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Egypt suffering from sugar crisis despite largest sugar factory in the world

Sugar prices have recently witnessed a record rise in Egypt despite the country’s opening of the largest sugar production plant earlier this year.
Egyptians buy sugar from a truck as the country suffers from a sugar shortage, Cairo, Egypt, Oct. 26, 2016.

CAIRO — The Egyptian market is currently witnessing an unprecedented rise in the price of white sugar, as the price of 1 ton of white sugar reached 16,750 Egyptian pounds ($682) in the past few days. 

In retail stores, the price of a pack (1.1-1.6 pounds) of the popular Al-Doha Sugar increased to 23 Egyptian pounds ($0.94), while the price of lower-quality brands ranged between 18 pounds and 21 pounds ($0.73 and $0.85).

This comes at a time when the Canal Sugar company in Egypt — of which the Dubai-based Al Ghurair Group owns a controlling stake — began operating in May a sugar beet processing facility in Minya governorate (Upper Egypt), which is set to be the largest factory in the world with an expected annual production of more than 900,000 tons of sugar. 

Observers believe that the sugar crisis in Egypt is the result of a lack of supply in the market and a failure to release shipments of raw sugar from the ports due to a shortage of US dollars. This, according to observers, is exacerbated by the global problems in shipping and import resulting from the coronavirus pandemic and Russia's war on Ukraine.

Hassan al-Fandi, head of the sugar division at the Egyptian Chamber of Food Industries, told Al-Monitor, “The current increase in the price of sugar is due to the lack of supply and the limited availability with merchants.”

He said, “The current lack of sugar stocks in Egypt is due to the fact that this time of the year marks the end of the Egyptian beet production season. Add to this the lack of imports due to the dollar shortage and to global crises such as the coronavirus pandemic and the Russian-Ukrainian war.”

Asked about the reasons behind the sugar crisis despite the announcement of the start of operations at the Minya factory, Fandi noted, “The factory is yet to be fully operational. But when it will operate at full capacity, it is expected to cover a quarter of Egypt’s total sugar consumption, which would bridge the gap between production and consumption.”

Fandi pointed out, “There is a gap between the volume of production and consumption in the Egyptian market, estimated at about 600,000 tons of sugar, as the volume of Egypt’s production of white sugar amounts to approximately 2.6 million tons, while the volume of consumption amounts to about 3.2 million tons annually.”

He explained, “Both the General Authority for Supply Commodities and the private sector currently import the required quantities of [unrefined] raw sugar to bridge the gap.”

Fandi added, “In order for sugar prices to decline in Egypt, the country would need to import about 150,000 tons in order to increase supply in the market and lower prices.”

In addition to the sugar beet processing facility launched in May, Canal Sugar is also working on a project to reclaim 181,000 acres of desert land and develop it using groundwater, in a bid to produce 2.5 million tons of sugar beets per year, among other strategic crops such as wheat, corn and chickpeas. 

The project will also help reduce imports by about $900 million per year, and it will export by-products worth up to 120 million tons per year, in addition to producing 216,000 tons of beet pulp and 243,000 tons of molasses on a yearly basis, to be exported abroad in its entirety.

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