Structural changes in the Egyptian poultry industry

Every year in the first week of July, poultry producers throughout the Middle East and North Africa plan a trip to Cairo to visit Agrena, the annual poultry and livestock show for the region. This year, some 50,000 visitors from all over the region came to meet, talk about business and attend the exhibition. The 3-day exhibition extended over four halls of the Cairo International Conference Centre, filled by 198 stands representing 485 national and international poultry, feed and processing equipment companies.

 

Considering the distressing situation of the Egyptian poultry industry, show manager Mohammed El Soufy was very pleased with the attendance. He does question, however, if in the longer term, the show can remain an annual event. It is reported that, looking ahead, there may be a show in Cairo every two years, and in one of the other major poultry producing countries in the region, a show every two or every four years.

 

No final decisions have been made as yet as there are many influencing factors involved, particularly the support of local governments, and the ease for foreign visitors to get a visa to enter the country to attend the exhibition.

 

All this talk about the future of Agrena is the result of global discussions regarding the number of poultry-related exhibitions, a growing trend to combine an exhibition with an educational programme or seminar, and changes in the communication market whereby telecommunication reduces the need to travel to an exhibition. Most important, though, is that the markets are changing. The number of poultry companies is declining and the size of the remaining operations is increasing. Consequently, exhibitions will see their visitor target group shrinking. This is especially the case in Egypt, where the AI outbreaks since 2006 reduced the poultry population by 40%. Infected flocks had to be culled without any compensation for the afflicted farmers. Losses in parent stock caused a shortage in the number of hatching eggs and consequently in day-old chicks. Import of hatching eggs was not permitted and day-old prices were unaffordable for many producers due to shortages in the market. In combination with high feed prices in 2007 and beginning 2008, many poultry farmers could not survive and were forced to stop production.

 

“Egypt’s poultry industry is changing rapidly and in the near future will exist only out of a small number of large integrated poultry companies and an unknown number of small-scale or backyard producers,” says Adel Al-Alfi, who is the new general manager of Cairo Poultry Group (“CPC”). His company has not been hit by AI due to its stringent bio-security measures and initiative to train its staff in disease prevention, he says.

 

“It will take at least another one and a half years before our home market has recovered from AI cuts and production is back from today’s 1.2 million to 2 million broilers per day,” Al-Alfi continued. “Egypt’s 80 million population is fond of poultry meat and eggs, but still, due to low incomes, consumption of 8 kg per capita is far from what we see in developed countries.

 

Our government helps the industry indirectly to get back on its feet by limiting imports of cheap poultry meat from Brazil or the US and banning the import of hatching eggs. The import of day-old chicks is allowed, but in practise it is limited due to availability and price. The protection the government offers has little to do with its sympathy for the industry but more with its goal to provide and protect over 10 million jobs in the country. It leaves industry-related issues to the industry itself, but was helpful when the industry asked for help to better control AI by banning live bird markets in the big cities as of mid 2009.”

 

Al-Afli’s vision for the future of the industry was partly confirmed at Agrena, where only a few large integrations were present, such as Al Watania. In its video presentation the company expressed that within the next four years it will expand its operation to capture 50% of the Egyptian market. It is building seven broiler farms each with 12 houses (31-33,000 birds) and a processing plant with three lines, two 10,500 broiler/h lines and one 4,000 breeders/h line. In addition there will be a further processing plant with six lines for the production of 15 t/h processed poultry meat.

 

Al-Alfi says that with the development of larger integrated organisations, the Egyptian poultry industry will see more stability and an improvement in efficiency and product quality. “This will help regain confidence from the consumer and to offer the consumer a better product for a more attractive price.”

 

Both Al-Watania and CPC believe in a rapid development of the poultry industry, and both have clear expansion and refurbishment plans in place. During Agrena various companies noticed some interest from potential buyers. Some Chinese companies were, in particular, very positive about their chances. They consider the Middle East as a market with good growth potential. Due to the very competitive price of their products and the price sensitivity of the Arabs and Egyptians, these Chinese companies already received a strong foothold in this market. This is particularly the case for those companies that offer ingredients and systems for the feed industry.

 

Since most of the poultry industry developed during the 1970s, many of the medium and large companies have had to refurbish their older houses. Various equipment manufacturers present at Agrena already experience that these poultry companies ask for ideas and quotations for updating parent stock and broiler houses. Whether this will be a revival of the market in this part of the globe is yet to be seen, say some of the regular Middle East visitors. Money is scarce here too, and terms like a “quick return on investment” are not always understood. It therefore may take quite some time before ideas materialise.