Dairy Leads The Way In Booming Egyptian Food Sector

The processed food sector is one of the key economic sectors in Egypt, contributing significantly to employment and exports. Government spending, exports and very strong investment will remain the principal economic drivers, as things are looking quite stable, with government figures showing that growth hit 7.2% in Q1 of FY06/07. Egypt is attracting huge amounts of investment, and the more it attracts, the more its infrastructure should improve.

Although for years there have been restrictive tariffs in place for many imported items, which have acted as a barrier to entry for many international food and drink brands, the government has been working to lift these as it acts to attract greater foreign investment. For example, in early 2007 the government decided to lower tariffs for dairy imports from New Zealand, allowing products to enter the country at a tariff rate between 0% and 2%. This new legislation will mean that European dairy firms such as Danone and Arla will face greater competition in what is a thriving dairy sector.

Although around 80% of Egyptians consume milk that has not been packaged or pasteurised, this number is quickly shrinking (it was as high as 90% just a couple of years ago) indicating the growth opportunities for dairy producers. Free trade agreements (FTAs) with neighbouring Middle Eastern countries has led a thriving export industry for Egyptian cheese, with approximately 75,000-85,000 tonnes of processed cheese produced in the country targeted for export. A free trade zone between all littoral Mediterranean states and the EU, which is expected to be in place by 2010, will help further bolster these food exports.

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Source: Business Wire

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