Required Report - public distribution

**Date:** 4/7/2004

**GAIN Report Number:** EG4005

EG4005

**Egypt**

**Sugar**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry

US Embassy

**Prepared by:**

Ali Abdi & Sherif Ibrahim

**Report Highlights:**

Total area and production of beet sugar and sugar cane are expected to
increase this year due to delivery price increases by the government.
Total sugar imports in CY 2004 are expected to increase by about 9
percent over the 2003 level.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Cairo \[EG1\]

\[EG\]

Table of Contents

[PSD Table Cent. Sugar 3](#psd-table-cent.-sugar)

[Production 3](#production-area-planted)

[Yield and Crop Quality 4](#yield-and-crop-quality)

[Policy 4](#policy)

[Fructose Corn Syrup 5](#fructose-corn-syrup)

[Consumption & Utilization 6](#consumption-utilization)

[Stocks 6](#stocks)

[Trade 6](#trade)

[Import Trade Matrix 7](#import-trade-matrix)

[Tariffs 7](#tariffs)

[PSD Table Sugar Centrifugal 8](#psd-table-sugar-centrifugal)

[PSD Table Sugar Beet 8](#psd-table-sugar-beet)

[PSD Table Sugar Non-Centrifugal 9](#psd-table-sugar-non-centrifugal)

# 

# PSD Table Cent. Sugar

# 

  ---------------------- ----------- ------------- -------- ------------- -------- -------------
  **PSD Table**                                                                    

  **Country:**           **Egypt**                                                 

  **Commodity:**         **Sugar**                                                 

                                     **2003**               **2004**               **2005**

                         Old         New           Old      New           Old      New

  **Market Year Begin**              **10/2003**            **10/2004**            **10/2005**

  Beginning Stocks       450         450           640      304           0        319

  Beet Sugar Production  300         355           320      420           0        430

  Cane Sugar Production  1040        940           1045     960           0        980

  TOTAL Sugar Production 1340        1295          1365     1380          0        1410

  Raw Imports            600         450           500      480           0        520

  Refined Imp.(Raw Val)  500         419           400      470           0        420

  TOTAL Imports          1100        869           900      950           0        940

  **TOTAL SUPPLY**       2890        **2614**      2905     **2634**      0        **2669**

  Raw Exports            0           0             0        0             0        0

  Refined Exp.(Raw Val)  0           0             150      0             0        0

  TOTAL EXPORTS          0           0             150      0             0        0

  Human Dom. Consumption 2250        2310          2255     2315          0        2318

  Feed Dom. Consumption  0           0             0        0             0        0

  TOTAL Dom. Consumption 2250        2310          2255     2315          0        2318

  Ending Stocks          640         304           500      319           0        351

  **TOTAL DISTRIBUTION** 2890        **2614**      2905     **2634**      0        **2669**
  ---------------------- ----------- ------------- -------- ------------- -------- -------------

# 

# Production & Area Planted

Sugar cane is the main sugar crop in Egypt, representing about 73
percent of total sugar production, or 940,000 MT. Cane is grown
primarily in Upper Egypt where it is well adapted to the extreme summer
heat. The crop is planted in January and harvested in mid‑December. The
Ministry of Agriculture (MOA) estimates total cane area and production
for the crop harvested in CY 2003 at 321,000 feddans (135,000 HA) and
15,276,441 MT, respectively compared to 309,000 feddans (130,000 HA) and
14,986,500 MT respectively in previous the year. Total area and
production are expected to increase slightly in CY 2004, due to the
successes in controlling the spread of rust scaling plant disease which
caused substantial damage to farms in the past and an increase in the
delivery price for cane and beet sugar by the government.

Sugar beet is a secondary sugar crop in Egypt. It currently represents
about 27 percent of Egypt\'s total sugar production, or about 355,000
MT. Most production of beet sugar is under the control of private sector
companies except for about 12,000 MT which is produced by the Sugar&
Integrated Industries Company (SIIC). Beets are planted in
August‑September and harvested in March. Most production is located in
the northern part of the Nile Delta, where the soil is quite poor and
unsuitable for other crops, or in newly reclaimed desert land.

