A new beetroot factory aims to increase supply in a sugar-hungry market, writes Mohamed El-Sayed Beetroot is sugarcane's up and coming competitor in the sugar market, as new beet refineries open to meet a growing demand for this sweet commodity. A new factory in Nubariya is expected to reduce by one-third the difference between local production and market needs. Currently, the government spends some $140 million annually on imported sugar to meet local demand, which exceeds domestic production by 800,000 tonnes. This is a significant figure since over the past three decades, the sugar market has witnessed major changes in terms of production and consumption. In the early 1970s, sugar production was 593,000 tonnes per annum, while an individual's annual consumption of sugar stood at 17kg. By 2005, sugar production was one million tonnes, and individual consumption 33kg. Steady population growth and an increasing sweet tooth, it seems, spurred consumption in 2005 to the unprecedented figure of 2.4 million tonnes. Consequently, the government decided to focus on producing sugar from beetroot and began investing heavily in building beet sugar plants. As a result, the annual production of beet sugar reached 465,000 tonnes, which is around 50 per cent of sugarcane production's total. The Nubariya Sugar Refinery, for example, is the newest project aimed at bridging the gap between supply and demand. Located in the governorate of Beheira, the new refinery is the fourth beet sugar factory in the country after the refineries of Delta, Daqahliya and Fayoum companies. Nubariya will begin operations in February, 2008, and is expected to produce roughly 125,000 tonnes of sugar and refine 125,000 tonnes annually. Hence, it will single- handedly replenish 30 per cent of the shortage in domestic production, according to its CEO Mohamed Abdel-Hamid Hassan. "The plant will also produce $10 million-worth of by products, such as fodder components, which will be exported," Hassan added. At a cost of LE750 million, the refinery will help reclaim 200,000 feddans in the desert for beetroot plantations, and create 600 direct jobs and 6,000 indirect jobs. "It is considered a national project," asserted the CEO. According to the company's chairman, Mokhtar Khattab, "the building of the new refinery is part of a plan to develop the beetroot crop and sugar production." Minister of Investments Mahmoud Mohieddin also sang the praises of the project, noting that the new factory will help reduce sugar imports by LE307 million annually, and increase profit from beet waste to $10 million. Local sugar production currently covers 64 per cent of local demand, but new refineries will enable the government to "cover local needs and start exporting by 2010," according to Mohieddin. This will be done through opening four more sugar plants in Nubariya, Sharqiya, Upper Egypt and a third production line at the Daqahliya plant. "The government is investing heavily in this vital industry because it has good returns. Egypt has an advantage in this industry as a result of its good expertise," the minister added. Nubariya Sugar Refinery is set up by a consortium of public sector companies and banks, including the Delta Sugar Company which owns the biggest stake of 30 per cent; 15 per cent is owned by each of the Egyptian Sugar and Integrated Industries and Al-Charq Insurance; while the Food Industries Holding Company, Daqahliya Sugar Company, Misr Insurance and Banque Misr make up the rest with a 10 per cent stake for each. Khattab explained the interest of the government and local investors in building more sugar refineries, saying that, "by the end of this decade, sugar exports around the world will decrease, causing significant price increases." He added that Europe is on its way to decrease subsidies for sugar production, and the opportunities of growing sugarcane will also go down. "Also, while there is a growing trend of producing alcohol from sugarcane to be used as car fuel," Khattab revealed, "there is a steady increase in sugar consumption in the world's two most populated countries -- China and India." Hence, experts believe, investing in sugar production is undoubtedly profitable. According to investors at the new plant, annual revenues for the refinery will reach LE407 million at full capacity after three years of operation. "The net annual profit is expected to be LE147 million, and the average added value amounts to LE195 million," stated Hassan.
