Required Report - public distribution

**Date:** 10/16/2006

**GAIN Report Number:** EG6027

EG6027

**Egypt**

Dairy and Products

**Annual**

2006

**Approved by:**

![](media/image1.wmf)Peter Kurz

#### U.S. Embassy

**Prepared by:**

Chris Rittgers & Sherif Ibrahim

**Report Highlights:**

In 2006, Egypt\'s total fluid milk is expected to drop by about 15
percent due to the outbreak of LSD and FMD diseases. In 2005, U.S market
share in the NFDM import market increased significantly.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Cairo \[EG1\]

\[EG\]

Table of Contents

[PSD Dairy, Milk, Fluid 3](#psd-dairy-milk-fluid)

[Production 3](#production)

[PSD, Cheese 4](#psd-cheese)

[Production 4](#production-1)

[Consumption 5](#consumption)

[Prices 5](#prices)

[Trade 5](#trade)

[Import Trade Matrix, Cheese 6](#import-trade-matrix-cheese)

[Tariffs 6](#tariffs)

[Marketing Opportunities for U.S. Exports
6](#marketing-opportunities-for-u.s.-exports)

[Butter, PSD 7](#butter-psd)

[Production 7](#production-2)

[Consumption 7](#consumption-1)

[Prices 8](#prices-1)

[Trade 8](#trade-1)

[Butter, Import, Trade Matrix 9](#butter-import-trade-matrix)

[Factors Affecting U.S. Exports 9](#factors-affecting-u.s.-exports)

[Tariffs 9](#tariffs-1)

[Milk Non Fat Dry Milk 10](#milk-non-fat-dry-milk)

[Production 10](#production-3)

[Consumption 10](#consumption-2)

[Trade 10](#trade-2)

[NFDM, Import Trade Matrix 11](#nfdm-import-trade-matrix)

# 

# PSD Dairy, Milk, Fluid

+---------------------+-------+-------+-------+-------+-------+-------+
| **Egypt**           |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| ####### Dairy, Mi   |       |       |       |       |       |       |
| lk, Fluid (1000 MT) |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     |       | **2   |       | **2   |       | **2   |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | Old   | New   | Old   | New   | Old   | New   |
+---------------------+-------+-------+-------+-------+-------+-------+
| ######              |       | *     |       | *     |       | *     |
| Calendar Year Begin |       | *01/2 |       | *01/2 |       | *01/2 |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Cows In Milk        | 1620  | 1625  | 1623  | 1610  | 0     | 1620  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Cows Milk           | 1690  | 1625  | 1695  | 1462  | 0     | 1470  |
| Production          |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Milk          | 2110  | 2375  | 2115  | 1928  | 0     | 2030  |
| Production          |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Production    | 3800  | 4000  | 3810  | 3800  | 0     | 3500  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Imports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Imports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL SUPPLY**    | 3800  | **4   | 3810  | **3   | 0     | **3   |
|                     |       | 000** |       | 400** |       | 500** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Exports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Fluid Use Dom.      | 1640  | 1640  | 1642  | 1465  | 0     | 1508  |
| Consum.             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Factory Use Consum. | 1853  | 1853  | 1858  | 1635  | 0     | 1592  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Use Dom.       | 307   | 300   | 310   | 300   | 0     | 300   |
| Consum.             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 3800  | 3800  | 3810  | 3400  | 0     | 3500  |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL             | 3800  | **3   | 3810  | **3   | 0     | **3   |
| DISTRIBUTION**      |       | 800** |       | 400** |       | 500** |
+---------------------+-------+-------+-------+-------+-------+-------+

## Production

##  

In 2007, total milk production is forecast to fall to 3.5 million tons,
about 8 percent below estimated production in 2006. Output in 2006 is
estimated to be about 5 percent lower than the previous year. These two
consecutive years of declining production are primarily due to incidence
of both lumpy skin (LSD) and foot and mouth disease (FMD), which have
taken a significant toll on the inventory of the local dairy herd. In
2006 during the height of the outbreaks, milk production was down as
much as 30 percent. The diseases continue to afflict the sector,
production is not expected to rebound until the local herd is
replenished, and milk output will continue to fall short of demand. The
decline in milk output has lead to an increase in milk prices, which in
September 2006, were up about 6 percent compared to the previous year.

