Daltex to invest EGP 150m in 2017

Selim Hassan
8 Min Read

Wadi Agricultural Development and Land Reclamation Company – Daltex plans to invest EGP 150m this year in order to take its sales back to the same rates as 2015.

Hisham El Naggar, the company’s managing director, said that the company aims to increase its sales to EGP 812m, compared to EGP 650m in 2016, when revenues declined by 20%.

He pointed out that Daltex plans to expand in exporting in 2017, whether in traditional markets or through opening new markets, in order to increase revenues and benefit from the currency difference resulting from the flotation of the Egyptian pound.

He explained that the company plans to inject new investments into the reclamation of 5,000 new acres in Nubaria, Wadi Natrun, and East of Ouyenat, in order to add them to the portfolio of lands owned by the company, estimated at 100,000 acres, distributed in Sharqeya, Minya, and Aswan.

The company also seeks to create a refrigerator to store agricultural products, with a production capacity of 10,000 tonnes in East of Ouyenat, in 2017.

El Naggar attributed the decline of sales to the poor export conditions over the past season due to the lack of US dollars and the increase in the currency’s price in the informal market before the flotation, which resulted in competitiveness being more difficult in global markets.

He estimated total exports of the company during the past season at 180,000 tonnes, compared to 210,000 tonnes over the past few years.

He revealed that Russian markets alone acquire about 45% of the company’s exports, compared to 35% for all European countries, 13% for Asian countries, and 7% for Arab countries.

El Naggar explained that his company plans to enter new markets, including India and China, given the population and their ability to accommodate large quantities of Egyptian products. These markets can achieve high growth rates of agricultural crops, he said.

He said that Daltex has some products with which it can compensate for part of the losses that will harm exporters, including peppers, green onions, and strawberries, as there is a great demand for them abroad.

He stressed the importance of agricultural and industrial education, as well as attention paid to training and increasing workers’ ability to produce in all fields, and the field of agriculture in particular.

He said that one Chinese worker can do the work of 10 Egyptian workers in more than one field, so it is crucial to enhance the level of agricultural and industrial education in Egypt.

He added that one of Egypt’s prime characteristics is its intensive labour and low cost as well as the number of youth able to produce, and demanded paying more attention to them, as countries such Malaysia and Singapore have advanced greatly as a result of paying attention to industrial and agricultural education.

He stressed that the increase of production costs represents a large part of the crisis facing agricultural crop exports for depending on importing 85% of raw materials (fertilisers and pesticides), and even machines and equipments, in addition to packaging products and transportation.

El Naggar said that the flotation decision was wise and will benefit exports strongly; however, integrated plans are needed in order to achieve the strongest possible benefit, especially since it has also caused an increase in production costs. This makes competition in global markets high.

“The time is still early to judge the decision of the pound’s flotation once and for all, as the market needs a clear vision over the upcoming period,” he said.

He pointed out that production costs in Egypt are high compared to competing markets by 20% to 30%; however, the flotation decision will help companies compete.

He added that the rival countries to Egypt in agricultural crops are Spain, Israel, Morocco, and China.

These markets have a comparative advantage to Egypt due to their close proximity to target markets.

He pointed out that determining the vision and plans according to which the state is working helps investment companies build their expansion plans and carry out their works according to target plans.

El Naggar welcomed the new export support programme “Burdens Return” created by the Ministry of Industry. He demanded more procedures to help achieve the main purpose of the programme, which is to increase exports.

He pointed out that Egyptian exporters are facing trouble to collect their financial dues fully as a result of procrastination by Russian suppliers, which exposes them to several problems.

El Naggar explained that the reason for the problem is exporters themselves as they enter into price speculations, which makes Russian suppliers control prices.

He added that speculations start before the beginning of the season for some companies, which leaves companies in a state of instability as a result of having fixed prices since the beginning of the season until it ends.

El Naggar supported the government’s recent step to cut subsidies on energy products despite the fact that they will increase production costs, noting that that step was long overdue.

He explained that the state had been injecting large investments over the past few years in order to establish an infrastructure, which left a good impact on factories.

He explained that the increase of energy prices will not weaken Egyptian companies in foreign markets, and will not affect production. Banning them will also not provide Egyptian exports with a competitive advantage.

He explained that giving the local currency its fair value against the dollar can balance the issue; however, the decision took too long, which caused the situation to worsen over time.

He added that the state should have increased the dollar’s value against the pound after the 25 January Revolution in order to curb smuggling and eliminate the informal market; however, improper financial policies at the time lead to the current crises.

Daltex has completed the reclamation of 8,000 acres in East of Ouyenat area to serve the company’s exports.

El Naggar said that the company owns about 100,000 acres that have been completely reclaimed in Wadi Natrun, East of Ouyenat, Sharqeya, Minya, and Aswan.

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