Luna Verde’s sales fell last season by 20%, despite the competitive advantage that resulted from the decision to liberalise the exchange rate. Fierce competition with exporters from Morocco and Spain prevented last season’s sales from growing.
Reda El-Amry, chairperson of Luna Verde, said that European Union countries account for all of the company’s output, adding that they also import 30% of Egypt’s agricultural products exports.
The prices of frozen vegetables in the European market fell last season, driven by fierce competition with exporters from Egypt, Morocco, and Spain, and the convergence of export seasons that overlap at the same time, as well as competing countries enjoying geographical proximity and low cost of transport.
Luna Verde incurred losses of €4.4m, which cut sales to €17.6m in 2017, down from €22m in 2016, despite the decision to float the Egyptian pound.
El-Amry said that depreciating the value of the local currency boosted the competitiveness of Egyptian products, yet other economic measures adversely impacted the cost of production, as many raw materials were imported.
“What flotation gave with the right hand, economic measures took it with the left,” he said. “This forced the company to drop the idea of selling in the local market and continue to export all production.”
He pointed out that last season witnessed an increase in quantities of specific crops, including citrus fruit and grapes for the Chinese market, which the company entered only five years ago, yet made good growth.
Italy accounts for 60% of Luna Verde’s exports, while other European countries account for the remaining.
Moreover, Luna Verde aims to strengthen its presence abroad as of next season, to open up new markets by participating in international exhibitions, to win customers’ trust and attract new customers to the company.
He pointed out that many Egyptian products such as broccoli, cilantro, zucchini, and eggplant have been seeing growing demand.
He added that bad weather sometimes affects the crops of some countries competing with Egypt, which promotes the growth of demand for Egyptian products.
Green beans account for 44% of the company’s exports, onions for 13%, while several other products account for the remaining exports, such as grapes, zucchini, eggplant, peppers, and garlic.
He explained that the decline in the company’s value of sales last season is due to low export prices in many markets, after the fierce competition with Morocco and Spain, in addition to the entry of new Egyptian exporters after the flotation.