The MOA estimates the total area and production of the beet crop
harvested in MY 2003 to be at about 130,000 feddans (55,000 HA),and
2,450,215 MT respectively, as compared to 154,762 feddans (37,800 HA)
and 3,195,000 MT in 2002. As a result In MY 2003, some farmers shifted
from beet cultivation to wheat as wheat became more lucrative crop.
However, after the increase of beet delivery price by the companies,
beet area for 2004 has increased by about 7 percent. This increase in
beet area is mainly due to the increase of basic delivery price for
farmer from LE 100 per MT in 2003 to LE 120 per MT.

# Yield and Crop Quality

Egypt\'s sugar cane yields are among the highest in the world. The
Ministry of Agriculture estimates the average yield for the 2003 crop to
be about 114 MT per hectare, almost the same level as the year before.
Beet yields on individual farms vary between 30 and 70 MT per hectare.
In MY 2003, the average yield was about 48 MT per hectare about the same
as the previous year. Favorable weather conditions and the widespread
availability of fertilizers to beet growers were the main reasons behind
maintaining the high yield. Industry sources expect yields in MY 2004 to
be slightly higher, or remain the same as the 2003 level.

Weather does not play a major role in cane production in Egypt. The
entire cane crop is irrigated and the climate is fairly consistent
throughout the major production area of upper Egypt.

Low temperatures at night and mild temperatures during the day continue
to keep the sugar content fairly stable. Preliminary reports on the 2004
crop indicate a sugar content of about 12.6 percent, compared to 12.7
for the 2003 crop. The sugar recovery rate in 2004 is also remain
unchanged from the previous year which was about 10.5 percent. The
polarity of cane sugar is reported to be 99.8 percent.

Weather conditions for the beet‑growing season in the Delta area have
been favorable throughout most of the 2003 season. Sugar content is
expected to average 17.5 percent, about the same as in 2002. The sugar
recovery rate for this season is running at about 14.6 percent, about
the same as in 2002.

At the present time, cane sugar production in Egypt is monopolized by
one public sector company, the Sugar & Integrated Industries Company
(SIIC). The SIIC was formed in 1963 when the government nationalized the
eight private sugar mills that were operating at that time. Most of them
had been built prior to the 1930\'s. The SIIC has a limited crushing
capacity and can process no more than 70‑80 percent of the total
available sugar cane crop. However, it does have a considerable amount
of excess refining capacity. In order to generate new sources of revenue
to compensate for its financial losses, the company contracts some of
its excess refining capacity to private importers who process raw sugar
at a fee of LE 200 per ton.

## 

# Policy

GOE continues to promote sugar cane production because of its importance
to the Egyptian economy. However, given the severe competition within
the local agricultural economy for land and water, in addition to the
country\'s limited cane crushing capacity, sugar cane area is unlikely
to increase in the future. Thus, any growth in cane sugar production
will have to be through vertical expansion, in essence by means of
increased crop yields. In this respect, the Sugar Crops Institute of the
Ministry of Agriculture is currently conducting field experiments on new
improved cane varieties (Giza 95/19, Giza 95/21, H94/119/72 and
94/181/1) that are known to have higher yields, are more resistant to
insects and plant diseases, and that are better suited to drought
conditions, all with the objective of reducing the demand for water. The
government\'s objective is to reduce

sugar cane area, and thus water consumption, in order to save about one
billion cubic meters of irrigation water. The savings in water will help
develop new land reclamation projects in the South Valley. However, this
objective may be difficult to achieve given the government\'s current
pricing policy which in

actuality encourages farmers to continue growing cane. At the current
average yield of 114 MT/HA, growing sugar cane represents the most
lucrative farming option for farmers in upper Egypt. For sugar beet in
MY 2003/04, the delivery price has been set by the beet Sugar Companies
at L.E 120 per MT for sugar beet that has 16 percent sugar content, this
is compared to LE 100 per MT in MY 2002/03 price. Also, companies
increased the price of the premium which is paid to farmers for early
delivery from LE 35 per MT to LE 45 per MT (during the first 10 days of
the season). The availability of excess refining capacity at the SIIC
has encouraged sugar traders to import raw sugar for domestic refining
as a lucrative alternative to the importation of refined sugar. The
large price differential between raw and refined sugar on the
international market and the difference in customs duties between
refined and raw sugar (10 percent on refined sugar verses 5 percent on
raw sugar) led to a an increase in Egyptian imports of raw sugar in
2003.

