BMI View: Egypt is the world's largest wheat importer and will benefit from the recent sell-off in grain prices. The country recently reforme d its food subsidy programme, introducing a n income-based subsidy in the form of a multi-commodity monthly stipend , which we expect to modify the typical household's food basket . We believe that particularly good growth prospects exist in the country's livestock and dairy industries, as cattle herds continue to recover from a foot and mouth outbreak in 2012. These sectors will also benefit from lower global grain prices relative to the last several years and an improving domestic economic situation.
|Agribusiness Market Value|
|BMI Market Value By Commodity (2011-2019)|
|e/f = BMI estimate/forecast. Source: FAO, BMI|
Wheat productio n growth 2013/14 to 2018/19: 3.5 % to 8.5mn tonnes. This will largely be the result of government efforts to increase area planted and yields in the coming years.
Rice consumption growth to 2019: 10.3% to 4.4mn tonnes. This will come from reform in the government's procurement scheme inducing substitution away from wheat in favour of rice.
Sugar consumption growth to 2019: 10.3% to 3.2mn tonnes. This will be driven by growth in the local confectionery and soft drinks industries on the back of population and income growth.
Poultry production growth to 2018/19: 13.9% to 1.1mn tonnes. Poultry production will grow strongly due to high demand and development in poultry rearing methods.
Real GDP growth: 2.6 % in 2015 (up from 2.2% y-o-y in 2014).
Consumer price inflation: 11.0% average in 2015 (up from 10.1% y-o-y in 2014).
BMI universe agribusiness market value: 1.1% increase to USD28.6bn in 2014/15; forecast to increase on average 2.7% annually between 2014/15 and 2018/19.
Wheat production will marginally increase by 0.6% y-o-y in 2015/16 to 8.3mn tonnes, as low import prices from the Black Sea region and the EU will limit domestic production. Strong production in the aforementioned regions in 2014/15 has led to high stocks of the grain, while we also forecast historically good production in 2015/16. This will ensure that Egypt has a steady supply of wheat available to import. Corn imports will also remain strong as we expect the country's livestock producing sectors - particularly poultry - to recover and grow over the coming years. We forecast corn output to increase by 0.4% y-o-y in 2015/16, to come in at 5.8mn tonnes.
The Egyptian government's decision to re-allow rice exports from the country following a ban enforced since November 2013 will prove to be a boon to output. We expect production to increase by 1.5% y-o-y in 2015/16 to 4.6mn tonnes. Rice output, however, will be held back by low domestic prices. Due to unfavourable price controls, we believe that rice production and export growth will be limited in 2015/16 and will marginally accelerate thereafter.
Egypt's livestock sector is dominated by poultry production, with beef output coming in at about one-third of the size and pork production in the country being illegal. Unofficial pork production experienced a crackdown in 2009 in the wake of swine flu outbreak and political uncertainty. In 2014/15, we expect poultry output to increase by 2.1% y-o-y to reach 955,000 tonnes and for beef production to decline by 6.3% y-o-y to reach 300,000 tonnes. We believe that beef output will rise again in 2015/16 due to renewed imports of breeder and feeder cattle as well as slaughter livestock from Australia.