international olive oil prices

Small and Medium Enterprise Promotion Programme Fruit & Vegetable Processing Component Small & Medium Enterprise Promotion Programme EL MOBADARA Small and Medium Enterprise Promotion Programme / Fruit & Vegetables Processing, Component 2 - Egypt Egyptian Olive Oil Sub-sector Analysis – Mr. Alaa Fahmy (January 2007) Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Small and Medium Enterprise Promotion Programme / Fruit & Vegetables Processing, Component 2 Egypt Egyptian Olive Oil Sub-sector Analysis – Mr. Alaa Fahmy (January 2007) presented by: AFC Consultants International GmbH Dottendorfer Strasse 82, D-53129 Bonn Telefon 0049-2 28-98 57 9-0 Telefax 0049-2 28-98 579 79 e-mail info@afci.de Web www.afci.de in consortium with: EL MOBADARA - The Association for Community Development and Small Enterprises 12 Shehab St. Mohandesin – Giza, Egypt Telephone 00202-7600357 / 7600349 Telefax 00202-7602874 Email fitayman@link.net For: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) mbH Organisations-Einheit 5034/Zi. 2286 Dag-Hammarksjöld-Weg 1-5 Postfach 5180 65726 Eschborn Bonn, January 2007 AFC-PN.: 2830 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA For any further information related to this project please ask at the office of AFC:  Mrs. Dr. Ute Jacob AFC Consultants International GmbH Dottendorfer Strasse 82 D-53129 Bonn Telephone Telefax e-mail Web: 0049-2 28-98 57 9-0 0049-2 28-98 5 79 79 info@afci.de www.afci.de Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Egyptian Olive Oil Sub-sector Analysis Report prepared by Alaa Fahmy January 2007 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA TABLE OF CONTENTS LIST OF ACRONYMS USED ABSTRACT 1. INTRODUCTION 1.1 1.2 2. Objective of the study Methodology and approach of the study 1 2 2 2 3 3 5 8 10 11 11 12 14 14 18 20 25 27 SUPPLY MARKET 2.1 2.2 2.3 2.4 International Olive Oil Supply Egyptian Olive and Olive Oil Supply Olive Farming Collection and Internal Trade 3. OLIVE OIL PROCESSING 3.1 3.2 Types of Olive Oils and Processing Technologies Egyptian Processors 4. TARGET MARKETS 4.1 4.2 International Market Local Market 5. 6. 7. SERVICE PROVIDERS SWOT ANALYSIS OF THE EGYPTIAN OLIVE OIL SECTOR CONCLUSIONS AND RECOMMENDATIONS ANNEXES Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA LIST OF ACRONYMS USED SWOT EUREPGAP CAPMAS EU ALEB UNCTAD FAO CFI USAID IOOC Strengths, Weaknesses, Opportunities and Threats Standards for Good Agricultural Practices Central Agency for Public Mobilization and Statistics European Union Agriculture Led-Export Businesses, USAID Project United Nations Conference on Trade and Development Food and Agriculture Organization Chamber of Food Industries United States Agency for International Development International Olive Oil Council Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA ‫ملخص عربى‬ Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA ABSTRACT The present study presents a general overview on the production of olive oil in Egypt with a glance on the supply and demand in local and international markets. A summarized situational analysis has been carried for out different actors in the supply chain. A consequent SWOT analysis has been conducted to identify potential business development services that may be provided to the different. The study has been carried out by consolidating secondary data and primary information derived from in-depth interviews with key stake holders. The olive-oil sub-sector has a strong potential towards both the local and export markets. The local market is growing and Egypt started to establish its position in export markets with a high potential for continuous growth. It is obvious that there is a bottleneck in the supply, which is not sufficient to cover existing processing capacities and hence the plans of exporters to increase Egypt's market share in the export markets. Other constraints in the supply side include the lack of extension services and poor harvest and post-harvest practices. Upgrading the farm management systems, increasing the number of EUREPGAP certified farms and internalization of traceability systems would enable for more sustainable development in the export business. The collection and internal trade mechanism need also to be improved and regulated. Collectors and traders need to focus more on proper harvest time, on good harvesting and post-harvest practices and on separation of different varieties collected. Long term contractual agreements with proper contract farming mechanisms would integrate the farming activities to long term plans of processors and exporters. Processors' main concerns is assuring sustainable quality supply, improvement of technical knowhow, enhanced operations management with focus on total quality management and quality management certifications. Another major issue is the lack of certified labs for olive oil analysis to assure the quality of the oils produced. Storing of oil seems to be a technical bottleneck to many producers. They need technical assistance on proper storage practices. There is a need for establishing and supporting professional trade and service associations serving the olive oil sub-sector. Collaboration with international service associations and service providers is essential at the current stage to transfer knowledge and methodologies for upgrading the local industry. Local associations need to work also on supporting the common interests of the stake holders to enhance the enabling environment including legislative and financial aspects. Reliable market information is lacking at all stakeholders' levels. There is a need to establish and strengthen entities providing market intelligence services and train current exporters on market research tools. Exporters need to be assisted also in developing export marketing strategies and in export procedures and logistics. Last but not least there is a need to improve local service providers and to train local calibers to provide high-end market driven services. Local calibers already existing in different universities and research institutes are good prospects for practical training by exposure to international service providers. 1 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 1. 1.1 INTRODUCTION Objective of the study The objective of the study is to elaborate a detailed description on the organization, challenges and potentials of the olive oil sub sector as part of the value chain analysis. The ultimate goal is to identify market oriented BDS packages that are demanded by the subsector. 