Fears of an Emirati monopoly on dairy in Egypt .. A government project that eliminates small producers

Abdel Rahman Ahmed - Cairo

"The government is fighting us in our livelihoods, and I no longer have anything but to sell cows and liquidate my small dairy production project."

Abdel-Azim like most peasants and owners of small farms in Egypt, especially in his village, "Ibshway al-Malaq" in Gharbia Governorate, which is the largest Egyptian village in livestock and dairy production.

Abdel Azim explains in his talk to Al-Jazeera Net that the prices of livestock have deteriorated with the high costs and requirements of breeding, and the debt has accumulated on most farmers in light of the low prices that companies impose on them to obtain milk, and they are forced to accept it because their goods are perishable.

A country that fights its citizens

"The nightmare is now complete by the government expressly declaring that it intends to fight us in our livelihoods with unfair competition," the farmer says.

Last month, the Minister of Business Sector Hisham Tawfiq announced the establishment of a giant project for animal and poultry production on an area of ​​28,000 acres in Toshka, in the southernmost part of Egypt, in partnership with the Egyptian sovereign fund "Tharaa", to counter "the acquisition of dairy owners by small cows."

Tawfiq justified the project by saying that 80% of the milk collected from the market comes from individuals who have between one and five cows, which means that "the market is fragmented and needs a giant project to avoid any crisis that may occur if individuals decide to give up raising their cows."

The minister's statement raised questions about the reasons that might cause millions of breeders to exit once from the production market, and observers considered it an indication of the regime's fabrication of crises or intentional failure to resolve them, in order to push them to abandon livestock and dairy production, which opens the way for monopolizing this vital commodity.

According to the latest data of the Ministry of Agriculture, the livestock sector contributes to 70% of the livelihood of the poor, and also contributes significantly to the food security of the rural population.

The head of the peasant union, Mohamed Farag, warned that the decrease in dairy prices will be reflected in the price of dairy cattle, leading to the exit of millions of young breeders from the market and the rise in dairy prices.

Emirati partnership

The Minister of Business Sector revealed his intention to attract Emirati investors to participate in this project, noting in press statements that his ministry presented the project to the sovereign fund before his visit to the Emirates, praising what he described as the "distinguished experience and prestige" that the UAE has reached in the agricultural and animal production industries.

During President Abdel Fattah Al-Sisi's last visit to the UAE last November, the two parties announced a joint investment platform worth twenty billion dollars, without specifying the projects and only naming sectors to launch them.

The animal wealth in Egypt amounts to more than 18 million heads of cows, buffalo, sheep and goats, and the local production of milk reached about 6.7 million tons, most of which come from small farms and home rearing, according to the report of the livestock and poultry sector in the Ministry of Agriculture issued last September.

According to the report, regular cattle farms produced 733,837 tons of dairy, small and medium farms produced 3 million, 21,816 tons, and home breeding produced 2,940,000 tons of milk.

The total value of dairy products for the 2017/2016 year was about 35 billion and 301 million pounds (the dollar is about 16 pounds), which represents about 21% of the total value of animal production, and about 7.5% of the total amount of the value of agricultural production, according to the General Mobilization and Statistics Authority.

Experts consider Egypt one of the important emerging markets in the field of bottled dairy, with a population increase rate of about two million children annually, and Egypt is one of the most consuming countries of white cheese, which makes this market the focus of attention of international companies.

Dominant companies

A small group of private domestic and foreign companies control the market for bottled dairy products in Egypt, after government companies exit the market, either by stopping or acquiring them by investors.

Juhayna holds the largest share of the milk market by 70% and about 30% of the yogurt market, and is rivaled by companies, such as Betty (owned by Saudi Almarai and American PepsiCo), Swiss Nestle, Danone and Lactel in France.

Dina Farms (owned by Citadel Holding Company) occupies the forefront in the fresh milk market with a market share of 70% and sales amounting to 220 million pounds this year.

Domty and Obour Land dominate most of the packaged white cheese market, with a market share of about 42% each, while a slice of small companies (about 15 companies) share the remainder of the market size.

Alternative projects

The government left the strong competitors in the dairy market and went to compete with the weakest link and they are its poor citizens despite the presence of great investment opportunities that the government can enter and encourage the private sector as well, such as setting up factories and feed farms, where there are only 200 feed factories only, according to the statement of the head of the peasant.

Egypt also needs to set up dried dairy factories to reduce its import bill, which ranges from five hundred million to one billion dollars annually, according to the Chamber of Food Industries, which helps to discharge the products of young breeders.

The establishment of dairy collection and refrigeration centers and the provision of vehicles equipped for transport also help in marketing operations, and it is a link between milk producers, factories and the consumer.

According to the Food and Agriculture Organization of the United Nations (FAO) reports, supporting the competitiveness of small enterprises in dairy production and development makes them a powerful tool in the fight against poverty and reducing levels, raising nutrition levels and improving the livelihoods of rural people.

Cooperatives perfect solution

The government’s endeavor to eliminate small producers has prompted many activists of the communication sites to compare the decision of the Egyptian government with the support experienced by the developed countries for small producers through what are called cooperatives.

Dairy cooperatives are spread in many developed and developing countries, where thousands of peasants and small farmers participate in the production, collection and manufacture of dairy, and receive returns that represent the percentage of their participation, and a group of them is chosen for management, and these cooperatives represent an ideal solution to confront the monopoly of businessmen and protect small farmers .

Dairy cooperatives around the world have outperformed global giants, such as Fonterra in New Zealand (more than 10,000 farmers share ownership, provide a third of the world's milk supplies with annual sales of $ 13 million), and Tina in Norway (owned by More than 11 thousand farmers, and exports its products to six countries), and "Arla Foods" (a cooperative of 13 thousand and 500 dairy farmers in seven European countries).