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FOCUS ON EGYPT FEED INDUSTRY

27 January 20209 min reading

Egypt’s yellow corn production covers less than 20 percent of its feed demand needs. Imports are supplementing the feed manufacturing industry’s expanded production. FAS Cairo forecasts Egypt’s soybean meal production in MY 2019/20 at 3.0 MMT, up by over 11 percent compared to post’s MY 2018/19 estimate.

Dr. Mahmoud Riyad Egyptian Milling Association Secretary General

INTRODUCTION: The area of agricultural land in Egypt is confined to the Nile Valley and delta, with a few oases and some arable land in Sinai. The total cultivated area is 7.2 million feddans (1 feddan = 0.42 ha), representing only 3 percent of the total land area. The entire crop area is irrigated, except for some rain-fed areas on the Mediterranean coast. Over the past four decades, an area of 900 000 feddans of newly reclaimed land has been added to the agricultural area.

Cereals and Soybean form the backbone of the compound feed industry. Egypt is an Agriculture-based economy and the abundance of these raw materials in local markets has helped the compound feed industry to thrive. Supplements and raw materials are grounded together cater to a variety of species. Adoption of protein-rich and energy-dense eating habits is changing the meat consumption trends in Egypt. This has created an opportunity in the feed industry to improve the quality of animal meat.

MARKET DYNAMICS: In June 2014, Egypt made two notifications, which amended Egypt’s meat and meat varieties standards by establishing a zero- tolerance level for synthetic animal growth promoters (synthetic hormones) in foodstuffs of animal origin, causing a significant change in the country’s ongoing research in the meat industry. Also, since 2005, to protect its domestic poultry industry, Egypt had banned the import of poultry parts from all origins, claiming halal slaughter concerns. Egypt’s interest in preserving its domestic meat industry is also seen in its compound feed market, where most of the compound feed produced is sold in the domestic market.

MARKET SEGMENTATION: Based on animal type, the market is segmented into Pork, Beef, Fish and Poultry feed. Beef has traditionally been Egyptians’ first choice, followed by Poultry and Fish. The Compound feed industry is directly related to the meat industry and follows a similar trend, in terms of sales. Based on ingredients, the Cereals form the largest segment. The market is also divided further Based on additives like antioxidants, vitamins, minerals, amino acids, and colorants. Antioxidants are the largest growing segment, amongst the additives.

GEOGRAPHICAL ANALYSIS: The production of Compound feeds in Egypt is mainly confined to the banks of Nile, in the arable lands of Asyut, Sohag, Qena, Luxor, and Aswan. Upper Egyptian areas like Alexandria, Beheira, and Cairo provide an excellent location for domestic as well as international place.

CORN PRODUCTION: Egypt’s yellow corn production covers less than 20 percent of its feed demand needs. Imports are supplementing the feed manufacturing industry’s expanded production. There is a strong demand for U.S. corn, with some $320 million in imports in 2018.

FAS Cairo forecasts Egypt’s corn production in MY 2019/20 at 6.4 MMT, down from USDA’s official estimate of 7.2 MMT. The decrease in production is due to a reduction in the area harvested due to increased plantings for rice. Post estimates area harvested for MY 2019/20 at 800,000 hectares down from USDA official estimate by 12.5 percent. Reportedly white corn area harvested accounts for 480,000 hectares, with yellow corn plantings making up the balance.

CORN CONSUMPTION: Consumption of corn in Egypt is forecast to increase in 2019-20 due to population growth and increased feed demand from the domestic dairy, poultry and aquaculture sectors, according to a Sept. 18 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).

FAS Cairo forecasts Egypt’s corn consumption in MY 2019/20 at 16.9 MMT, up from the MY 2018/19 estimate of 16.2 MMT. Post consumption estimates for MY 2018/19 and MY 2019/20 remains unchanged from USDA official estimates.

The post attributes the uptick to increased feed demand driven by the country’s poultry, dairy, and aquaculture sectors. MALR recently announced that the issuance of licenses for animal, poultry and production of feed projects has more than doubled over the past two years.

EGYPT’S YELLOW CORN IMPORTS: FAS Cairo forecasts Egypt’s corn imports in MY 2019/20 at 10 MMT, up to three percent from Post’s MY 2018/19 estimate of 9.7 million metric tons. Post estimates for corn imports in MY 2018/19 and MY 2019/20 remains unchanged from USDA official estimates.

The USDA said the decrease in production is due to the reduction in harvested area due to increased plantings of rice.

Yellow corn shipments in CY 2019 (Jan-Aug) total 6.7 MMT. Egypt’s top three suppliers in 2019 are Ukraine (2.5 MMT), Argentina (2.3 MMT), and Brazil (1 MMT).

CORN GLUTEN MEAL: Egypt’s imports of corn gluten meal in CY 2019 (Jan –Jun) reached 73,800 MT. The United States accounts for 99.7 percent of Egypt’s corn gluten meal imports. The beef/dairy livestock, poultry, and aquaculture feed manufacturing sectors are heavy users of corn gluten meal. Prices for corn gluten meal are EGP 11,700/MT ($709/MT) down from EGP 12,400 ($751/MT) at the beginning of the calendar year.

SOYBEAN MEALS PRODUCTION: FAS Cairo forecasts Egypt’s soybean meal production in MY 2019/20 at 3.0 MMT, up by over 11 percent compared to post’s MY 2018/19 estimate. We attribute the increase in soybean meal production to expanded local crush capacity, seeking to meet the expanding demand of the local feed industry. Post is revising Egypt’s soybean meal production in MY 2018/19 upward to 2.7 MMT from the USDA official estimate of 2.6 MMT, due to a nearly four percent increase in soybean imports. Ninety percent of Egypt’s soybean crushers are private-sector entities. Local producers met about 87 percent of Egypt’s soybean meal requirements in marketing year 2018/19.