1.2 Methodology and approach of the study The analysis of the value chain is based on an approach combining existing sources in terms of databases and statistics with primary information from stakeholders within the commodity based supply chain (food processors, collectors, traders, retailers and exporters). The collected information (primary and secondary) is consolidated to form the basis for preparing final conclusions and recommendations. The overlap in methodologies covering the market demand assessment, the identification of supply constraints and the processing and marketing infrastructure conveys the possibility to crossanalyze information from different sources and by doing this increasing the quality and precision of the information and consequently also the findings. The secondary data comprises sector-specific statistics, technical, economic and marketing reports, international development reports, data from the Chamber of Food Industries, Food Commodity Council and trade associations, and data available at governmental organizations such as CAPMAS and the ministry of agriculture. A sample of olive oil producers has been selected for in-depth interviews to provide qualitative information on their specific sub-sector. The interviews covered market potentials, the current situation of the industry and the existing bottlenecks. Interviews were conducted with 10 companies working in the processing sector. The companies are located in different areas of Egypt; Cairo-Alex Desert Road, Sadat City, El Arish, and Siwa. Some of them are also active in olive growing. Based on the findings from desk review and in-depth interviews, a foundation has been laid for a description of the value chain (supply – processing and market side). A general map of the olive oil value chain with the key inputs to each step is shown in Figure 1. Egypt has a great potential towards increasing the production and export of olive oil. Although there are obvious strengths and opportunities for this specific sub sector, yet it faces a number of problems and threats as will be illustrated in the following sections for each of the supply chain steps. The SWOT analysis and the assessment of the value added in each step (the whole map including also the technical and logistical inputs) comprise the basis for identifying the needs for technical assistance and for developing proper strategies. As the previous steps has been carried out and the value chain mechanisms and bottlenecks are assessed and described, technical assistance interventions and business development packages has been identified with the objective to develop and improve the olive oil sub-sector. Interventions include assistance on selecting suitable crop varieties for processing, contract farming, processing technologies, good manufacturing and hygiene practices, quality management and food safety, packaging, market links, etc... 2 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Figure 1: Olive Oil Value Chain 2. 2.1 SUPPLY MARKET International Olive Oil Supply The global olive oil production increased from 1.7 million tons in 1990 to up to 3 million tons in 2005 with a growth ratio of 76% in 15 years. Olive oil production has normally been concentrated in the Mediterranean basin countries: Spain, Portugal, Italy, Greece, Turkey, Tunisia and Morocco. These seven countries alone account for 90% of world production. The graph below shows the dominating countries in olive oil production. The EU in total produces around 78% of the world production, Syria around 10%, Tunisia around 9%. 3 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Figure 2: Main producers of olive oil1 The image of olive products as health products has certainly contributed for the past decade to the strong growth of olive products worldwide and more specifically in the USA. A study carried out in year 2000 by ALEB2 indicates that the annual worldwide olive oil production was 465 million US gallons. Worldwide olive oil consumption exceeded production by 26 millions US gallons. Production of the USA covers less than 1 % of the US consumption of olive oil. Its consumption in 1998 reached 175000 tons and growth trends in US consumption reflect 20 % increase each year2. The European Union countries represent 40 % of the olive oil import worldwide and 46 % of the world olive export. The evolution of world production during the last ten years is shown in the graph below. Production trend by country is ascending but the great influence of the two major producing countries introduced a high level of uncertainty in the production level. Indeed, the fact that production in Italy and Spain changed much more than the one of the other producing countries explains the high volatility of global production. It should be mentioned that the production of other countries (not included in the graph), such as Australia and United States, is increasing. 1 2 UNCTAD based on data from the Food and Agriculture Organization (FAO) of the United Nations Supporting Egypt’s Processed Foods Export Industry; USA Import Market for Olive Oil and Olive Oil Products; ALEB July 2000 4 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Figure 3: Evolution of olive oil production3 2.2 Egyptian Olive and Olive Oil Supply In the mid-seventies the area planted with olive trees in Egypt was about 5000 Feddans distributed in traditional olive farming areas in the North Coast, Fayoum and some Oasis such as Siwa. In 2005, this area grew to 130,000 Feddans4, 45% of which in traditional olive areas and the rest 56% in new reclaimed areas at Cairo-Alexandria desert road, Wadi Elnatroun, Wadi Elfaregh, at CairoIsmailia desert road and in North Sinai. The average yield increased from below 2 tons/Feddan up to 3.5 tons/Feddan and reached in some farms higher figures up to 5.2 tons/Feddan. This increase in yield is a result of using modern agricultural practices and in intensifying the planting. This is far above the average international yield of 1.2 tons/Feddan. This low international yield results from the fact that most of the olive trees are grown on rain water. In the seventies the olive crop pattern was 90% of table olive varieties used for pickling and the rest 10% were oil varieties (the global figure is 7% oil varieties). Today the Egyptian crop pattern is as follows: 55% table olives varieties, 15% oil variety olives and 35% universal varieties that could be used for both purposes.Error! Bookmark not defined.Fehler! Textmarke nicht definiert. The crop marketing pattern in the 70s was 70% household consumption, 15% small and micro enterprises for olive pickling and oil production and 10% primitive oil presses for oil production. Today this marketing pattern drastically changed to 10% household consumption, 15% small and micro enterprises, 25% modern olive oil presses and 50% modern table olives enterprises. Pickling and oil extraction became well established at farm level processing and preservation practices in historic time. The thousand years old traditional processing technology has supported not only the all year along subsistence of the population but also a thriving trade among the 3 4 UNCTAD based on data from the Food and Agriculture Organization (FAO) of the United Nations Hegazy, Elsayed and Elkholy, The Five Years Plan for Developing