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Egypt’s fresh orange exports are squeezing out other citrus crops

In depth
This article is part of the dossier: Africa’s growing Agribusiness

By Sherif Tarek
Posted on Thursday, 27 May 2021 15:56, updated on Wednesday, 2 June 2021 07:27

A worker collects oranges harvested at a farm in El Nobaria, northeast of Cairo, Egypt December 23, 2020. December 23, 2020. REUTERS/Mohamed Abd El Ghany

Having leapfrogged Spain recently, Egypt is steadily edging closer to achieving its full potential as the world’s top orange exporter, a widely desirable prospect that might be overshadowing further opportunities to diversify into other high-quality citrus crops and spin-offs.

The Egyptian private sector was allowed to tap into citrus fruits during the late 1980s. Since then, key agricultural producers have increasingly channeled their resources into improving orange production while pushing for opening of new markets such as Brazil and Japan – added as export destinations in recent months.

Exporters are further spurred by a pandemic-induced global demand for the Vitamin C-rich fruit.

Oranges account for approximately 80% of Egypt’s total cultivated citrus area today, and, according to official data, made up over 86% of exported citrus fruit in the 2020/2021 season: that is December 2020 to 30 April.

Not too far from ceiling

The Foreign Agricultural Service (FAS) – a United States Department of Agriculture (USDA) agency –  projects Egyptian orange production to rise by 6.2% year on year to reach 3.4m tonnes in the current marketing year which began last October.

FAS Cairo also forecasts that orange exports will hit 1.5m tonnes in MY 2020/2021, up from 1.37m tonnes the previous year.

More markets are set to open up in future, yet the exporting fraternity is not too far from hitting the ceiling, says Hussein Marie, a board member of Egypt’s largest agricultural NGO – the Horticultural Export Improvement Association – and a managing partner at an exporting company, the Egyptian Growers Organisation.

Hesham El-Naggar, CEO of Daltex, believes that citrus exports will witness no more quantum leaps, only climbing marginally in the coming years, before plateauing out in a decade.

“We used to see increases of 20% or 15 % annually, now we will be going up 2% or 3%  at most,” El-Naggar tells The Africa Report. “After 10 years, there will be no more increases.”

Citrus overproduction

Egypt’s orange exports and domestic consumption are bound to leave overabundance largely untapped, says Marie.

Official data does not reflect citrus oversupply, especially of oranges, because it is only based on agricultural land plots that are registered at notary offices, explains Marie.

With Brazil as the main player in this industry, Egypt could be a favorite NFC juice exporter to Asian countries given its closer geographical proximity.

Unregistered parcels of land are mostly in the desert and were seized by farmers who invoked a law introduced by the late agriculture minister Youssef Wali, particularly during the 1980s and 90s.

“A rough analysis indicated that while the government would say we produce four million tonnes,” the actual citrus production would be six million tonnes, Marie tells The Africa Report.

According to projections based on similar analysis, “we are supposed to be producing anywhere from 6-8m [tonnes of citrus fruits],” which is significantly higher than Egypt’s domestic consumption and exported amounts combined.

This gap has caused local prices to plummet in the past year with losses incurred by producers, Marie says.

Valencia oranges reign supreme

Valencia oranges, also known as summer oranges, are the most cultivated and exported citrus fruits in Egypt, and are attributable to the citrus overproduction, Marie says.

Their plantation process is anything but demanding, unlike other citrus crops like mandarins that require technical know-how.

Their harvest season extends from January to March or April, a period that sees “a gap in the international market” – a prime opportunity for Egyptian exporters, Marie says. The weather also contributes to high-quality summer oranges, he adds.

El-Naggar says what gives Egypt an edge is the cost-effective production and resulting competitive prices, compared to its main competitor, Spain.

Today, Valencia oranges comprise of 60-70% of Egypt’s citrus production, Marie estimates, reclaimed lands included. While this has bolstered Egypt’s reputation as a citrus exporter, it’s still not enough to rival competitors, he says.

Motley collection of citrus fruits

“The citrus breakthrough will happen upon achieving diversity, which is what I am trying to push for nowadays,” says Marie, who seeks to introduce new seedlings through his company, MAREI Orchard & Nursery.

“I have been exhorting many growers not to cultivate the summer [oranges] anymore and plant mandarins, grapefruits and lemons to mix it up,” says Marie. Only then will “our reputation as citrus exporters” improve, he adds.

Egypt’s 2019 accession to the International Union for the Protection of New Varieties of Plants (UPOV) should boost international confidence.

But El-Naggar says it does not make much difference, since besides Tango oranges, there are no other protected varieties.

He believes there is growing demand for certain citrus products, including grapefruits and lemons, which Egyptian exporters could tap into to beat fierce competition from Morocco, Israel and Turkey.

Orange juice potential

“Going industrial” could resolve overabundance of Valencia oranges, which are widely used in juice production, says Marie.

“There is a massive market in Asia and Europe,” he says. “There is potential in different areas… Dubai procures its juice products from the US and Poland and pays a lot of money for it… If they imported it from Egypt, it would be delivered faster and at a better cost.”

Marie says Egypt has a head start in exporting NFC (Not From Concentrate) juices, which are fresh and pasteurised. Unlike the concentrate, NFC juice can diminish in quality while being transported to far-flung destinations, and its price would even be higher due to its costly transportation process.

With Brazil as the main player in this industry, Egypt could be a favorite NFC juice exporter to Asian countries given its closer geographical proximity, he explains.

Khaled Medhat, the sourcing & BU-PBN head of food and beverage company DÖHLER Egypt, says the country’s main advantage is free-trade agreements:

  • The Common Market for Eastern and Southern Africa (COMESA).
  • The Greater Arab Free Trade Area (GAFTA).
  • The EU-Egypt Association Agreement.
  • Offering juice products that are cheaper than Brazil’s to nations that exempt Egyptian imports from customs would give Cairo the upper hand, he says, adding that maintaining prices is a big challenge.

Contract farming needed

Medhat rues the lack of a system to regulate the relationship between farmers and juice makers in Egypt, to ensure sustainable procurements and fair prices for both parties.

“The agro-industrial sector is not sponsored by a certain body in Egypt,” he tells The Africa Report. “There are no crops that are cultivated to be allocated for manufacturing,” with Egyptian fruit producers of all scales primarily targeting fresh consumption, and juice makers only receiving what is left.

Medhat explains that juice makers would offer lower prices for fruits, possibly a third or even ¼ of those in the fresh market, to maintain a profit margin.

This is crucial for Egyptian orange juice prices if producers are to stand a chance in competing against Brazil, he adds.

What facilitates procurements for juice makers is that their specifications are less strict than those of the fresh market – which considers fruit shape, size and color, for instance. Juice makers would only need to focus on internal quality, he says.

But with orange prices occasionally fluctuating, a regulator would still need to financially support either side when needed. “This already exists in Egypt for some items, such as raw milk, whose price is determined by the EMPA [Egyptian Milk Producers Association],” Medhat says.

“We always say we want contract farming in Egypt, but it can only be achieved with an arbitrator,” he concludes.

Bottom line

Egypt’s oversupply of citrus fruits, particularly summer oranges, indicates a need for more crop diversity, and thinking beyond exporting fresh fruits altogether, with orange juice presenting itself as an ideal byproduct – amid lingering challenges.

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