Potatoes in Egypt: What does prices spike tell us about country’s economy, climate change?

Ahmed El-Mahdi , Monday 29 Jul 2024

Potatoes are one of Egypt's strategic crops and a staple that Egyptians rely on, especially with the inflationary wave the country is experiencing and the low purchasing power resulting from local currency devaluation for the fourth time.

Potatoes
File Photo: Farmers carrying Potatoes to be transported to market. Al-Ahram.

 

The increase in potato prices, resulting from higher demand than supply, can be attributed to the devastating implications of climate change that damaged part of the crops and the shortage of US dollars in Egypt for over two years which affected the import of potato seeds for the season that ended on 30 June, traders in potatoes production and distribution told Ahram Online (AO).

The spikes in potato prices in the local market are expected to vanish with the beginning of the new season in November.

“Potato cultivation typically relies on imported seeds and local leftover seeds preserved from a previous season for planting the new crop. However, the recently ended season faced issues even before it started due to the difficulties in importing seeds caused by the dollar crisis, which reduced the quantities by about 25 percent compared to previous years,” Hatem El-Nagib, vice president of the Vegetables and Fruits Division at the Federation of Egyptian Chambers of Commerce, told AO.

He added that the productivity of the local leftover seeds used in planting has also decreased, indicating a potential crisis in various crops in the market, not just potatoes, due to unprecedented high temperatures and climate change.

According to El-Nagib, this problem resulted in damaging part of the crops.

Moreover, he noted that the yield per acre dropped from 14-16 tons in 2023 to 9-12 tons in 2024, while the yield from local leftover seeds reached about 7-10 tons per acre.

Thus, the quantities entering the markets for daily trading have decreased by 35-40 percent, causing a shortage in supply and a rise in prices to the current levels.

El-Nagib stated that the wholesale price per ton ranges between EGP 19,000 and 23,000, while the retail price ranges from EGP 30,000 to EGP 35,000 per ton. Egypt's potato production stands at about seven million tons annually.

A staple food
 

Potatoes are one of the strategic commodities in the market that recently witnessed increased demand due to the rising prices of meat, poultry, fish, and other items, El-Nagib highlighted. 

"The Ministry of Agriculture should release the quantities of potatoes it has obtained for testing before export operations are permitted, through its sales outlets at cost price. This would help lower prices and increase market supply," said Al-Nagib.

He suggested that potatoes should be sold at cost prices at the Ahram and Nile sales outlets and that storage locations should be monitored. Furthermore, any new export contracts should be postponed, and previously signed contracts should be honoured to maintain Egypt's reputation in international markets, which could potentially reduce prices by 25-30 percent.

Potatoes grown for industrial purposes have not contributed to the crisis, as factories pre-arranged contracts with farmers to secure their supply needs throughout the year through storage. These potatoes are typically red, known as "Rosetta," and are used for frying.

Egypt's rank
 

Egypt ranks 10th globally in production volume and fourth in exports, President of the Potato Producers Union Ahmed El-Shorbini told AO.

According to the Ministry of Agriculture's data, potato exports follow citrus fruits as the top agricultural export, achieving a record high of over one million tons in 2023.

Regarding calls to halt potato exports, El-Shorbini stated that the Egyptian economy would also suffer in the future, as agricultural exports have a unique nature compared to other export sectors. Egyptian products would take time to gain approval in different countries. Competing countries would seize the opportunity to take over Egypt's market share, making it difficult to recover.

He also confirmed that the current crisis is exceptional due to the negative effects of climate change and the reduced quantities of imported potato seeds due to the dollar crisis. This has lowered the amounts from 140,000 to about 110,000 tons, while the price of a seed potato ton rose from EGP 35,000 to EGP 100,000-120,000.

Furthermore, El-Shorbini pointed out that the coming phase requires state support for potato farmers to continue production amid the rising production costs, especially for small farms.

Egypt is considering raising the prices of subsidized fertilizers by up to 30 percent, increasing the price to around EGP 6,250 per ton compared to the current EGP 4,800, to counter the recent significant rise in production costs, according to government sources.

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