Rebuilding the dairy herds is stymied by import regulations making it
difficult for dairy producers to import new stock. A Ministry of
Agriculture (MOA) Decree requires that imported cattle come from a
country or area declared as exotic bovine leukosis (EBL) free. While
imports of breeding cattle would be allowed from bio-secured farms under
the supervision of Egyptian veterinary authorities, BSE-related
restrictions still would prevent any live cattle imports from the U.S.
Cost would also be a major impediment. In addition, a BSE-related import
ban is imposed on cattle imports from all European countries except
Bulgaria and Romania. The EU is providing LE 280 million low interest
loans with 7 percent, 9 percent and 11 percent interest rates for one
year, two- year and more than two year loans respectively. This program
is managed by the Ministry of Agriculture and is directed to milk
producers and processors in order to improve their operations.

# PSD, Cheese

+---------------------+-------+-------+-------+-------+-------+-------+
| **Egypt**           |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| **Dairy, Cheese     |       |       |       |       |       |       |
| (1000 MT)**         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     |       | **2   |       | **2   |       | **2   |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | Old   | New   | Old   | New   | Old   | New   |
+---------------------+-------+-------+-------+-------+-------+-------+
| ######              |       | *     |       | *     |       | *     |
| Calendar Year Begin |       | *01/2 |       | *01/2 |       | *01/2 |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 460   | 480   | 462   | 408   | 0     | 420   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Imports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Imports       | 10    | 10    | 10    | 12    | 0     | 12    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports       | 10    | 10    | 10    | 12    | 0     | 12    |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL SUPPLY**    | 470   | **    | 472   | **    | 0     | **    |
|                     |       | 490** |       | 420** |       | 432** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Exports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Exports       | 6     | 6     | 7     | 5     | 0     | 7     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Exports       | 6     | 6     | 7     | 5     | 0     | 7     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Human Dom.          | 464   | 484   | 465   | 415   | 0     | 425   |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Use, Losses   | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Total Dom.          | 464   | 484   | 465   | 415   | 0     | 425   |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Use           | 470   | 490   | 472   | 420   | 0     | 432   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL             | 470   | **    | 472   | **    | 0     | **    |
| DISTRIBUTION**      |       | 490** |       | 420** |       | 432** |
+---------------------+-------+-------+-------+-------+-------+-------+

## Production

In line with lower overall milk output, cheese production is falling.
Feta is the most important type of cheese produced, accounting for about
three-quarters of all cheese produced. A majority of this is produced by
small un-licensed factories (about 5000 factories) from un-pasteurized
milk, despite a standard (yet to be enforced) that prohibits the
production of feta cheese from un-pasteurized milk. The rest of
production is spread among hard Romano (about 65,000 tons), processed
cheese (about 40,000 tons), and a small but growing quantity of
mozzarella cheese. There is also a small amount of blue cheese and
cheddar cheese. Production is steadily increasing but still falls short
of demand. Both the private and public sectors produce cheese; however,
in recent years the public sector market share has drastically
decreased. The Government of Egypt has been trying to sell the only
public sector company for dairy products (Misr Dairy) to private sector
buyers. So far only one factory in Alexandria has been sold to a private
sector investor.

# Consumption

Due to lower domestic supplies, cheese consumption is down in 2006 and
is expected to rebound only marginally in 2007. Current per capita
consumption of cheese is estimated at 6.5 kilograms. Cheese is an
important part of the Egyptian diet and many people eat cheese with at
least one meal per day. Most cheese is consumed with bread. Feta cheese
is both the most popular and least expensive type of cheese available.
The hard cheese known as "Romi" and processed cheese known as "Nisto"
are also among the popular cheeses consumed in Egypt. A relatively small
amount of imported fancy cheeses is also consumed.