Egyptian Olive Industry, Egyptian Olive Union, Union of Producers and Exporters of Horticultural Crops, August 2006 5 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Mediterranean countries. Today national and international trading of olive products (oil and pickles) has gone beyond the Mediterranean borders. The global demand currently exceeds the global supply and has stimulated booming olive tree cultivation in the Mediterranean and more specifically in Spain and Italy for the past 30 years. The olive production in Egypt has a long tradition which reaches back several centuries. Table 1 shows the development of olive production in Egypt over the last 15 years. The total national cultivated area has grown by a factor of 3. While the growth rate for cultivated area is good, the growth ratio for production does not indicate the same trend. The national production has grown by a factor of 5,4 However, an important increase in the olive output should be expected in the new land areas within the next 5 years provided that no major natural problems as experienced in year 2003 take place. Table 1: Olive cultivation area and yields on national level over the past 15 years5 Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 (extrapolated) Average Cultivated Area (fed.) 44,457 48,386 53,985 63,796 67,023 74,602 82,685 87,083 94,129 103,933 108,322 113,080 117,886 120,000 125,000 130,000 Total Yield (tons) 62,242 65,103 94,991 111,689 130,287 207,982 208,133 220,412 231,949 287,080 281,745 77,342 336,442 360,000 400,000 455,000 Yield (tons/fed.) 1.40 1.35 1.76 1.75 1.94 2.79 2.52 2.53 2.46 2.76 2.60 0.68 2.85 3.0 3.2 3.5 2.5 The average productivity in Egypt is higher than the world's average (1.3 tons/Feddan) as most of the world's production is from arid orchards relying mainly on rain water. Most of the Egyptian produce result from commercial farms using modern irrigation and fertigation systems. 5 Agricultural Statistical year book 2002 and reference number 4 6 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Egypt is ranked number 8 in the top olive producers' world wide with a record of 455 thousand metric tons in 2005. Egypt's production counted for 1.9% which exceeded countries such as Algeria 1.3% and Lebanon 1.7%. Spain has the largest olive trees harvested area in the world reaching 40.8%. Italy has 18.4% share in the harvested area, Syria 5.8% and Tunisia 5.8% Area harvested and production showed very rapid increases in the last five years and is expected to increase significantly within the next few years. New olive cultivation in the new land areas is expected to position Egypt as the third most important producing country of olives by the year 2010. In Egypt, the harvested area is expected to record a level of 240 thousand feddan and production volume is expected to reach more than 800 thousand metric ton by the year 2010 as indicated in the following graph. These expectations are supported by the expected increase of land devoted for olive production in the new mega projects in Toshka and Owienat as well as the tendency of producers to grow new superior varieties with high yield6 New varieties of trees and modern oil presses have been introduced in the olive producing regions of Sinai, Marsa Matrouh, Fayoum, Giza, etc.). As a result, the production and commercialization of Egyptian olive oil has tremendously increased within the past decade. The domestic consumption of olive oil remains marginal since the traditional Egyptian cooking is based on the use of clarified butter (ghee) from cow milk and other cheaper oils of plant origin. A relatively small portion of the Egyptian population living in the Mediterranean coastal region consumes olive oil on a regularly basis. In the proposed 5-year plan to develop industry of olive oil processing in Egypt that was prepared by the Egyptian Olive Union, it was recommended to increase the cultivated area by 50,000 feddan yearly. 700,000 Area Harv (Ha) Production (Mt) Expected Harv est Area (Hectars) Expected production (Mt) y = 764.1x2 - 2868.9x + 3251.4 R2 = 0.9678 600,000 500,000 400,000 300,000 200,000 y = 101.74x2 - 277.53x + 2518.3 R2 = 0.9365 100,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Figure 6: Egypt Olive Production and Expectations 6 Info on olive oil production in Egypt. Unpublished report 2004. 2010 7 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA The industrial processing of the olive product sector is a mix of large private companies and cooperatives. The CFI directory shows about 20 major important private companies, established within the past two decades and which process and export edible olive oil and pickled olive. Olive oil is a big export winner product and the Egyptian growers and traders are slowly realizing the situation and their opportunities Egypt exported 1,470 tons of virgin oil in 20017. The major part was exported to Spain, Italy and Greece. As quoted in ALEB’s study, since Egyptian oil is superior in grade, the major worldwide olive oil export countries, i.e. Spain, Italy and Greece import it, blend it with their local production and export it to the USA. Till today Egypt has a very small market share in olive oil exports (about 0.3%) with its exports of 8,000 tons in 2004. This figure is remarkably small compared to the 230,000 tons exported by Syria that succeeded to increase the number of planted trees from 23 million to 75 million trees in 15 years. A significant portion of the non edible olive oil production is absorbed by the national medicinal and cosmetic industries. Unfortunately, official statistics offer limited range of data to appreciate the share between edible and non edible oil production. 2.3 Olive Farming The production of olives for oil as well for pickling has a great potential in Egypt for continual growth due to many factors. Among these factors is the fact that that growing of olive trees does not require rich soils and thus very suitable for reclaimed new lands. In addition to that, the olive trees can withstand high degrees of water and soil salinity up to 4000 parts per million. Olive trees suffice with low irrigation loads with drip irrigation as low as 3000 cubic meters per Feddan under high salinity conditions, which is a minimal water demand compared with other horticultural crops. Any variety can be used to produce olive oil; however special oil varieties produce oils that can be stored for longer storage life without changing of its characteristics. Olive growing is a labor intensive agricultural activity especially during the harvesting season. The manual harvesting in Egypt brings an added value to the olives produced as its quality is much higher compared to mechanically harvested olives due to the avoidance of any mechanical damages that result in an increasing acidity of the olives and hence the oil produced. It is worth to mention that the olive growing in Egypt could be considered as a young industry established with modern agriculture concepts. Thus, the quality of Egyptian olives is high In comparison to other countries with a wider tradition in olive growing. In the production phase, there is a shortage in the supply. The already cultivated area covers only 50% of the existing oil processing capacities of the factories. In some seasons, lack of good yield leads even to a much lower figure. This is caused either by low tree productivity which results in high prices of the raw materials or by lower oil content of the olives not feasible for olive oil production. Some factories were obliged to cut down their production capacity down to 20% in some seasons. A national strategy should be developed to increase the planted area and the yield per feddan of oil varieties. 