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Four conditions to ensure successful expansion of agricultural processing - Daily News Egypt

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Four conditions to ensure successful expansion of agricultural processing

Provision of necessary lands, reducing interest rates on sector loans

Specialists have expressed their reliance on four conditions in order to expand agricultural products over the upcoming period, as well as achieve a value added on products before exporting. The conditions include providing the needed area of agricultural lands, reducing the prices of interest on the loans directed to the sector, paying the export support, and eliminating bureaucracy with government agencies.

Ali Eissa, the former head of the Association of Exporters, said that the idea of expanding these agricultural products is executable, but with the condition of eliminating the issues facing the sector.

He added that some products can be processed well, including strawberry, peas, beans, and tomatoes; however, there are many obstacles ahead.

Egyptian agricultural products have generally gained prominence in foreign markets, and some products specifically have achieved leaps in total deals made, so they cannot be abandoned, making a shift towards processing.

Exports of agricultural crops have reached about 3.7 million tonnes, compared to 3.5 million tonnes the last season, including 1.5 million tonnes of citrus, compared to 1.2 million tonnes during the two comparison periods.

“So if we want to expand in the processing of agricultural products, we must provide the necessary agricultural areas for that through reaching an agreement with the government regarding the lands to establish agricultural and industrial areas on them at the same time,” he said.

He pointed out that agricultural processing requires developing agricultural programmes using modern methods that can maintain annual losses of the quickly perishable produce.

It also requires developing agricultural research to increase the productivity of a single acre with the goal of reducing costs and the amounts of water needed for cultivation through high-productivity seeds, all of which require large investments, so the government must have a say in this regard, according to Eissa.

“Investment is the only way to develop the agricultural sector; however, the banking sector still deals with it as a long-term investment, which highlights the weakness of the investments in the sector,” said Hisham El Naggar, the chairperson of Daltex for Agricultural Crops. “The sharp increases in the interest rates over the past period will be one of the most prominent obstacles before agricultural processing. Banks must quickly finish these procedures in order to help sectors not to suffer from austerity,” he added.

The Central Bank of Egypt (CBE) increased the interest rate by 700 basis points since the liberalisation of the exchange rate in November to control the high inflation rates, which reached historical levels. The interest rate reached 18.75% for deposits and 19.75% for loans.

Abdel Wahed Soliman, the chairperson of the British Egyptian Company for Agricultural Development, said that agricultural institutions can rely on self-investments in the process of agricultural processing; however, they will be facing several issues in this matter.

“The late payment by the government to support exports will prevent companies from achieving their goals. In case companies choose to rely on self-investments, it will be extremely important for companies to obtain the export support on time,” he added.

Soliman suggested benefiting from the initiative made by the CBE to finance small and medium enterprises (SMEs) with a 5% decreasing rate. However, companies first need to include the agricultural sector to conclude procedures easily.

Reda El Omari, the chairperson of Luna Verde for Agricultural Crops, said that obtaining the papers, permits, and licenses necessary is considered one of the main obstacles facing investors, especially in the agricultural sector.

He explained that, three years ago, he filed for a permit to operate four sorting and packaging stations for agricultural crops with the aim of exporting them. He added that he still has not obtained these papers.

El Omari noted that the concerned authorities have demanded him to file an ownership document for 10 acres in the location of the stations as a condition to issue the licenses. “Are there investment conditions or obstacles?” he wondered.

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