## Prices

In the third quarter of 2006, the price for imported cheddar cheese was
about \$2,935 per ton C&F. For the same period, Gouda and Edam cheese
were being imported at costs of \$3,550 - 3,600 per MT CIF,
respectively; and being retailed for about LE 30 and 28 per kilo,
respectively. Imported fancy cheese such as Old Amsterdam, Parmesan and
Camembert retail between LE 90 and LE 125 per kg.

# Trade

Despite a drop in local production, import demand is forecast to remain
fairly flat. The more affluent segments of the population, the tourism
sector, hotels and restaurants consume most of the imported cheese. The
Netherlands and Australia continue to be by far, the major cheese
suppliers to the Egyptian market. Exports are relatively constant, and
are mostly feta cheese to other Arab countries.

The EU-Egyptian Partnership Agreement, which went into effect in June
2004, offers several important tariff concessions for European dairy
suppliers. However, European cheese exporters are not gaining much from
the agreement. According to the agreement, Egypt is required to allow a
2,000 MT TRQ at 50 percent of the basic tariff for cheese and curd
products from the EU.

Following are the product codes for which the EU has TRQs:

04061090 Fresh cheese in packages over 20 kg

04062090 Grated or powdered cheese over 20 kg

04063090 Processed cheese over 20 kg

04064090 Blue veined cheese over 20 kg

04069090 other cheese over 20 kg

It usually takes three weeks for imported cheese to be released by
Egyptian import authorities. A great deal of that time is taken to
review all of the certifications required by the Ministries of Health,
Agriculture, and Economy and Trade. The shelf‑life for imported cheese
is between 6 months and one year depending on the product.

## Import Trade Matrix, Cheese

+--------------------+-------------+--------------------+-------------+
| **Egypt**          |             |                    |             |
|                    |             |                    |             |
| **Dairy, Cheese**  |             |                    |             |
|                    |             |                    |             |
| ####### MT         |             |                    |             |
+--------------------+-------------+--------------------+-------------+
|                    | **2004**    |                    | **2005**    |
+--------------------+-------------+--------------------+-------------+
| U.S.               | 114         | U.S.               | 121         |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| Netherlands        | 3,343       | Netherlands        | 3,812       |
+--------------------+-------------+--------------------+-------------+
| Australia          | 1,018       | Australia          | 1,585       |
+--------------------+-------------+--------------------+-------------+
| New Zealand        | 665         | Saudi-Arabia       | 856         |
+--------------------+-------------+--------------------+-------------+
| Saudi-Arabia       | 668         | New Zealand        | 749         |
+--------------------+-------------+--------------------+-------------+
| Ireland            | 554         |                    |             |
+--------------------+-------------+--------------------+-------------+
| Poland             | 437         |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Total for        | 6,685       |                    | 7,002       |
| Others**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Others not       | 2,311       |                    | 2,877       |
| listed**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Grand Total**    | 9,110       |                    | 10,000      |
+--------------------+-------------+--------------------+-------------+

# Tariffs

All cheeses, packaged under twenty kilograms are subject to a 22 percent
tariff, while all cheeses, packaged over twenty kilograms are subject to
a flat 12 percent tariff. There is an additional service fee of 3
percent, and a 1 percent sales tax. Most cheese imports are in 20 kg
packages.

## Marketing Opportunities for U.S. Exports

Opportunities for U.S. cheese exports to Egypt exist, but they are
limited due to lack of price competitiveness. The primary factor
influencing cheese imports is price, but there is a growing segment of
consumers who consider quality before price when buying cheese. Egyptian
consumers prefer the taste and texture of European cheddar cheese over
that from the United States.

