By Mohamed Abdel Monsef
Farmers have requested price increases for supplying 1 tonne of beets to factories, according to Abdel Wahab Allam, President of the Sugar Crops Council.
Allam said this was so farmers can cope with the increased cost of production per acre, at a rate of 12%. The rise would also account for the 60% increase in diesel fuel prices used in administering irrigation pumps, and a 33% increase for fertilisers.
Farmers are also struggling to maintain profit margins, all of which increases production costs in the range of 12-13%.
Sugar cane factories will begin receiving sugar cane crops at the end of the coming month and sugar beet crops by the end of January 2015.
Allam predicted that sugar production this year would reach 2.5m tonnes, compared to 2.3m tonnes last year. He said this would lead to approximately 80% self-sufficiency with estimated annual consumption at approximately 3m tonnes.
Allam explained that the total area allotted to sugar beet cultivation this season reached 500,000 acres, which are expected to produce 1.4m tonnes. The area in which sugar cane has been cultivated reached 285,000 acres, which are expected to produce 1.1m tonnes of sugar.
He said that farmers grow beetroots because it is a contractual crop for which farmers agree to market to factories before cultivation. This achieves profits between EGP 4,000-EGP 5,000, margins which winter crops like wheat or alfalfa fall sharply below.
Allam said that the cost of cultivating one acre is EGP 4,500, of which EGP 2,000 goes toward production kits and EGP 2,500 to renting land. One acre will produce an average of 20 tonnes at EGP 400 a tonne, totalling EGP 8,000. An extra EGP 1,000 is added to the total for scraps sold as animal feed.
Allam predicted that Egypt will convert from a net importer of sugar to a net exporter within 10 years, if sugar beet cultivation is expanded and new factories constructed.
He said that the increase in the average yield per acre of beetroots ranges from 20 to 25 tonnes. Enhancing factories’ efficiency to operate at maximum production levels, and reducing losses and per capita consumption from 34kg to 32kg per year, will allow Egypt to become self-sufficient in supplying sugar to the domestic market.
Allam said that there are seven factories that produce sugar from beetroots in addition to eight subsidiaries of the Sugar & Integrated Industries Company (SIIC) which produces sugar from sugar cane. Two new factories producing sugar from beets are currently under construction thanks to Emirati investments, he said, with one located in Sharqeya and another in the Suez Canal Axis. Studies are also being conducted on constructing other factories in Minya and land reclamation areas.
Abdel Hamid Salama, Chairman of Delta Sugar Co, stressed beetroot companies’ commitment to the supply price agreed upon with the farmers, explaining that there is no intent to increase the supply price.
Salama said his company are contracted to supply one tonne with a sugar ratio of 16% at EGP 275, with an additional EGP 25 for every 1% increase in the proportion of sugar. He explained that an additional EGP 120 would be added at the beginning of supply at the end of January and this figure would be reduced by EGP 10 every 10 days.
Salama explained that companies bear the full costs of transportation, while pest control fees are shared with the Sugar Crops Council. Companies bear 50% of seed costs as well.