Egyptian market needs more incentives to attract investments: Robert Claxton

Businessmen need to believe the atmosphere in Egypt will be stable for their long-term investments, says food consultant

Expert and consultant at GIRA Food Robert Claxton gave a speech at the Experts Guide: The Challenges and Opportunities of Egypt's Poultry Industry seminar on 1 March. The forum was organised by Business News to discuss the future, opportunities, and challenges of and to the poultry industry in general and specifically in Egypt. Daily News Egypt interviewed Claxton to further discuss the theme in detail.
What do you think of the poultry industry in Egypt?
Although the poultry industry seems to face issues in Egypt, it is better than many other countries, including Indonesia and China, who have bigger populations, for example; China has a population of 1.3 billion people.
The sector in Egypt is a promising one, since the price of beef is expensive and it is going to get more expensive. Also, keep in mind, the Egyptian market cannot depend on the pork industry. So, as I said, any growth will be in the poultry and fish industries.
What are the challenges that the industry faces?
There are three challenges: the diseases that impact chickens, which leads to the loss of high percentages of products. The second challenge is the devaluation of the Egyptian currency; the Egyptian feed industry depends on importing 90% of its production inputs, which allows the global market to control the domestic product's prices. For example, importing soil and maize in light of the increase of the value of the US dollar will lead to the increase of product prices. The third is that the poultry industry is not operating at its full capacity.
Farms are operating at less than 50% of their production capacity. Feed mills are operating at 65% capacity, while slaughterhouses are operating at 20%. The infrastructure of the Egyptian poultry sector is conducive to high growth rates, bearing in mind that the issues afflicting the sector must be resolved.
Numerous countries have recorded high growth rates in the poultry sector in a short period of time, including Turkey, Brazil, Iran, South Africa, and Ukraine. What does Egypt have to do to catch up with these countries?
The situation in Egypt is different. These countries succeeded in reducing production costs and product prices, which allowed them to turn into exporting countries. As for Brazil, it has access to cheap grain and a growing domestic market. It all depended on having access to lower-cost feed.
Iran, due to political circumstances, became a closed environment. When they needed protein, they had to produce it themselves.
To get protein, they resorted to poultry since their other option was beef, but to buy beef they had to import it from Brazil, which means they had to have foreign currency. To conclude, Iran had to develop its domestic poultry production.
The poultry industry in Egypt does not need to catch up with countries like Brazil, since it is too far away. The industry in Egypt needs to be supplied by feed at suitable prices and technology to compete with the cheap and high-standard imports. It also has to face the issue of diseases separately from the commercial sector, as Thailand did to solve this issue.
I would like to add that the stability of the governmental process is necessary to develop the sector in Egypt. On the other hand, farmers should be educated on profit-making methods.
To what extent does the foreign currency crisis affect the industry's development?
The local currency is weighed against the US dollar. For a period of time, things are going to become more expensive, leading to domestic inflation, so that will be a painful situation. At the end of the day, this is more in the hands of politicians.
Can any steps be taken to reduce the costs of the industry here, in Egypt?
Definitely. It has to do with the utilisation of the industry's capacity, as I said before. If you have capacity that you do not use, then it is adding cost. Mortality from diseases and poor management are issues that should be confronted.
You previously mentioned that Russia has applied fees and customs on importing poultry to protect its domestic industry. Should Egypt take similar steps?
Egypt already has an import tax.
But it went down from 60% to 30% in 2012, which led to a peak in imports from 49,000 tonnes to 130,000 tonnes in the same year. What are your views on this?
I believe it is still high. In any case, imports cannot challenge the Egyptian market. The problem in Egypt is not commercial. It is important that the domestic market receive some level of protection, but it needs to be done in a way that guarantees the existence of affordable meat for consumers.
Are the circumstances in Egypt suitable for attracting investments to the poultry sector?
The problem is that there are more attractive markets worldwide. Egypt needs to make the market, here, more attractive. People need to believe that the atmosphere in Egypt will be stable for their long-term investments.
So the security situation in Egypt is also a challenge?
Compared to other low-cost countries, including Syria and Iraq, for example, Egypt is far more secure. The concern of the international community is how much effect these places will have on the regional market.