Sakr Group for Food Industries targets to increase its exports this year after the inauguration of its new factory for the production of juices
The company aims to double its exports of milk products and juices to reach $20m in 2016, compared to $10m last year, chairperson Ahmed Sakr said.
The inauguration of the company’s new factory for the production of juices, which has an annual production capacity of 1bn packages, will support the company’s exports, he added. The company exports about 15% of its production and Mauritania is considered the company’s most important export market as it acquires 60-70% of the company’s total exports.
Sakr said that the company used to export 50% of its production before 2011, but the Arab Spring negatively affected the export of agricultural crops. For example, Iraq used to import 120,000 tonnes of Egyptian cheese, but this has completely stalled because of the Iraqi government’s rejection of Egyptian products.
He added that 85% of the company’s production is directed towards the local market, pointing out that the holy month of Ramadan and Eid El-Fitr increased domestic sales in June and July.
Sakr said that some foreign shipping companies insist on collecting their dues in US dollars, which means import costs are increased by about EGP 80 per tonne.
Exporters are facing a great deal of obstacles in the Egyptian market, notably the high prices of production requirements, which is affected by the high US dollar exchange rate against the Egyptian pound—registering EGP 12 on average in the informal market.
Since the beginning of this month, the price of sugar rose to EGP 5,800 per tonne, compared to EGP 4,700 last month. In addition, exporters lack the support of the Egyptian government, while other countries support their exporters. He referred to Turkey, which aims to increase its exports to $350bn and increase its factories to 30,000 by the end of 2023.
Sakr stressed the importance of building new logistics areas and storage centres outside the ports, adding that most of the factories in Borg El-Arab region have built their storage centres next to the factories.
The price of dairy products has increased over the past month, amid the decline of domestic dairy production—the dairy production season starts in December and ends in March. This forces the factories to use powdered milk as an alternative to liquid milk. Sakr noted that the price of imported milk powder recently reached $2,000 per tonne compared to $1,900.
Further, the shortage of foreign exchange needed to import production inputs has also negatively affected dairy production during the last period.
Sakr said that the cost of milk from farms and producers to factories has significantly increased from EGP 3.60 per kg up to EGP 4.20; however, the company did not increase the price of its products as the consumer would not accept any price hikes.
Sakr demanded that the Egyptian government pay more attention to international trade agreements that support Egyptian exports. He pointed out that the Egyptian government has recently agreed with Russia to import poultry, and he wondered whether or not the government also discussed exporting Egyptian products with Russia.
Sakr stressed the need to reconsider the export policies and sign new economic agreements to promote the exports of companies in various sectors. He also stressed the need to intensify Egypt’s participation in international exhibitions and to hold many annual exhibitions.
He demanded that an entity be formed that can gather all relevant government agencies and businessmen to activate Egyptian exports. This entity would determine the target markets, establish marketing centres in foreign countries, and activate the export support programmes.
Sakr said that his company has seven factories in Borg El-Arab, Alexandria, including a factory for triangular and square-shaped cheese with nine production lines, and a production capacity of 1.7 tonnes per hour. Additionally, there is a Tetra Pak factory and a juice factory with a capacity 6 tonnes per hour—it produces packages of 200 and 250mm. The company also has a cheddar cheese factory with an annual production capacity of 1,500 tonnes; a factory to produce fruit concentrates; and another one for the production of margarine and butter.
Sakr said that his company is the only agent for many international companies in New Zealand, the United States and Europe. Sakr Group has another company called Sakr for International Investment which is the only agent and distributor of Fonterra Company’s production of butter in Egypt. This subsidiary company acquires 70% of the market share in this field.
Sakr noted that his company is the leading importer and distributor of canned tuna and mackerel from Thailand, liver and frozen meat from the United States, and frozen fish from different countries such as the United Kingdom, Mauritania, Ireland, the Netherlands, and others.