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Al-Ahram Weekly 13 - 19 January 2000 Issue No. 464 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 13 - 19 January 2000 Issue No. 464
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Heritage Special Books Profile Travel Sports People Time Out Chronicles Cartoons Letters A future for fruits
By Gamal Essam El-Din
As Egypt tries to reduce its growing trade deficit, government and private experts are debating the role of promoting exports as a means to accomplish this goal.
For more than two years, however, economists have been disturbed by the consistently weak performance of the export sector and the problems facing it. While exports increased over the last 15 years, so too have imports -- leaving many wondering how to reduce this country's trade deficit. Agriculture in general, and fruits and vegetables in particular, were recently identified as the key. But this solution still has its challenges.
According to a recent Shura Council report, while Egyptian agricultural exports rose from a modest LE418 million in 1980 to almost LE1.9 billion in 1998. Agricultural imports sharply increased over the same period, rocketing from LE1.2 billion in 1980 to LE11 billion in 1998. The result, said the report prepared by the Council's Agricultural Committee, is that agriculture's contribution to Egypt's trade deficit has increased from 21 per cent in 1974 to 33 per cent in 1998. In absolute terms, Egypt's trade deficit has also grown dramatically. It climbed from LE1.3 billion in 1980 to LE4.3 billion in 1985, only to increase again, this time to the alarming figure of LE22.2 billion in 1998. The contribution of exports to Gross Domestic Product (GDP) dropped from 14 per cent in 1980 to LE5.2 per cent in 1998.
The report emphasised that Egypt enjoys high agricultural export potentials which have not been fully exploited. "Egypt produced 21 million tons of horticultural crops in 1998. It is regrettable that out of this huge figure Egypt exported a mere five per cent even though it enjoys a significant comparative advantage in this field," the report said. Similarly, Egypt's production of vegetables and fruits reached 21 million tons last year, but only half of this was exported. Ali Abu Gazia, head of the Federation of Horticultural Crops' Exporters, noted that Israel managed to export a large portion of its vegetable and fruit production last year, generating revenues of $1.8 billion. The report revealed that the total value of Egyptian agricultural exports last year was a mere LE1.1 billion. "This has to be increased to at least LE5 billion in the next few years," the report said.
In the meantime, economists and experts in private industry argue that Egypt could easily double its production of vegetables and fruits for export if two basic steps were taken: reduce air freight costs as part of an overall reduction in production costs and employ the most up-to-date techniques in marketing produce, especially in packaging and handling.
The Federation of Egyptian Vegetable and Fruit Exporters (FEVFE) recently submitted a memo to Economy Minister Youssef Boutros Ghali, requesting government cooperation to realise those two objectives. The memo said that Egypt's vegetable and fruit exports to Western and Eastern Europe and Arab Gulf countries could be boosted from the present 36,000 tonnes (generating $84,300 million) to an estimated 54,000 tonnes (generating $102,750 million) in one year if reductions in air freight costs were introduced.
Wholesale dates at a Cairo fruit and vegetable market
photo: Yves Paris
"Vegetable and fruit exports to Western Europe, for example, could increase from 25,000 tonnes to 37,500 tonnes per year if the air freight cost was reduced from $880 to $500 [per tonne]," the report said.
Isaad Mandour, speaking for FEVFE, said that the national air carrier EgyptAir has responded favourably to the exporters' demands. "EgyptAir transports 70 per cent of Egyptian air-transported exports. It has recently agreed to reduce its air freight rates from 90 to 73 cents per kilogramme in order to lure Egyptian exports away from foreign air carriers. This is very encouraging but it should also be complemented by other measures," said Mandour. She added that FEVFE recently proposed establishing a refrigerating station at Cairo Airport with a capacity of 120 tonnes to minimise losses and ensure that Egyptian produce exports reach their European markets with a high level of freshness. Underlining the importance of this measure, Mandour said that currently, 30 per cent of vegetable produce and 20 per cent of fruit produce shipped to the European market is lost.
Agricultural experts suggest that Egypt's export potentials for oranges and potatoes are particularly promising. Potato exports, said the Shura report, increased from 120,000 tonnes in 1985 to 430,000 tonnes in 1996. In 1998, however, they dropped to 224,000 tonnes because of the many barriers placed in their way by the European Union. However, through its partnership with the EU, Egypt aims to raise its annual potato exports to this market to 365,000 tonnes. Regarding orange exports, although they were dealt a blow over the past 10 years as a result of the collapse of the Soviet Union, during the last two years they have rallied with an increase of 3.6 per cent.
On the other hand, the Shura report praised the high levels of rice exports that reached 430,000 tonnes in 1997, generating revenue of LE420 million, thereby representing 30 per cent of total agricultural export revenue. In 1998, however, rice exports dropped to 310,000 tonnes.
As part of its anticipated bilateral agreement with the EU, Egypt is seeking to raise the volume of rice exports to Europe from their current level of 28,000 tons to more than 100,000 tonnes through reducing custom duties by at least 40 per cent.
Nowhere has the decrease in agricultural exports been more acutely felt than in the cotton sector. Cotton exports, said the report, are down to 47 per cent of their level during the mid-1980s, and make up only 45.5 per cent of Egypt's total agricultural exports due to a drop in cultivated areas of almost 400,000 feddans. Despite this reduction, cotton remains Egypt's most important agricultural export.