# Fructose Corn Syrup

The National Company for Maize Products (NCMP), a private sector
company, is the only producer of high fructose corn sugar (HFCS)in
Egypt. Production of HFCS in CY 2003 is estimated at 93,000 MT,out of
which 73,500 MT is HFCS-55, and the balance is HFCS-42, compared to
99,552 MT in 2002. This decrease in HFCS production is came as a result
of devoting part of production capacity for dry yeast. The production of
dry yeast was estimated at 30,200 MT.

The NCMP has storage capacity up to 50,000 MT of corn and 6,000 MT of
HFCS. The company produces about 800 kilos of HFCS from one metric ton
of corn. HFCS‑55 is utilized exclusively by soft drink bottlers. HFCS‑42
is used in a variety of products including jams and jellies, ice cream,
pastries, and canned fruits. In addition to HFCS, NCMP produces crude
corn oil, corn gluten meal (60 percent protein), which is used mainly in
poultry feed, and corn gluten feed (16 percent protein), which is used
mainly in cattle feed.

The company imports about 200,000 MT of yellow corn annually, mostly
from the U.S. The average price of HFCS-55 in 2003 was LE 1,300 per MT
compared with LE 1,122 per MT in 2002. the current import price of raw
sugar (from Brazil) is \$ 200 C&F per Mt while the price of refined
sugar is \$215 C&F per MT.

## Consumption & Utilization

Total sugar consumption in CY 2003 increased by 0.8 percent over the
2002 level, i.e., to 2.3 MMT. Consumption is projected to increase
slightly in 2004, mostly due to increased in population. In CY 2003,
locally produced sugar sold at L.E 1,400 per MT wholesale, plus a 5
percent profit margin. The GOE continues to subsidize sugar consumption
under the national ration system. Under the current program, however,
about 500,000 MT of refined sugar is targeted for distribution under the
ration system. The balance of total consumption is freely traded. The
cost of one kilogram of sugar to ration card holders is divided in two:
one half kilo at a cost of LE 0.50/Kg. plus an additional half kilo at a
cost of LE 0.80/Kg. Unrationed sugar is available to consumers through
government outlets at LE 1.60 per Kg. The current retail price of sugar
in private sector shops runs between LE 1.80 and LE 2.30 per Kg. At the
present time, the government appears to be far away from removing sugar
altogether from the list of subsidized commodities.

Per capita sugar consumption in Egypt at the present time is estimated
at 33 Kg. per year. In 2003, approximately 80 percent of total sugar
consumption, or about 1.8 million MT, was in the form of sweeteners for
direct consumption. The soft drink bottling industry alone accounts for
up to 60,000 MT of raw sugar utilization. The remainder is used by the
confectionary industry, in addition to about 73,000 MT of HFCS‑55. Most
of the HFC‑42 produced domestically and most imported sugar are used for
baking, ice cream, jams, jellies, and in canned fruit. The onfectionary
industry uses about 25,000 MT of HFCS‑42 annually.

# Stocks

Egypt normally maintains strategic sugar stocks equal to about 60 days
of direct consumption, i.e., about 385,000 MT. Stocks are held mainly by
the SIIC, or at storage facilities belonging to the Ministry of Supply.
In 2003, however, total sugar stocks were estimated at 304,000 MT. The
decrease in sugar stocks was the result of decreased sugar imports which
occurred as a result of the devaluation of Egyptian pound over the last
12 months.

## Trade 

Egypt is a major importer of sugar and relies on imports to meet about
one third of its total sugar requirement. In CY 2003, however, in
response to declining the Egyptian pound value, coupled with shortage of
foreign currency availability, imported sugar prices became expensive.
Egypt imported both raw and refined sugar, totaling 869,000 MT (raw
basis). This quantity was 233,000 MT less than the amount imported in
2002. Imports of raw sugar in 2003 totaled 434,596 MT while refined
sugar imports totaled 434,404 MT (raw basis).

The private sector companies and the Egyptian Sugar Company (SIIC)
purchase raw sugar from various sources including Cuba and Brazil, among
others. Most imported raw sugar is refined at the Hawamdia plant, but
small quantities also are refined at the Gerga and Kous facilities
located in upper Egypt.

For 2004, total sugar imports are expected to increase by about 9
percent over the 2003 level, i.e., about 950,000 MT. The average C&F
price of white sugar is currently \$215 per MT compared to \$ 240 per MT
in 2003 while the average C&F price of raw sugar is 195 per MT compared
to \$210 per MT in 2003.