# Butter, PSD

+---------------------+-------+-------+-------+-------+-------+-------+
| **Egypt**           |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| **Dairy, Butter**   |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| **(1000 MT)**       |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     |       | **2   |       | **2   |       | **2   |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | Old   | New   | Old   | New   | Old   | New   |
+---------------------+-------+-------+-------+-------+-------+-------+
| ######              |       | *     |       | *     |       | *     |
| Calendar Year Begin |       | *01/2 |       | *01/2 |       | *01/2 |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 11    | 12    | 12    | 10    | 0     | 10    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Imports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Imports       | 30    | 41    | 35    | 45    | 0     | 46    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports       | 30    | 41    | 35    | 45    | 0     | 46    |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL SUPPLY**    | 41    | *     | 47    | *     | 0     | *     |
|                     |       | *53** |       | *55** |       | *56** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Exports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Domestic            | 41    | 53    | 47    | 55    | 0     | 56    |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Use           | 41    | 53    | 47    | 55    | 0     | 56    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL             | 41    | *     | 47    | *     | 0     | *     |
| DISTRIBUTION**      |       | *53** |       | *55** |       | *56** |
+---------------------+-------+-------+-------+-------+-------+-------+

## Production

A very small quantity of butter is produced in Egypt on a commercial
scale, approximately 10,000 MT. The bulk of local butter production is
by farmers for home consumption, with a small amount of this production
marketed locally at weekly village markets. The absence of a significant
domestic butter industry in Egypt is due to several factors, the most
important being the lack of adequate refrigeration throughout the
country, which makes the conversion of butter to butter oil and ghee
necessary. Also, there is an increasing consumer trend toward the use of
palm olein ghee rather than butter.

## Consumption

Egyptians prefer butter made from buffalo milk to butter made from cow
milk due to its distinctive flavor. They also have a preference for
unsalted versus salted butter. Only small quantities of butter are
consumed in solid form and mostly sold at up-scale supermarkets. With
pita style bread being the main type of bread used in Egypt, butter is
rarely used directly on bread. Rather, butter is mostly used as an
ingredient in baked goods or in fried foods. Both locally produced and
imported butter is melted and stored in the form of butter ghee. That
allows it to be kept without refrigeration for as long as 9-12 months.
Butter ghee is preferred to vegetable oil for cooking. As a result of
relatively higher prices of imported butter oil compared to imported
butter, a large number of consumers buy butter, rather than butter oil,
and convert it at home. Imported butter is available throughout the year
and demand increases during holidays, especially the fasting month of
Ramadan where 20-30 percent of total annual demand is consumed.

## Prices

In the third quarter of 2006, the average import price of butter was
\$1,600/ton CIF, compared to an average of \$2,400/ton in September
2005. Reportedly, the decrease in import prices was mainly due to the
increased production in U.S., New Zealand and China. Entering the fourth
quarter of 2006 also coincided with Ramadan, and according to importers,
prices were relatively high and sales at LE for a 25 kg carton. This
high price is because of Ramadan. However, traders expect retail prices
will drop back to their normal level of LE 280 per carton of 25 kg.

## Trade

In 2007, imports of butter and butter oil are expected to increase only
marginally as demand for the product is relatively stagnant. In 2005,
spurred by lower prices, imports increased to 41,000 MT, compared to
28,000 MT in 2004. New Zealand and the Netherlands are the major
suppliers of butter to Egypt. In recent years, due to relatively
uncompetitive prices, there has been no U.S. presence in the Egyptian
butter market.

The EU maintained the butter export restitution program in 2005, paying
out euro 1,500/ton. Under the EU-Egypt Partnership Agreement, 5000 tons
of butter, other fats and oils derived from milk, dairy spreads and
other products that fall under heading HS 04050090 in packages greater
than 20 kg, enter Egypt at 5 percent below the basic duty. This puts the
current duty on EU butter at 3.75 percent. According to the agreement,
three years after implementation there will be a 10 percent reduction of
basic duty, and a 15 percent reduction four years after implementation.
In addition, European suppliers will receive a 5000 MT tariff rate quota
(TRQ) at a 25 percent reduction from the applied tariff.