7 CAPMAS, 2001 trade statistics 8 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Moreover, the varieties of the olive trees are hardly subject to research and development and the existing ones are vulnerable to diseases. Aiming for export depends to a large extent on the quality of the product, which is a process that starts from the production phase. Some of the growers depend on their own experience and on the false practices of growing olive trees. The common understanding that olive trees require the least care and attention in matters concerning irrigation and fertilization brings many growers to not providing the minimum effort required for a high yield production. Special programs and intensive extension services are needed to educate and help the majority of present growers. Special attention should be dedicated to small holders and farmers associations. A number of producers try to follow the biodynamic trends in growing the olive trees and to reduce the chemical pesticides. Although biological pest control using natural predators was introduced in Egypt, the qualified and experienced calibers are very few. Technology transfer should be enhanced in order to provide the sector with additional calibers that will meet the demand and fill in the existing shortage. From surveyed sample (10 olive oil producers of a production ranging between1 to 100 tons oil per year) eight of them depend completely on other olive producers (farmers) to get the olive used in producing the oil. These eight producers either have direct contact with farmers in many areas (Cairo-Alex desert road, Cairo-Ismailia desert road, Areesh and Fayoum governorates or to get the olive through traders. Normally the traders have early arrangements with farmers prior to the harvesting season. The early arrangements include supplying in-advance payments to the farmers and these payments are used by the farmers to cover production costs. One oil producer used only his farm output for producing the oil and he is considered as a small oil producer. The reason for him in doing that is to guarantee the quality of the olives used for producing the oil. This producer exports 100% of his production from olive oil (12-15 tone per year). Another olive oil producer, considered as the largest producer in the sample under investigation (100 tons per year in average), has his own farm providing the company's olive oil production line with 60-70% of its capacity The rest of the olive needed is made available through other farmers or through olive traders. The surveyed producers (except the two producers who have their own olive farms), in general, use any available olive variety to produce oil. This means that the factors determining which variety is used for producing oil are as follows:    The availability of the variety; The price in comparison to other varieties; The oil content in the olive in comparison to other varieties available Also, it is very obvious from the interviews that the olive farming is having an increasing trend in Egypt during the previous years and it is expected that this increasing trend will continue in the future due to the following reasons:  Growing market demand at processors end in terms of number and capacity of factories and quantities demanded; The Egyptian desert soil and climate are very suitable to olive trees cultivation; Availability of suitable varieties; Low water requirements of olive trees in terms of quantity and quality. 9    Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 2.4 Collection and Internal Trade Collection and trading of olives seems to be an attractive business to traders within the current environment of growing demand and increasing prices. Most of traders buy the whole produce of olive farms and send their collectors for manual harvesting. As all of the olive farms grow several varieties, sometimes pickling and oil varieties, it is not an easy job to assure clear separation of the varieties collected. The harvesting time of olives is a critical factor for the quality of oil produced. Collectors and harvesters, who have to carry out their job within the assigned timeframe, do not pay much attention to this critical issue. Some large companies have vertically integrated covering most or all steps of the value chain as to assure sufficient supply or quality produce or to incorporate the profit of the export or local distribution steps. Nevertheless, most of the processors, even having their own supply farms tend to buy from farmers additional amounts when the season proves to be feasible. In this case, the purchase is better done directly with the farmers, however many of the producers depend on suppliers and collectors to provide the varieties and quantities required. Traceability is becoming more and more a very important issue in the agricultural exports. It is very hard within the present collection and internal trade system to regulate this important issue. Nevertheless, it is not impossible to internalize some basic traceability principles and practices within this system to assure the tractability of the batches delivered to processors. Raising the awareness of the existing traders towards quality issue is essential to assure the quality of the supply to the processing industry. Key points here are Good Collection and Post Harvest practices, adequate packaging and transportation, and traceability. It has been suggested to establish a specialized center for collecting the olives with the objective of providing the processing companies with their needs and to guarantee fair market prices for the growers. It should follow contract farming approaches to regulate the supply market in a more sustainable way and to allow for increasing the planted area. It seems from the interviews undertaken that the olive trading market is much unorganized. The main reasons behind that could be listed as follow:  Absence of local information providers neither as private entities nor as organizations delivering information about olive and olive oil prices (on national and international bases) and as result of that the olive oil producers depend on their personal communication to get an idea about the prices and available supply. Absence of organizations, neither governmental nor non-governmental, that could play the role of olive and olive oil market organizer or to make any kind of supervision on the varieties and quality of the supply. The price of olive has large fluctuations according to the olive availability resulting from yearly fluctuating yields that is legitimate to olive trees. This adds to the market instability.   