more cotton subsidies The government will no longer subsidise the local cotton crop due to its high cultivation costs, together with low local and international demand, said Adel Al-Beltagui, the minister of agriculture. Talking to the state news agency MENA, Al-Beltagui asked farmers not to cultivate cotton unless they have a means to market it as many spinning companies have refused to buy the local long staple produce, choosing instead to purchase cheaper imported ones. The government used to buy the cotton crop from farmers at high prices to cover cultivation costs and then sell it to spinning companies at subsidised prices. The cotton subsidies cost the government around LE400 million annually. Al-Beltagui said that the introduction of new technology has made the productivity of the short staple variety higher than it was before and has limited demand for Egyptian cotton, long considered the world's finest. Though it was one of Egypt's main crops in the 1960s, with 33 per cent of the land cultivated with cotton, fierce competition from cheaper varieties reduced the area cultivated from 1.29 million feddans in 1980 to 300,000 feddans last year. Abraaj pulls out of Bisco Misr bid The Abraaj Group, a leading private equity group, pulled out of the bidding process for Egypt's confectionary and snack producer Bisco Misr this week, only a few days after it raised its offer for the company for the fourth time to LE88.09 per share, putting the overall value of the deal at $142 million. Abraaj has been in a bidding war with Kellogg's, the world's largest breakfast cereal maker, to acquire 100 per cent of Bisco Misr. Abraaj did not give a reason for its withdrawal from the bidding process, but according to Reuters said the “orderly and transparent process” had underlined growing investor interest in Egypt. Kellogg's has now offered LE89 a share, almost 20 per cent higher than the first bid submitted by Abraaj, of LE73.91 per share. Egypt pays its energy dues Britain's British Gas group received a $350 million payment from the Egyptian government this week as part of the latter's dues to the company. The political and economic turmoil after the 25 January Revolution deprived the country of the liquidity needed to pay its debts to international oil exploration companies. The shortfall reached $6 billion last year. However, the government said on 31 December that it had paid $2.1 billion of its debt to the foreign energy companies as part of its bid to ease the country's worst energy crisis in decades. The British Gas payment reduced Egypt's debt to the company to $920 million, according to a statement. Dana Gas, an Abu Dhabi-listed firm, said in a statement Sunday that it had received $60 million from the Egyptian government towards overdue receivables totalling $212 million. Energy companies working in Egypt have been unable to meet their export commitments since 2011 as the government has failed to pay for extracted gas, mainly used to cover local demand, leading the companies to halt their exploration activities. More portfolio investments A Reuter's survey of regional asset managers has concluded that the stock markets of Egypt and the United Arab Emirates (UAE) are the most attractive of major Middle Eastern stock markets after the international decline in oil prices. According to the 15 fund managers surveyed, managers are willing to increase their allocations to both markets as the oil crisis is not thought to affect them, unlike in Gulf countries like Saudi Arabia and Kuwait where petrochemical companies are heavily weighted in the stock markets, making them vulnerable to any further declines in oil prices. Prices have so far declined by 40 per cent to reach $60 per barrel. Egypt is a beneficiary of cheap oil since it is a net energy importer. And while low oil prices might limit Gulf aid to Egypt, this will not impact the major benefits to its external balances and state finances, the fund managers said. A third of the managers expected to raise their Egyptian equity allocations while seven per cent said they would reduce them. In the UAE, Dubai's economic growth depends less on oil than other wealthy Gulf states. Oil and petrochemical firms are weighted only lightly in the Abu Dhabi and Dubai stock markets, which are dominated by banks and real estate firms.