Most butter is imported in 25 kilogram blocks and then re-packaged for
sale to grocers and supermarkets. The shelf‑life for both imported and
locally produced butter is 18 months. For butter oil the shelf-life is
two years. It takes between 15‑21 days to obtain all of the necessary
certificates to clear incoming shipments of butter and butter oil from
Egyptian ports.

## Butter, Import, Trade Matrix

+--------------------+-------------+--------------------+-------------+
| **Egypt**          |             |                    |             |
|                    |             |                    |             |
| ###                |             |                    |             |
| #### Dairy, Butter |             |                    |             |
|                    |             |                    |             |
| ####### MT         |             |                    |             |
+--------------------+-------------+--------------------+-------------+
|                    | **2004**    |                    | **2005**    |
+--------------------+-------------+--------------------+-------------+
| U.S.               | 0           | U.S.               | 0           |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| New Zealand        | 12,140      | New Zealand        | 11,076      |
+--------------------+-------------+--------------------+-------------+
| Netherlands        | 5,635       | Netherlands        | 5,743       |
+--------------------+-------------+--------------------+-------------+
| Australia          | 1,404       | Finland            | 2,604       |
+--------------------+-------------+--------------------+-------------+
| Belgium            | 1,374       | Australia          | 2,520       |
+--------------------+-------------+--------------------+-------------+
| Finland            | 1,074       | Sweden             | 2,139       |
+--------------------+-------------+--------------------+-------------+
|                    |             | Belgium            | 1,924       |
+--------------------+-------------+--------------------+-------------+
|                    |             | Poland             | 1,839       |
+--------------------+-------------+--------------------+-------------+
|                    |             | France             | 1,810       |
+--------------------+-------------+--------------------+-------------+
|                    |             | Denmark            | 1,646       |
+--------------------+-------------+--------------------+-------------+
|                    |             | Ireland            | 1,278       |
+--------------------+-------------+--------------------+-------------+
| **Total for        | 21,627      |                    | 32,579      |
| Others**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Others not       | 6,373       |                    | 8,421       |
| listed**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Grand Total**    | 28,000      |                    | 41,000      |
+--------------------+-------------+--------------------+-------------+

## Factors Affecting U.S. Exports

The withdrawal of the Dairy Export Incentive Program (DEIP) is the main
factor behind the drastic decline of U.S. butter exports to Egypt in
recent years. Although Egyptian importers of dairy products have a very
favorable opinion of U.S. butter quality, they indicate that price is
the most important factor that influences their decision.

In addition to the prohibitive price of U.S. butter, Egyptian importers
cite three other reasons for the absence of U.S market share in
Egypt: 1) poor quality of packing cartons; 2) high moisture content,
and; 3) the white color of U.S. butter.

## Tariffs

The current import tariffs on butter and other fats and oils derived
from milk are as follows:

**[Size]{.underline}** **[Tariff]{.underline}**

######## Containers up to 20 kg 12 percent

> Other 5 percent

In addition, there is a 3 percent customs service fee and a 1 percent
sales tax.

## Milk Non Fat Dry Milk

+---------------------+-------+-------+-------+-------+-------+-------+
| **Egypt**           |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| ####### Dair        |       |       |       |       |       |       |
| y, Milk, Nonfat Dry |       |       |       |       |       |       |
|                     |       |       |       |       |       |       |
| **MT**              |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     |       | **2   |       | **2   |       | **2   |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | Old   | New   | Old   | New   | Old   | New   |
+---------------------+-------+-------+-------+-------+-------+-------+
| ######              |       | *     |       | *     |       | *     |
| Calendar Year Begin |       | *01/2 |       | *01/2 |       | *01/2 |
|                     |       | 005** |       | 006** |       | 007** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Imports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Imports       | 23    | 25    | 25    | 28    | 0     | 30    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports       | 23    | 25    | 25    | 28    | 0     | 30    |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL SUPPLY**    | 23    | *     | 25    | *     | 0     | *     |
|                     |       | *25** |       | *28** |       | *30** |
+---------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Exports    | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Exports       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Human Dom.          | 23    | 25    | 25    | 28    | 0     | 30    |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Other Use, Losses   | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Total Dom.          | 23    | 25    | 25    | 28    | 0     | 30    |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Use           | 23    | 25    | 25    | 28    | 0     | 30    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL             | 23    | *     | 25    | *     | 0     | *     |
| DISTRIBUTION**      |       | *25** |       | *28** |       | *30** |
+---------------------+-------+-------+-------+-------+-------+-------+