Because most of the interviewed producers believe that the marketing information is a very important factor to improve their businesses they try to gather such information through different ways. For example one of the producers has a subscription in one of the Spanish magazines specialized in olive oil. Other producers used to depend on the information provided by one of the USAID funded projects that was supporting olive production but this project ended some years ago. 10 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 3. 3.1 OLIVE OIL PROCESSING Types of Olive Oils and Processing Technologies Olive oil is the oil obtained solely from the fruit of the olive tree (Olea europaea L.), to the exclusion of oils obtained using solvents or re-esterification processes and of any mixture with oils of other kinds. It is marketed in accordance with the following designations and definitions: Virgin olive oils are the oils obtained from the fruit of the olive tree solely by mechanical or other physical means under conditions, particularly thermal conditions, that do not lead to alterations in the oil, and which have not undergone any treatment other than washing, decantation, centrifugation and filtration. Virgin olive oils fit for consumption as they are include: Extra virgin olive oil: virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 0.8 grams per 100 grams, and the other characteristics of which correspond to those fixed for this category in this standard Virgin olive oil: virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 2 grams per 100 grams and the other characteristics of which correspond to those fixed for this category in this standard. Ordinary virgin olive oil: virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 3.3 grams per 100 grams and the other characteristics of which correspond to those fixed for this category in this standard.a Virgin olive oil not fit for consumption as it is, designated lampante virgin olive oil, is virgin olive oil which has a free acidity, expressed as oleic acid, of more than 3.3 grams per 100 grams and/or the organoleptic characteristics and other characteristics of which correspond to those fixed for this category in this standard. It is intended for refining or for technical use. Refined olive oil is the olive oil obtained from virgin olive oils by refining methods which do not lead to alterations in the initial glyceridic structure. It has a free acidity, expressed as oleic acid, of not more than 0.3 grams per 100 grams and its other characteristics correspond to those fixed for this category in this standard.b Olive oil is the oil consisting of a blend of refined olive oil and virgin olive oils fit for consumption as they are. It has a free acidity, expressed as oleic acid, of not more than 1 gram per 100 grams and its other characteristics correspond to those fixed for this category in this standard.c Olive-pomace oil is the oil obtained by treating olive pomace with solvents or other physical treatments, to the exclusion of oils obtained by re esterification processes and of any mixture with oils of other kinds. It is marketed in accordance with the following designations and definitions: Crude olive-pomace oil is olive pomace oil whose characteristics correspond to those fixed for this category in this standard. It is intended for refining for use for human consumption, or it is intended for technical use. a b c This designation may only be sold direct to the consumer if permitted in the country of retail sale. If not permitted, the designation of this product shall comply with the legal provisions of the country concerned. This designation may only be sold direct to the consumer if permitted in the country of retail sale. The country of retail sale may require a more specific designation. 11 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Refined olive pomace oil is the oil obtained from crude olive pomace oil by refining methods which do not lead to alterations in the initial glyceridic structure. It has a free acidity, expressed as oleic acid, of not more than 0.3 grams per 100 grams and its other characteristics correspond to those fixed for this category in this standard.d Olive pomace oil is the oil comprising the blend of refined olive pomace oil and virgin olive oils fit for consumption as they are. It has a free acidity of not more than 1 gram per 100 grams and its other characteristics correspond to those fixed for this category in this standard. e In no case shall this blend be called olive oil. 3.2 Egyptian Processors Formal and Informal Sectors The formal sector, represented by the 18 companies registered at the Chamber of Food Industries, accounts for about 80% of the production of olive oil in EgyptError! Bookmark not defined.Fehler! Textmarke nicht definiert. . The large players are located Greater Cairo and its surrounding industrial cities, Sadat City and New Salheya, Elarish and Siwa. The informal sector is concentrated at traditional olive planted areas in Matrouh, Elarish and Siwa. Production Capacities and Market Shares The production capacities of the Egyptian facilities are estimated by 15,500 tons of olive oil. The maximum utilization was about 60% in 2004 and is expected to reach 85% in 2006. The largest producer is Wadi Food with about 10% of the Egyptian production. Other producers with significant production sizes (Dr. Olivee, Mina, Green Valley, Quality Standard, Emcco and Salheya) have each a contribution between 3 and 6% of the Egyptian production. Aspects related to production The common technology used for olive oil production in Egypt is cold pressing. This is done by grinding the raw olives and pressing the oil out of the resulting paste. Further purification steps are needed to filtrate impurities and to separate the emulsified water. Oil produced from the first stage cold pressing is called extra-virgin, that of the second stage is called virgin. A third lower quality cut could be still extracted from the waste paste by heating and by adding chemical solvents. It is worth to mention that cold pressing is an available technology that is practiced by all small and large producers. Yet maintaining the quality upon storage and packaging remains a challenge for small scale producers in Egypt. The available common technology and the closeness to the production regions add to the strengths of local small and medium scale processors, who could supply large producers and exporters with high quality oil. Although processing of olive oil is of ancient origin, the support given to this sub-sector is still below expectations. There is no financial support to the olive oil sub sector. There is hardly any bank that would make attractive loans for the olive business. So, financial services are required to enhance the investment in this sub-sector. Following the trend of certified products of olive oil, Egypt does not have so far a certified laboratory to test quality of the production sample. A certificate system in line with the international d e This product may only be sold direct to the consumer if permitted in the country of retail sale. The country of retail sale may require a more specific designation. 