Egyptian export companies are set for a significant competition with Turkish products in the Russian market, in the aftermath of the depreciation of the Turkish lira exchange rate versus the dollar.
Cairman of Horreia 2000 Food Industries Hassan El-Fendy said that the Turkish food industry is the strongest competitor to Egyptian agricultural exports in world markets.
He explained that Turkey’s proximity to major food importing markets bestows upon it a robust competitive advantage against Egyptian exports, whereby Egyptian companies should take into consideration this advantage, which is not in their favour, after the devaluation of the Turkish lira.
The lira witnessed a 43% drop this year only, bringing the foreign exchange rate to 6.7 liras per dollar, driven by fears of the Turkish president’s tightening grip on monetary policy and the political crisis erupting between Ankara and Washington.
El-Fandy said that the Turkish government provides regular 20% incentives to exporting companies, while Egyptian exporters receive only 5-7% incentives, which are not even on a regular basis.
Raafat Razika, a member of the Chamber of Food Industries at the Federation of Egyptian Industries, noted that Egyptian companies have not received export incentives for over two years.
“This delay affects expansion plans of factories, especially as some companies need to sell their products at the cost price to compete with other exporters and maintain customers. In this case, the export incentives represent the profit margin for the companies,” Razika added.
He pointed out that Egyptian companies will likely incur big losses in the European Union and Russian markets, both of which Egypt depends substantially to increase agricultural and food commodities’ exports.
According to the Ministry of Industry, Egyptian food exports to Russia alone increased by 108% in the first four months of this year, reaching $13.7m.
Razika also pointed out that most of the first quarter’s exports were contracted in the end of the previous year, so no one can expect the actual situation of Egyptian exports to Russia until the end of this year.
“Europe will not be the only source of loss for Egyptian exporters, but it will also extend to the North and West Africa markets, due to the growing demand for Turkish products in these areas,” he added.
Not all Egyptian food products will be affected by the current crisis, as Egyptian sweets and frozen vegetables hardly face any competition from Turkey.
Financial Director of Halwani Brothers Fathy Saleh said that Turkey does not compete with the company’s products, noting that the Turkish influence will be limited in European markets.
“Egyptian companies have many competitive advantages in the Russian market that enable them to maintain their market share,” said Dalia Nabil, export manager at Alex Frost, specialised in exporting frozen vegetables and fruits.