## Production

Egypt has no significant milk powder production. Imported nonfat dry
milk (NFDM) and whey powder are used mainly for the production of feta
cheese, yogurt and ice cream. There are also small quantities of NFDM
and whey utilized in the production of chocolate and pastries. Limited
quantities of full fat dry milk are also imported and sold for direct
human consumption. Milk powder production is negligible in Egypt.

## Consumption

Nonfat dry milk (NFDM) is used mainly for manufacturing purposes such as
feta cheese, yogurt, ice cream as well as chocolate and pastries. In
2005, the consumption of milk powder increased to 25,000 MT, compared to
24,000 MT in 2004.

## Trade 

In line with expectations for continued growth in the processing sector
NFDM imports are forecast to grow slightly through 2007. The private
sector imports all of Egypt's dry milk requirements.

New Zealand and Sweden are the main suppliers of milk powder to Egypt.
However, U.S. NFDM exports to Egypt have increased significantly in the
past two years, and reached a record of nearly 12,000 tons during the
first 8 months of 2006. In the third quarter of 2006, the average import
price for non-fat dry milk was \$2,500/ton CIF compared to \$2,250/ton
CIF during September 2005. The EU continues to maintain its milk powder
export restitution; though it has reduced its subsidy on milk powder
exports from 1,110 euros per MT to 500 euros per MT.

The current import tariffs on NFDM are as follows: milk and cream not
containing added sugar, packages over 20 kg: 5 percent of CIF value;
while packages less than 20 kg: 15 percent of CIF value.

## NFDM, Import Trade Matrix 

+--------------------+-------------+--------------------+-------------+
| **Egypt**          |             |                    |             |
|                    |             |                    |             |
| ####### Dairy      |             |                    |             |
| , Milk, Nonfat Dry |             |                    |             |
|                    |             |                    |             |
| MT                 |             |                    |             |
+--------------------+-------------+--------------------+-------------+
|                    | **2004**    |                    | **2005**    |
+--------------------+-------------+--------------------+-------------+
| U.S.               | 1,320       | U.S.               | 3,803       |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| New Zealand        | 4,841       | Sweden             | 3,564       |
+--------------------+-------------+--------------------+-------------+
| Sweden             | 4,783       | New Zealand        | 3,025       |
+--------------------+-------------+--------------------+-------------+
| Finland            | 1,770       | Germany            | 2,898       |
+--------------------+-------------+--------------------+-------------+
| Poland             | 1,629       | Denmark            | 2,732       |
+--------------------+-------------+--------------------+-------------+
| Denmark            | 1,409       | India              | 2,506       |
+--------------------+-------------+--------------------+-------------+
| France             | 1,153       | Poland             | 1,178       |
+--------------------+-------------+--------------------+-------------+
| Germany            | 694         | Finland            | 1,141       |
+--------------------+-------------+--------------------+-------------+
| Canada             | 485         | France             | 611         |
+--------------------+-------------+--------------------+-------------+
| Greece             | 475         |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Total for        | 17,239      |                    | 17,655      |
| Others**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Others not       | 5,441       |                    | 3,542       |
| listed**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Grand Total**    | 24,000      |                    | 25,000      |
+--------------------+-------------+--------------------+-------------+

## 

##