Egypt Food & Drink Report Q1 2008

Egypt's food and drink and agricultural industry is continuing down its sometimes slow, sometimes difficult path to development. Recognising the important role that agriculture plays, both as a contributor to the economy and as a major source of employment, the government has been investing in agricultural development programmes. Another motivation behind this move to increase production is that the country is tremendously dependent on food imports in order to feed its large and rapidly growing population. Yet the food processing industry is also in need of government support, as this is another area in which Egypt has considerable untapped growth opportunities.

Although Egypt produces a wide variety of crops, only 3.5% of its landmass, mainly around the Nile delta, qualifies as agricultural land. Agricultural development is also held back by a number of technical, logistical and information-related obstacles. In order to realise the potential of the country's agricultural sector, more investment is needed in the country's human resources through the education of its farmers.

One of the main ways in which the government has been supporting this sector has been through land reclamation projects, which are very controversial due to the level of water usage involved. Some of these projects are huge in scale, with the feasibility of such projects continually questioned. Many argue that what the government needs to focus on instead is teaching farmers about irrigation, crop rotation, efficient harvesting and transportation methods. Taking these criticisms on board, the government's Ministry of Trade and Industry is now working with a series of international organisations to help inform farmers of fair market prices for their crops, as well as provide them with technical information for storage and transportation. If Egypt's farmers can be taught to adopt more efficient and sustainable farming techniques then the potential of the country's agricultural sector will be vastly improved.

Meanwhile, the food processing industry is also characterised by its high potential but numerous obstacles. The domestic food-processing sector is growing and has attracted increasing investment in recent years. Egypt has ambitious plans to modernise its food-processing sector, with the ultimate aim of increasing its export markets. Already, free trade agreements with neighbouring Middle Eastern countries have led to a thriving export industry for Egyptian food products. Many companies operating in Egypt have to deal with a shortage of qualified personnel, finding it difficult to recruit employees with the right skill sets across all levels of their operations. This is due to the fact that although education levels are relatively high in Egypt, there is a considerable mismatch between skills taught in schools and those required by most employers. Although labour is cheap, there is still a deficit of trained and experienced staff, leading to inefficiencies in the running of businesses. If the government invests in its human resources in terms of improving education and practical skills, this could have a major positive impact on both the agricultural and food processing industry.