The instability of the Egyptian market has pushed Unicom to rely on government institutions, Unicom Managing Director and member of GPC Youth Programme Adham Magdy El-Welely said.
Unicom is a trading company with a specialty in trading in agricultural commodities, and is a subsidiary of El-Welely Group. It is one of the most recognised exporting houses in Egypt and is affiliated with regional corporations, such as United Commodities based in Syria, and Tradigrain with premises in Dubai and Lebanon.
Unicom expects $12m worth of exports from projects in the next two quarters.
Unicom mainly focuses on exporting with rice, broken rice, sugar beet pulp, broad beans, white beans, and several other pulses.
“The complex problem is that prices skyrocketed in the local market when compared to the international market prices, and the competition with global exporters grew widely,” he said.
“On the other hand, the availability of crops was decreasing and there was no proper management and implementation in the farming of agricultural crops. This makes its very recognisable that there is an immense gap in the availability of the crops to be offered and this is somewhat elucidated by trying to import as much as possible to have the capability of filling in the gap.”
Rice commodities of European origin ranging from €600 to €660, and those of Indian origin ranged from $320 to $350. As such, they overtook Egyptian competitors because the prices were low compared to the local market. Since the launch of exporting, the price of rice was not reasonable and so they were not competitive in the market, El-Welely said.
“The only approach exporters were able to take was to cope with the dollar currency deviations and the Egyptian market, which follows the dollar prices. Nevertheless there were changes that caused a deficiency in the Egyptian market prices that extended from an average of $680 to $820,” he said. This would result in Egyptian market prices being completely unsuitable for competition.
As for broken rice, its prices went up high from $260 to $330 in three months, fundamentally affecting the Egyptian market. Subsequently this indicated that there is no reliability in the local Egyptian market, causing the competitiveness of Egyptian products to further dwindle.
In contrast, white beans had the potential of being the most competitive crop on the market two years ago (the crop of 2013/2014). Last year (crop of 2014/2015), the product reached its peak level in offering the best competition in relation to price and quantity amongst all the competitors, but at the end of the season, the prices dropped suddenly.
Unicom was still able to maintain a stable price. However, its main competitor, Argentina, was able to take over the white bean market, as their prices were $100 cheaper. “The Egyptian market during that time was not in good condition. They assumed that, being the market leaders, they would not lose sight of competition. But the fact was that this turned to the Argentinean’s favour since purchasers started looking for the cheaper options,” El-Welely said.
“Egypt can overcome most of its economic problems by implementing the right planning in harvesting crops. We aim for an adjacent balance between the export and import trade in Egypt and the significance of protecting the economic growth of Egypt’s domestic products. Export-oriented industrialisation should be encouraged as a means of identifying the country’s comparative advantage, as well as a way to reduce its balance-of-payments shortages.”