CONSUMPTION: Soybean Meal: FAS Cairo forecasts Egypt’s soybean meal consumption in MY 2019/20 at 3.2 MMT, up 3.2 percent from MY 2018/19 estimate of 3.1 million metric tons. Post is revising down soybean meal consumption in MY 2018/19 to 3.1 MMT from the USDA official estimate of 3.4 MMT due to higher feed prices in the first quarter of the marketing year. Post anticipates that MY 2018/19 will see increased soy meal production, which will contribute to lower poultry and fish feed prices. We estimate that 1.0 MMT of soybean meal will go into aquaculture in the marketing year 2018/19. Another 1.4 MMT will go into poultry feed, while 700,000 MT will go into feeder and dairy cattle feed. Egypt counts with 180 poultry feed mills producing various types of feed formulations for the poultry industry; these supply over 95 percent of the domestic market’s demand. The soybean meal component used in poultry feed formulations ranges between 25-35 percent.

EGYPTIAN POULTRY INDUSTRY: Egypt's Poultry industry employs 2.5 million workers, with investment reaching 3.73 billion dollars, some, according to the USDA data. The sector produces nearly 1.25 billion day-old chicks, 1.1 billion broilers and 8 billion table eggs per year. Large commercial breeders account for about 70% of the production.

The Ministry of Agriculture and Land Reclamation (MALR) has also been allocating desert land in western and Upper Egypt for new poultry investments reaching EGP 1.5 billion ($90.9 million). These investments will produce annually 62 million broiler chicks, 4.2 million mothers, 100,000 grandmothers, and 30 million table eggs, generating nearly 2,000 new jobs. Post anticipates the poultry sector’s feed consumption to grow by 2-3 percent as the larger producers consolidate and vertical integration increases.

Since the beginning of MY 2018/19, the market has seen new investments in poultry feed mills with production capacities reaching 6,500 MT of feed per day. Additional feed lines are coming online, adding to already existing aqua and cattle feed milling capacities. The USDA also forecasts poultry feed prices in Egypt to drop from 414.50 US dollars per metric ton to 391/MT. dollars.

We anticipate the poultry sector's feed consumption to grow by 2-3% as the largest producers consolidate and vertical integration increases. Egypt's feed mills, as per the review, produce a poultry feed-mix of 70% yellow corn, 19.4% soybean meal, 3.4% wheat bran, and 1.9% concentrates fish or meat meals- in addition to minerals and vitamins.

Dakahlia Poultry Co., one of Egypt's largest investors in the poultry sector, recently inaugurated a new feed mill with a capacity of 3.000 MT/ day of poultry feed and 400MT/ day of aquafeed, said the USDA. The new feed mill is the largest in the Middle East, noted the US agency's publication. Dakahlia's feed line utilizing a quality feed system is allowing it to produce broilers averaging 2.1 kg in body weight in 33.5 days with a 1.53 feed conversion ratio (FCR), revealed the report.

In January 2019, Egypt's Ministry of Agriculture and Land Reclamation (MALR) signed four new poultry investment contracts, totaling 84.5 million dollars, with producers of the establishment of five new projects, spread out over 3,300 hectares, in upper and western Egypt, found the publication. These projects will produce, on an annual basis, 62 million broiler chicks, 4.2 million mothers, 100,000 grandmothers, and 30 million table eggs, generating nearly 2,000 new jobs, it added.

DAIRY, AQUACULTURE SECTOR: The USDA country review also found that the dairy industry in Egypt is experiencing a growth rate of 2-2.5% per annum. "The sector is rapidly industrializing, driven by increased demand for fresh, refrigerated dairy products. Middle-sized dairy farms are now increasingly relying on higher- yielding Holstein cattle."

Egyptian aquaculture is also witnessing spectacular, rapid development, said the market specialists. Production is reaching 1.5 MMT, and is up sharply; it now accounts for 80% of Egypt's total fish production, both farmed and wild catch.

"Egypt is today the tenth largest producer of farmed fish, as well as the world's second largest producer of tilapia." With fish production expected to grow to reach 2 million tons in 2020, there is a need to support increased production efficiency and profitability to maintain the sector’s sustainability into the future. Investment in feed mills is expanding to meet the demand for high-quality extruded feed

Feeds typically represent 70% of aquaculture’s operational costs, and so solutions that reduce this burden are a priority for many farmers.

References • Egypt Grain and Feed Update- Population Growth and Increased Feed Demand Drive Up Egypt’s Wheat and Corn Consumption. USDA foreign agricultural service, Global Agricultural information network, GAIN Report Number: EG19015, Date:9/15/2019. • Egypt Grain and Feed Annual 2019- Egypt adds Rice to its Grain Imports of Wheat and Corn. USDA foreign agricultural service, Global Agricultural information network, GAIN Report Number: EG19002, Date: 3/14/2019. • Egypt’s wheat, corn and rice imports to rise: USDA https://enterprise.press/stories/2019/03/26 • USDA Projects increase in consumption of wheat, corn in Egypt. https://www.foodbusinessafrica.com/2019/09/20 • Egypt Compound Feed Market to Experience Significant Growth during the Forecast Period 2016-2022- America News Hour, Feed market report, Aug 05, 2019. • New investments in poultry feed mills in Egypt - Feed Navigator, 25/03/2019.

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