12 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA specifications should be established. A national lab should be founded in order to save the complicated process of sending the samples out of Egypt to be tested and approved. One of the major needs is the assurance of good quality supply with the required quantities. The purchasing departments have huge constraints in sourcing from the local market. Large companies always compete in collecting the required quantities and contracting major farms and suppliers. The competition is sometimes unfair and not in the favor of smaller companies. Sometimes large companies even source part of their olives from other countries such as Syria and Morocco at a higher price if they have export obligations. Financing the working capital during the season seems to be a bottleneck to most of the processors. They need to purchase the whole quantity needed for olive production within 70 or 80 days in the season. Due to this cash problem they have to export the oil produced immediately during the season. During the season from October to December the international olive oil prices are always at their lowest levels due to large international supply caused by large European companies selling the remaining quantities from the previous year to clean their storage facilities to receive new fresh products. As for the technologies used in extracting the olive oil, most of the large companies are using Italian technologies. According to the processors, the Italian technology is far advanced and feasible. It results in extracting the utmost amount from the plants. The expatriate consultants are also provided as a part of the installation package of the Italian production lines. Some local experts are hired by large companies in order to provide necessary technical consultancy. Many of the large companies rely on the local expertise also in the farming business if they have their own farms. Processing companies still lack of good caliber technicians and engineers. There is an obvious need for training, especially on operations management and total quality management. Upgrade in good manufacturing and hygiene practices is also needed. International quality certifications such as ISO and HACCP are essential if the companies aim for export businesses, and there is much to be developed in this regard. Packaging seems to be a key bottleneck facing the olive oil industry. Glass and PET bottles produced locally is not of an adequate quality for export. Several large companies import their packaging containers, sometimes from Italy or Lebanon. Some of them are planning to build glass manufacturing plants, rather than lobbying to apply pressure on existing glass manufacturers to enhance their quality. Storage techniques are important and crucial in determining the quality of the final product. One of the constraints that face this sub-sector is the storage techniques. Many technicians lack the experience and technical knowledge on the best techniques for olives and olive oil storage. A technical training should be conducted to as many technicians as possible in this regard. Building the capacity and adding to the technical knowledge in this important step of the process is expected to increase the quality of the Egyptian olive oil. Seven years ago, there have been 2 associations in El Arish and Matrouh that used to provide services to the olive oil producers and processing companies. They have been inactive since 1999. The need is urgent for activating these entities and adding to them more associations serving other areas. There should also be an association on a national level having as an objective improving the industry to qualify the Egyptian product for better chances for export. Profitability The production cost and the sales prices vary from year to year according to the yield of the specific year. Below is an analysis of the production costs (based on an average size factory of 13 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 1000 ton/year) and sales prices as an average for the period between 2004 and 2006 based on an average quality. Production cost: 1100 - 1400 Euro/ton Local Sales Price Ex factory (bulk): 1800 – 2100 Euro/ton Local Sales Price Ex factory (in 1 liter glass bottles of average quality): 2800 – 3100 Euro/ton Export Price FOB Alex (Bulk): 2300 – 2500 Euro/ton 4. TARGET MARKETS The olive oil is consumed in the market on a wide scale. It is used for domestic uses and in commercial purposes as well. The Mediterranean countries inhabit olive oil as a dietary tradition. Olive oil is consumed extensively also in hotels. Cosmetics companies and food distribution outlets also are of the main beneficiaries. Export does not constitute the main outlet for marketing. Other big countries dominate the export such as Spain, Greece and Italy. However, some companies direct their production to local market with a portion to export. This portion ranges from 40% to 90% in some companies. The supply to the local market varies very much price-wise. Some companies provide cheap products and the consumers run after them. However, this is reflected very much in the quality of the products. Some companies mix different grades of olive oil and it results in dumping the market with bad quality products. Consumers must have enough awareness that the product price should be estimated versus the quality. Some producers of olive oil prefer to sell their production in bulk. In this case, export is the best solution. According to some companies, the supermarket chains have certain specifications to follow and the companies do not have the required facilities to satisfy them. Thus, the companies head toward exporting olive oil in its primary status. The market information which shows the level of demand locally and internationally is not of easy access. Most of the companies get the required information either through their personal relations or through contact with foreign importers. Some mentioned that they watch closely the Spanish Olive stock market or subscribe in specialized Spanish magazines. 