Egypt faces sugar crisis
Egyptian officials say strategic sugar reserves are enough to cover seven months of consumption, but prices are rising on the local market and traders do not believe supply is meeting demand.
"Egypt's sugar stocks have reached 1.016 million tons ... enough to meet consumption needs over the next seven months," Public Enterprise Minister Mokhtar Khattab said after a meeting headed by Prime Minister Atef Obeid last week.
He predicted a surplus of 350,000 tons by the start of the new season in December. Free market prices have been rising and have reached 1.8 pounds ($0.28) per kg, up from about 1.3 pounds two months ago.
The Supply and Internal Trade Ministry normally buys 550,000 to 600,000 tons of sugar from local producers for sale to the poor via ration cards at a subsidized price of 0.55 pounds ($0.15) per kg.
Egypt has three sugar production companies, two of them private and one government-owned. A third private-sector firm is due to come on stream soon. Egypt is the world's seventh largest sugar importer, according to the International Sugar Organization, importing 700,000 to 1.3 million tons per year.
Sugar cane accounts for about 78% of total sugar production in Egypt. It is cultivated mainly in Upper Egypt where it is well adapted to the extreme summer heat. Sugar cane is planted in January and remains in the ground for 4-5 years.
Total sugar cane area has been stable around 115,000 HA for the last three years and is expected to remain almost unchanged for the next few years. "There is a sugar crisis, but it has not broken out yet...My estimates are that the government stocks enough until November," said one trader. He noted consumption increased sharply in the fasting month of Ramadan, which
coincides with December this year.
Egypt's cane harvest and crushing season runs from December to June. Beet production runs from March to June.
In December Egypt was forecast to produce 1.32 million tones of sugar in 1999/2000 (July-June), up from 1.25 million in the previous season. The government has a fixed consumption figure of 1.7 million tons for the past five years.
Traders have reservations about that figure, citing population growth and higher per capita incomes. They put consumption at about two million tons. Officials were quoted as saying private importers had stopped buying sugar on overseas markets after world prices rose to about $280 per ton. Local prices are around 1,250 pounds ($356) per ton.
In November, the government raised import duties on white sugar to 26 percent from 10 percent, and on raw sugar to 24 percent from five percent to protect local industry. –(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)