The sales of Saqqara Horticultural Crops fell to EGP 200m in the past year, a 20% decrease in the company’s reported 2014 sales registered at EGP 240m.
Islam Selim, Marketing Manager at the company, attributed the decline to an increase in the cost of production in the local market, in addition to increases in transport costs in the past year.
Company sales increased 14% in 2013 to a height of EGP 210m, before falling again in 2014.
Production costs jumped by 15%-20% in 2014 following the implementation of a plan to eliminate subsidies for petroleum products, precipitating a price increase for several agricultural supplies as well as labour costs.
Selim explained that the price of transporting one container on the Cairo-Alexandria Desert Road appreciated to EGP 530 last year, up from EGP 130 in 2014 and EGP 70 in 2013. Higher production costs required an increase in the final price of the product, which contributed to a decline in demand and reduced sales.
The company has announced that it aims to increase sales by 20% by the end of 2016, an EGP 40m increase in sales to a total of EGP 240m, the same figure achieved in 2014. Selim noted that the company will expand participation in specialised international exhibitions to showcase its products as well as its ability to provide goods that suit the requirements of foreign markets.
Selim said the company’s citrus exports amounted to approximately 50,000 tonnes per year alongside 25,000 tonnes of carrots, 25,000 tonnes of potatoes, and 25,000 tonnes of onions. The company supplies approximately 36,000 tonnes of its products to the domestic market.
The company exports approximately 70% of its total production and offers the remainder on the local market.
Arab countries account for 45% of Saqqara’s annual exports, while Russia accounts for 35%. The remainder is exported to the countries of East Asia, including Bangladesh, India, and Sri Lanka.
The company opened a new headquarters in the United Kingdom and will commence work there in early January 2016. Saqqara aims to export approximately 3,000 tonnes of agricultural products this year to the British market and plans to double this figure in the upcoming years.
According to Selim, the company owns 5,000 acres for the production of citrus fruits, from which 75% of its total crop yield will be directed toward foreign markets.
Saqqara has allocated approximately 150 acres to onion cultivation.
He added that the company aims to increase carrot exports at the beginning of this year by 40% by adding 400 acres to the 800 acres allocated already to the crop.
Saqqara also aims to increase the space allocated to its potato crop beginning the season after next when markets and product prices stabilise locally and internationally. The current amount of land designated for potatoes does not exceed 300 acres.
Approximately 70% of company sales are drawn from Saqqara farm production, while the remainder is brought in from other farms in order to meet the annual needs of foreign markets.
Selim explained that Turkey and China are Egypt’s main competition in European markets, noting that low production costs and government subsidies provided to producers helped them acquire a significant share of the global market.
He said that entering the Chinese market is difficult at the moment because it imposes technical and environmental specifications that are even more stringent than those of the United Kingdom.
Selim emphasised the potential export opportunities created by the recent Turkish-Russian political tension. According to Selim, Russia is currently relying on Morocco as an alternative to Turkey, noting that Morocco has the advantage of low production costs and high product quality. The nation also takes the requirements of foreign markets into account.
Russian has banned the import of various Turkish products in response to the latter’s shooting down a Russian military aircraft. The Turkish government, which was previously Russia’s main exporter, claimed that the Russian military aircrafthad violated Turkish airspace while conducting aerial missions in Syria.
Saqqara intends to increase the volume of its sales to Russia by 15% this year.
Egypt’s agricultural exports to Russia range from 600,000 to 650,000 tonnes annually, registering a total gross export value of $310m according to the Ministry of Commerce.