Organic Food Sector in Egypt: Industry Analysis

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- Price competition among Egyptian exporters which results from lack of experience of some local traders who considerably reduce prices to close a certain deal. Hence, importers use those low-price quotations to practice a bargaining power on reputable Egyptian exporters to reduce their prices.

- Lack of pure and new grown varieties is quite an issue as most exporters can’t source pure or specific varieties that are not traditionally grown in Egypt.

- Although some Egyptian organic products are irreplaceable to some extent, severe global competition affects the Egyptian organic industry. Countries,such as India, Morocco, Pakistan, turkey, Romania, Australia and Canada constitute a serious threat as importers resource to those countries rather than to Egypt to meet their quality and cost targets.

The bargaining power of supplier

The structure of the organic products can be divided into three main segments or in other words the value chain consists of:

- Growers

- Land fragmentation in Egypt is one of the highest in the world so small farmers cultivate the vast majority of lands dedicated to organic products.

- However small farmers formulated an umbrella under which they facilitate their production and trading; farmers’ associations, small farmers have no bargaining power as suppliers.

- Traders

- Traders play a significant role in the value chain of the organic food industry as they deal with growers and exporters and they represent the main gate for small growers.

- They supervise the harvesting and transportation from the field to the drying facility.

- Exporters

- Some exporters follow backward integration policy where they have their own farms and facilities for dying, screening, and packing and outsource the rest of their demand from contracted farms or traders. Those type of exporters don’t comply with any hose type of exporters don’t comply with the bargaining power of suppliers; if any.

- Exporters with screening and packaging facilities

- Exporters with no or contracted farms and factories

Potential development of substitute products

Actually, more or less all organic products are similar but differ in the purity and quality of product. So, products mainly depend on its quality and the way it is dried. Moreover, SEKEM has a competitive advantage in organic cotton and textile fabrics which is not widely used.

Potential entry of new competitors

Great global interest in organic foods and drinks creates intense competition locally and internationally. Egyptian legal framework and regulations encourage exportation of agricultural products in general and organic products in particular and this created an opportunity for some new entrants who represent a sort of competition. It can be said that there are low barriers for new entrants to get into the market.

List of companies in the market with brief about each one:

AL DAHLIA COMPANY IMPORT & EXPORT (CAIRO & BENI SUEF)

Mr.Magdy El Wahsh- Commercial Director

21, Rabba El EstethmaryBldg.,Apt. 73, Floor 7,Nasr City, Cairo

Phone: +20 2 2417 5227 Mobile: +20 127 375 9944

Fax: +20 2 2418 1276 E-mail: magdy@aldahlia.com

Website: www.aldahlia.com

“Throughout the years since its establishment in 1974, Al Dahlia Company had success to set up a record in cultivation, trade, storage, processing, and extracting of essential oils, culinary herbs, spices, aromatic seeds, and dehydrated vegetables. Keeping pace with time, of rapidly changing markets, we always modernize our factories with the aim of obtaining a high quality product by importing the latest equipment’s and recruiting highly trained staff. • Number of permanent/seasonal employees: 40/100 • Production sites: BeniSuef: Cleaning, dehydration, packaging and lab: 9000 m2 • Main export countries: Germany, Netherlands, UK, Poland, Ukraine, USA, Mexico • Main products: Marjoram, Basil, Parsley, Chamomile, Calendula, Cilantro, Dill, Onion, Spearmint, Peppermint • Certifications: ISO 9001, ISO 14001, OHSAS 18001, ISO 22000, Organic (EEC)”

A. Fakhry& Co.

Ms.AmnaShawkat - Junior Project Manager

1081 Corniche El-Nil, Cairo

Phone:+20 2 2795 0685 Mobile: +20 122 799 5672

Fax: +20 2 2794 4198 E-mail: a.shawkat@afakhry.com

Website: www.afakhry.com

“A. Fakhry& Co. is Egypt's oldest, family owned, aromatic raw materials production & export business still in activity (since 1955) integrating farming, industrial processing, and delivery of goods to its client network worldwide. We offer a range of 250+ products (Conventional & Organic). Organic range includes essential oils, extracts, hydrolates, specialty fatty oils, and specialty dried blossoms/herbs. . AF & Co. runs full in-house lab analyses covering GC, refractometry, polarimetry,, density, etc. A. Fakhry is also REACh compliant. • Number of permanent/seasonal employees: 40/200 • Production sites: ShobraBeloula El Sakhaweya, Gharbeya: distillation & extraction: 4337 m2 • Main export countries: Germany, France, USA, UK, Spain, Australia, India, Switzerland, Turkey, Netherlands • Main products: Geranium, Cumin, Clue Chamomile, Neroli& Petit Grain Mandarin oils; Jasmine concrete • Certifications: ISO 9001, ISO 14001, OHSAS 18001, ISO 2200, Organic (EEC & NOP), Kosher, Halal, Demeter”

Export:

A. Fakhry& Co. exports 100% of its production to over 30 countries on all 5 continents.On average, A. Fakhry& Co.’s geographical turnover is distributed as follows:

60% Europe

20% North America

13% Asia/Oceania

6% Middle-East

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