The Delta Sugar Company (DSC) exported 170,000 MT of palletized beet
pulp (12 percent moisture) to Europe at a price of about \$140/MT, FOB
Alexandria.

## Import Trade Matrix

  --------------------- -------------- -------------------- --------------
  **Import Trade                                            
  Matrix**                                                  

  **Country:**          **Egypt**      Units:               000 MT

  **Commodity:**        **Sugar**                           

  **Time period:**                                          

  **Imports for**       **2002**                            **2003**

  U.S.                                 U.S.                 8,400

  Others                               Others               

  Brazil                942            Brazil               579,196

  E.U                   84             E.U                  67,678

  Guatemala             41             Colombia             63,950

  Thailand              28             India                50,925

                                       South Africa         33,250

                                       Cuba                 29,500

                                       Swaziland            20,500

                                                            

                                                            

                                                            

  **Total for Others**  1095                                844999

  **Others not listed** 7                                   15,601

  **Grand Total**       1102                                869000
  --------------------- -------------- -------------------- --------------

# Tariffs

The importation of sugar is essential to domestic needs.

Tariffs on imported sugar are 5 percent and 10 percent on raw sugar and
refined sugar respectively. Tariffs on other sugar in non-solid form
such as syrups and molasses are 30 percent and confectionary sugar is
assessed a tariff rate of 40 percent.

## PSD Table Sugar Centrifugal

  ---------------------- --------------- ------------- ----------- ------------- -------- -------------
  **PSD Table**                                                                           

  **Country:**           Egypt                                                            

  **Commodity:**         **Sugar Cane                                                     
                         Centrifugal**                                                    

                                         **2003**                  **2004**               **2005**

                         Old             New           Old         New           Old      New

  **Market Year Begin**                  **10/2003**               **10/2004**            **10/2005**

  Area Planted           92              113           94          114           0        115

  Area Harvested         91              112           93          113           0        114

  Production             10386           12768         10614       12993         0        13110

  **TOTAL SUPPLY**       **10386**       **12768**     **10614**   **12993**     **0**    **13110**

  Utilization for Sugar  10386           12768         10614       12993         0        13110

  Utilizatn for Alcohol  0               0             0           0             0        0

  **TOTAL UTILIZATION**  10386           **12768**     10614       **12993**     0        **13110**
  ---------------------- --------------- ------------- ----------- ------------- -------- -------------

# PSD Table Sugar Beet

  ---------------------- ---------- ------------- ---------- ------------- -------- -------------
  **PSD Table**                                                                     

  **Country:**           Egypt                                                      

  **Commodity:**         **Sugar                                                    
                         Beets**                                                    

                                    **2003**                 **2004**               **2005**

                         Old        New           Old        New           Old      New

  **Market Year Begin**             **10/2003**              **10/2004**            **10/2005**

  Area Planted           58         55            60         59            0        60

  Area Harvested         57         54            59         58            0        59

  Production             2841       2592          2940       2846          0        2890

  **TOTAL SUPPLY**       **2841**   **2592**      **2940**   **2846**      **0**    **2890**

  Utilization for Sugar  2841       2592          2940       2846          0        2890

  Utilizatn for Alcohol  0          0             0          0             0        0

  **TOTAL UTILIZATION**  2841       **2592**      2940       **2846**      0        **2890**
  ---------------------- ---------- ------------- ---------- ------------- -------- -------------

# 

## PSD Table Sugar Non-Centrifugal

  ---------------------- ------------------- ------------- ---------- ------------- -------- -------------
  **PSD Table**                                                                              

  **Country:**           Egypt                                                               

  **Commodity:**         **Sugar Cane                                                        
                         Non-Centrifugal**                                                   

                                             **2003**                 **2004**               **2005**

                         Old                 New           Old        New           Old      New

  **Market Year Begin**                      **10/2003**              **10/2004**            **10/2005**

  Area Planted           35                  22            36         23            0        24

  Area Harvested         34                  21            35         22            0        23

  Production             3137                2508          2047       2622          0        2736

  **TOTAL SUPPLY**       **3137**            **2508**      **2047**   **2622**      **0**    **2736**

  Utilization for Sugar  3137                2508          2047       2622          0        2736

  Utilizatn for Alcohol  0                   0             0          0             0        0

  **TOTAL UTILIZATION**  3137                **2508**      2047       **2622**      0        **2736**
  ---------------------- ------------------- ------------- ---------- ------------- -------- -------------