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Opportunities for Egyptian food companies in Russia

Due to ongoing international events, a sizeable gap has been created in the Russian food market. 13% of the nation’s total imports are for food. While EU states and Turkey have been banned from exporting some key food and beverage products to the Russian Federation, other nations have identified this market opportunity. One such country ready to step into the breach is Egypt.
 

Egyptian Russian exports at a glance
 

In 2014, Egypt exported $26.8 billion worth of goods globally. Food, specifically vegetables, fruits and nuts, contributed 8.5% of this figure – some $2.3 billion. 2014 also saw a huge rise in exports of meat and seafood preparations. This sector increased by a massive 804.8%, although the relative value is somewhat lower than their key food exports ($8.8 million). 
Agricultural products, alongside fats and livestock, contributed 11% to the total exports of the period January-October 2015. The value of exports during this period came to $23.8 billion. A further 4% of this total came from foodstuffs, beverages and tobacco. 
 

Egyptian food in Russia
 

As Russia continues to impose sanctions or outright bans on food imports from the EU and other countries, Egyptian food companies have spotted a huge opportunity to get their products in this very lucrative market. 
 
In 2014, Egyptian exports to Russia increased by 22% according to Trade and Industry Minister Mounir Fakhry Abdel Nour, stimulating trade balance growth from $3 billion in the previous year to $5.5 billion.  Foodstuffs were a major component of this growth, specifically potatoes, frozen vegetables and fruit. So far, the future is looking great for Egyptian produce in the Russian food market. 
 

An expanding market for Egyptian producers
 

Over the past few years, and especially since the embargoes were put in place in late 2014 and again in 2015, Russia has experienced a 30% increase in agricultural imports from Egypt. After a meeting with Egyptian President Abdel Fattah al-Sisi in August 2014, further growth of another 30% is expected in future according to President Putin. 
 
Egyptian potatoes in particular are flourishing, according to Hisham Al-Naggar, Vice-Chairman of Daltex. Daltex is one of Egypt’s leading exporters of potatoes and is currently enjoying a boom time in the Russian market.
 
In an interview with Egyptian newspaper Al-Ahram, Mr Al-Naggar commented that Russia was already moving away from EU sourced potatoes before tensions began and was importing more of the vegetable from Egypt. Previously, Daltex’s levels of potato exports to Russia were in the region of 50,000 to 70,000 tons. Now, according to Mr Al-Naggar, the company is shipping five times that amount. 
 
Russian trade representative Fyodor Lukashin, quoted by Russian news agency RIA Novosti, commented that Egyptian fruit and vegetable exports doubled in 2014 from 2013. Over 150 Egyptian companies also appealed to make headway into the Russian market that year, according to Mr Lukashin. The official also added that the value of Egyptian agricultural export totalled $436 million in 2014. 
 
Egypt is one of the few nations that enjoys “Most Favoured Nation” (MFN) status in Russia, which also goes someway to explaining why Egypt is keen take a bite out of the fantastic market opportunities in the CIS. MFN status confers a 25% reduction in tariffs on certain fruit imports during periods where they do not compete with local Russian production. 
Productive opportunities
 
The list of Turkish products now banned in Russia includes various types of fruits including oranges and lemons, as well as other varieties such as strawberries. However, Egyptian producers are more than ready to pick up the slack.
 
Take Cairo-based strawberry exporters Extreme. By utilising innovative new technologies, the firm is confident they can deliver produce with the same level of freshness and quality at the final destination as when they were first picked. 
 
Riham George, Extreme’s Head of Operations, explained that the company had begun exporting to Russia last season, but has since expanded further into this market due to an import ban on Greek strawberries.  
 
Extreme is keen to demonstrate the cost effectiveness of sea-based distribution using modified atmosphere technology (MAT) as opposed to shipping via aeroplane. The Egyptian food industry currently represents 20% of the nation’s airfreight.   
Logistics issues have often been a source of concern for Egypt, as rivals such as Turkey and Morocco enjoy easier transport links due to shipping lanes or geographical location. With MAT technology, however, Extreme believes that their products will now have a greater competitive edge by offering fantastic freshness. 
 
Egyptian citrus fruit exporters have also spotted opportunities. Roughly 3.8 million tons of citrus fruits are produced every year in Egypt. Over 25% of Egypt’s exported citrus crops make their way to Russia.  This volume is likely to increase, alongside shipments of other fruit varieties. Agroegypt, the specialist citrus exporters, have begun shipping larger quantities of nectarines and peaches to the Russian market since the situation between Turkey and Russia developed. 
 
The price of citrus fruits is also set to fall as exports increase. Low prices could encourage larger orders, and Agroegypt’s Chairman Mohamed Ghallab is hoping to improve their annual tonnage of fruit shipped from 17,000 to 27,000 tons in 2016. 
 

Challenges facing Egyptian exporters
 

As with all exporters, there are still some key challenges that should be observed. Competition from other fruit producing states, namely South Africa , will have an impact on market share. Transport and logistics links will also play a part in determining how quickly, and freshly, foodstuffs can be delivered. 
 
Seasonability also plays a hand in competiveness. South Africa’s harvesting season runs from July to September for Valencia oranges, whereas Egypt’s crop is due to be harvested in December. This means that South Africa could potentially flood Russia’s market before the Egyptian harvest commences. 
 

Exhibit at Moscow’s biggest food show
 

Russia’s leading food industry exhibition, WorldFood Moscow, will return on 12 – 15 September 2016. With over 1,500 firms annually congregating to network and conduct business in Russia, WorldFood Moscow is a key event in the food industry. In 2015, Egypt was one of the biggest represented countries at WorldFood Moscow. Egyptian food producers showcased fruit, vegetables, confectionery, tea, coffee and a range of meat produce. 
 
Interested in participating at WorldFood Moscow 2016? Contact us now to take advantage of the huge opportunities in the Russian food market.

Related Events

Event24 Sep

WorldFood Moscow..

24-27 September, 2019
RUSSIA

MOSCOW, RUSSIA
Venue: CROCUS EXHIBITION CENTRE

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