November 04, 2003

 

 

Overview of Egypt's Dairy and Products Market 2003
 

Dairy Production

 

Total Egyptian fluid milk production is currently estimated at 3.8 million MT. Fluid milk production has been on the increase during the last couple of years before stabilizing in 2003. Egyptians are not major milk drinkers. Per capita consumption of fluid milk in Egypt is estimated at 5.5 Kg, which is significantly lower than in other developing countries.

 

In Egypt, most fluid milk is consumed in the form of cheese and other dairy products.  Dairy processors have increasingly been relying on local production for their inputs rather than on imports due to the government's three- year safeguard duty on milk powder imports which finally expired on September 24,2003.

 

The discontinuation of the safeguard duty on milk powder imports is not expected to result in more milk powder import in the near future. 

 

The continuing devaluation of the Egyptian pound which lost about 30 percent of its value since January 2003, has made imports more expensive relative to local products.  The cost of production of fluid milk increased this year in line with increasing cost of imported feed. Accordingly, expansion in dairy farms is expected to be limited this year. 

 

The European Union is providing LE 280 million low interest loans over a three-year period to help the dairy industry modernize. This program is managed by the Ministry of Agriculture and is directed to milk producers and processors as an effort to improve their operations. About 50 percent of the total milk production is consumed at the farm level and the remaining share is consumed by dairy operations.

 

Non-Fat Dry Milk

 

Production

 

Egypt does not have a significant milk powder production. Imported non-fat dry milk (NFDM) and whey powder are used mainly for the production of feta cheese, yogurt and ice cream.  There are also small quantities of NFDM and whey utilized in the production of chocolate and pastries.  Limited quantities of full fat dry milk are also imported and sold for direct human consumption.

 

Consumption

 

Milk powder production is negligible in Egypt. Non fat dry milk (NFDM) is used mainly for manufacturing purposes such as feta cheese, yogurt, ice cream as well as chocolate and pastries. Although, the government reduced the safeguard duty to 3 percent in April 2002 and to zero in September 2003, the consumption of milk powder declined in 2002 due to the devaluation of the Egyptian pound. 

 

The consumption of milk powder is expected to further decline in 2003 with the continuing devaluation of the pound. Consumption of locally produced fluid milk and imported whey has been increasing during the past two years in order to fill the gap created by lower imports of NFDM.

 

Trade

 

The private sector imports virtually all of Egypt's dry milk requirements. According to official trade data, total imports of powder milk in 2002 declined by about 25 percent to an estimated 18,000 MT, and are expected to further decline to 15,000 MT in 2003 due to the continued devaluation of Egyptian pound against the U.S dollar and the general economic slow down.

 

At the present time, Poland, New Zealand and Sweden are the main suppliers of milk powder to Egypt. Egyptian NFDM imports from the U.S. in 2002 remained zero for the second year in a row, compared to 6,623 MT in 2000 when all U.S. sales were under the DEIP program.

 

The NFDM import market is very price sensitive. The average import price for non-fat dry milk from Poland is currently about $1,800 per MT CIF compared to about $1,150 per MT CIF during October 2002. The EU countries maintained their milk powder export restitution in 2002(reportedly about EUR 570 per MT).

 

The shelf-Life for imported NFDM into Egypt is two years.  It normally takes between 15-21 days to release a NFDM consignment through Egyptian customs.

 

 

Source: USDA