4.1 International Market Prices are promising in the export market. However, they depend on the quality of the product as well as the season. The prices differ much according to the packaging. In October 2004, the price of bulk olive oil recorded 2,050 Euro/ton (free on board) in international markets. However, the price jumped one year later to 4,300 Euro/ton. This was reflected immediately in the domestic market to reach 43 LE/liter after having recorded 32 LE/liter 8. The dramatic increase in prices resulted in fall in consumption internationally. The drop was estimated as 6.6% in Spain, 7.5% in Portugal, and 13% in the Czechoslovakia. The consumption was not affected negatively except for a minor ratio. The main consuming countries are also the main olive oil producers as it can be seen from next graph. European Union 8 El Khouli M. (2006). A proposed study to outline the 5-year plan 2007-2012 of Egyptian olive oil industry 14 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA accounts for 71% of world consumption. Mediterranean basin countries represent 77% of world consumption. Other consuming countries are United States, Canada, Australia and Japan Figure 7: Main consuming countries in 20059 Main producing countries are also the main exporting counties as it can be seen from the graph below. Once again, the Mediterranean basin countries concentrate more than 95% of total exports. Figure 4: Exports of olive oil, 1988-2004 (1,000 tons)10 Prices paid to producers are quite unstable, mainly due to the change in the quantities produced from one year to another and the level of stocks. However, it is difficult to assess the price formation mechanism. Refined olive oils are generally less expensive than virgin oils. Refined olive oil from Jaen is an exception. A possible explanation would be an insufficient amount of lampante oil to meet demand of refining industry given the good quality of produced virgin oil and as a result an increase in lampante oil prices. 9 UNCTAD based on data from the IOOC 10 UNCTAD based on data from the Food and Agriculture Organization (FAO) of the United Nations 15 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Figure 5: Price of olive oil paid to producers, 2001 to 2004 (thousand euros per ton)11 As mentioned earlier, and as result of the interviews, six olive oil producers have an olive oil exporting activity. Only one producer is exporting 100% of his production, which is sold in a special market for olive oil in Australia. The other five producers (exporters) export part from their production. The percentage of the exported part ranged from 40% up to 90% of the factory production. Some of them export directly since they have access to international markets and the other that do not have this access export through either other olive oil exporters or through companies that are specialized in exporting. The following tables indicate the exports of olive oil as recorded in the UNSTAT and COMTRADE. It indicates that the Egyptian exports reached a maximum of 1,500 tons in 2005. This figure is far below what is reported from the estimates of the exporters interviewed (Egypt is producing about 8000 tons half of which is exported). It is reported also by the Egyptian exporters that more precise data is now recorded at the Food Commodity Council that reports it to the World Trade Organization. Thus more accurate data is expected to show up in future records of the UNSTAT. 11 UNCTAD, data from the International Olive Oil Council 16 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Table (2): Egyptian Exports from Olive Oil from 2000 to 2004) (Source: UNSTAT) Olive oil and its fractions, not chemically modified (HS1992 - 1509) Olive oil, fractions, blends, not chemically modified (HS1992 - 1510) Period 2000 2001 2002 2003 2004 2000 2002 2003 2004 Trade Flow Export Export Export Export Export Export Export Export Export Reporter Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Partner World World World World World World World World World Code 1509 1509 1509 1509 1509 1510 1510 1510 1510 Trade Value $672,469 $220,061 $323,335 $2,326,097 $1,935,995 $2,292 $333 $4,298 $250 Net Weight (kg) 0 147,463 0 1,312,320 966,349 0 0 2,339 500 Quantity Unit 1 8 1 8 8 1 1 8 8 Trade Quantity 0 147,463 0 1,312,320 966,349 0 0 2,339 500 Table (3): Egyptian Exports from Olive Oil by countries of destinations in 2005 with historical trends from 2001 (Source: TRADEMAP based on COMTRADE) Importers Exported value 2005 in US$ thousand Share in Egypt's exports, % Exported quantity 2005 Quantity unit Unit value (US$/unit) Export trend in value between 20012005, %, p.a. Export trend in quantity between 20012005, %, p.a. Export growth in value between 20042005, %, p.a. Ranking of partner countries in world imports Share of partner countries in world imports, % Total import growth in value of partner countries between 20012005, %, p.a. 23 Total United States of America Italy Republic of Korea Croatia 4,658 100 1,500 Tons 3,105 271 49 362 2,607 1,887 56 41 834 617 Tons Tons 3,126 3,058 267 232 23 483 238 2 1 19 35 23 21 106 58 2 1 33 16 Tons Tons No quantity No quantity No quantity No quantity 3,212 3,625 2550 9 30 2 0 120 46 France 0 0 0 3 7 20 Germany 0 0 0 5 4 20 Japan United Kingdom 0 0 0 6 3 16 0 0 0 4 4 30 Source: ITC calculations based on COMTRADE statistics 17 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA Table (4): Egyptian Exports from Olive Oil by countries of destinations from 2001 to 2005 (Source: TRADEMAP based on COMTRADE)* Importers Total Exported value 2005 in US$ thousand 4,207 Exported quantity 2005 1376 Quantity unit Tons Unit value (US$/unit) 12919 Exported value 2004 in US$ thousand 1027 Exported quantity 2004 374 Exported value 2003 in US$ thousand 1674 Exported quantity 2003 565 Exported value 2002 in US$ thousand 953 Exported quantity 2002 326 Exported value 2001 in US$ thousand 63 Exported quantity 2001 15 United States of America Italy Republic of Korea Croatia Israel Morocco Saudi Arabia 2,369 1,674 770 557 Tons Tons 3,077 3,005 447 558 155 202 290 724 150 365 141 411 73 252 0 0 106 58 33 16 Tons Tons Tons Tons 3,212 3,625 4 0 18 0 0 0 0 0 0 0 29 400 0 0 0 0 57 0 17 584 45 Tons 31 21 1 1 6 15 *Note the discrepancy in the data also from the same source obtained in different format (compare year 2005 in tables 4 and 5) Most of the exporters reported an urgent need for market intelligence services. There is no entity that systematically provides information on the prices neither of produced and processed olives nor on olive oil. Moreover, some information is misleading and is spread to destabilize the market. Some exporters reported that wrong practices of unprofessional exporters ruins the reputation of the Egyptian exports, especially if they manipulate on quality and terms of delivery. There should be a proper coordination between the exporters and supervision of the quality of products exported by a professional entity. Assistance is also needed in the export process and logistics. Training sessions are needed on several topics such as export marketing strategies, export market research, trade agreements, export procedures and logistics, etc. Institutionally, the government imposes taxes on the exported olive oil. This leads to doubling the taxes because the exporter pays again for the products to enter country of destination. A monitoring organization should be established to oversee and intervene to limit the wrong practices of some of the companies. 