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International Food postpones establishment of potato factory indefinitely - Daily News Egypt

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International Food postpones establishment of potato factory indefinitely

The company exports 40% of its production, mostly to the Netherlands, Belgium, France and Germany


By Basma Bahaa

International Food & Consumable Goods has postponed the establishment of a potato processing factory until the government is able to present a clear plan to support the cultivation of potatoes, said Export & Business Development Manager at International Food Mostafa Desouky.

He said that the EGP 250,000 potato plant will have a production capacity of 50,000 tonnes.

Desouky told Daily News Egypt that Egyptian potatoes have already lost their competitiveness in the global market as a result of price increases, and the lack of governmental support. This is in addition to speculation that the domestic market would not be able to absorb the added tonnes, which means a proper outlet for distributing the production is unavailable.

The high cost of cultivation and processing of potatoes resulted in the decline of Egypt’s exports of potatoes and French fries, since the beginning of this year, according to Desouky. He explained that Egyptian companies will be able to double the size of their potato exports if the government provides additional support to the sector.

According to Desouky, the cost of planting an acre of potatoes in Egypt amounts to $280, compared to $220 in the European market. Desouky said the lack of government support increased the price of exported Egyptian potatoes to $900 per tonne, compared to $650 for European potatoes.

He added that the price decline of European potatoes has increased their competitiveness and helped them to gradually acquire Egypt’s share of foreign markets.

He noted that his company resorted to markets that do not acquire potatoes produced in European countries, such as France, Belgium, Sudan, Iraq and a few other markets, to avoid facing the unfair competition.

Desouky estimated the size of International Food’s production to be about 20,000 tonnes, eight tonnes of which are allocated to overseas markets, while the remainder is distributed in the domestic market.

International Food owns 20,000 acres dedicated to the cultivation of potatoes, according to Desouky, and the cost of planting an acre of potato exceeds EGP 2,000, which is EGP 500 more than the cost in European countries.

Desouky called on the government to provide more support to save potato exports, especially since the profit margin has already begun to decline.

He predicted that the sector’s exports will continue to decline if the government does not intervene, pointing out that exporters tend to reduce the price per tonne of potato from $900 to $700 to increase competitiveness, which causes heavy losses for companies.

Farm Frites has the largest share of French fries in the Egyptian market, according to Desouky, who explained that International Food and Farm Frites are sufficient for the local market, leaving no outlets for additional production except through export.

He said Egypt could more than double the volume of French fries exports to 500,000 tonnes instead of the current 200,000 tonnes, provided that the government increases its support.

He added that increasing the competitiveness of Egyptian products in foreign markets will encourage local companies to increase exports to countries that rely on European products, such as Gulf states and African countries.

He said that the Gulf states and African countries import potatoes from Dutch, Belgian, German and French companies due to their lower prices compared to Egyptian products.

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https://www.dailynewsegypt.com/2015/10/08/international-food-postpones-establishment-of-potato-factory-indefinitely/
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