4.2 Local Market Although olive oil is consumed in large amounts in many countries in the mashreque region such as Syria, Lebanon and Palestine, it is not a substantial component in the diet of the Egyptians. An important factor is also the weak purchasing power of class B and C of the local market. However, the trend in the local market is increasing by increased awareness and increasing standard of living. Large companies do tremendous effort in the marketing and promotion of olive oil. Products of large companies are sold in large supermarket chains as well as in grocery stores, while the produce of medium and small scale producers is sold in street markets and in many cases is packaged spontaneously as per the buyer's convenience. A marketing manager of a processing company mentioned that the taxes imposed on empty packs are higher than those on filled packs. 18 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA In the processing and marketing chains, an awareness raising campaigns should be conducted to consumers on the degrees and types of the olive oil and the characteristics of good quality olive oil. As result of the interviews most olive oil producers (except one producer who exports all his production) have a share in local market. The percentage from the production that is sold domestically ranges from 10% to 100% of the factories production. One company only out of the ten interviewed has its own outlets to sell the olive oil locally. The other eight producers sell their production either packed to large super market chains and hotels or in bulk to other olive oil producers, who carry out the packing step and sell it under their brand names. Most of interviewed agreed that the local market could absorb any expected increase in the olive oil production due to the following reasons:      Existing local market channels, infrastructure and logistics Large companies' strong local distribution system Increasing trend of large supermarket chains Increasing awareness in the local market about the healthy nutrition Increasing demand by continuously growing population 19 5. SERVICE PROVIDERS Several associations, chambers and programs do provide services to the olive oil processors. The main observation is that most of the organizations do not work on a sustainable manner, relying mostly on donor supported programs and design their activities to absorb the funds allocated. Objective & establishment NGO established in 1997 Promoting the competitiveness of the Egyptian Exporters Nr. of Members/ geographical outreach 1000 Members of which 25% work in food processing Outreach: One head office in Cairo serving companies all over Egypt 20 Members All over Egypt Nr 1 Organization Egyptian Exporters Association Expolink Services Provided Provide export services (trade fairs, market information, tax information on food and leather, ICT and furniture) Fees / Resources Full Mem: L.E 30001500 / annual Partial Mem: L.E 200 Deals with international organizations like USAID Registration free of charge Cooperation Strategic alliance with IMC for management of trade fairs and workshop activities Strengths Dynamic and responsive organization Linkage to the IMC funded programs Weaknesses Limited service portfolio 16 Egyptian Olive Union Semi governmental organization(under the Union of Producers and Exporters of Horticultural Crops) Established Aug 2004 Increase exports & remove or decrease the export barriers Developing sector strategies Lobbying and policy advocacy Technical Services Information Dissemination The association has different fields: juices and concentrates oils, beef and dairy. They provide technical support and trade fairs as well as Policy activities Ministry of Agriculture, International Olive Oil Council They’re willing to provide the administrative work and promotion for training courses in order to form a cooperation with other donors Collaboration with the Ministry of Agriculture Political influence Representation of large processing companies Provision of technical services not in its mandate 4 Food Processors Exporters Association FPEA 128 Members Annual fees: L.E 500 All funds come from their members as well as AERI Project Lack of financial resources A young association 6 Egyptian Agribusiness Association EAGA Established in Newcastle in 1990 to lead government funded efforts to improve the living conditions of vulnerable people living in cold, damp and energy inefficient homes across England. Eaga provides services, products and solutions that address the social, environmental and energy efficiency objectives of Government and the EAGA provides services, products and solutions that address the social, environmental and energy efficiency objectives of Government and the private sector throughout the UK, as well as in North America, India and the Republic of Ireland. Preparation of meetings and reports Annual fees: L.E 1000 They don't facilitate funds, but they do have their own connections with banks and take their own percentage as well as but services from IMC and sell it to their members and get a percentage as well Strong presence of olive and olive oil producers Lack of financial resources Lack of membership 20 Nr Organization Objective & establishment private sector throughout the UK, as well as in North America, India and the Republic of Ireland. Services Provided Nr. of Members/ geographical outreach Fees / Resources Cooperation Strengths Weaknesses 8 Chamber of Food Industries CFI Established in 1958 under the umbrella of the federation of Egyptian Industries FEI Non-profitable organization CFI is committed to the development of the Egyptian food and beverage companies and is dedicated to strengthening the image and competitiveness of the Egyptian food industry both domestically and globally. Protect the combined interests and welfare of members through lobbying on their behalf before different governmental bodies Cooperate with the different concerned governmental departments in laying out policies related to the food and beverage industry, and provide opinions and suggestions on legislation Provide access to strategic alliances Organize seminars, conferences and trade fairs 2200 Member in all food processing fields The Federation of Egyptian Industries FEI Strong lobbying and political influence Large number of membership Outreach to all formal processors Not effectively involved in technical services 17 Egyptian Association for Supporting Olive Growers To support olive growers in improving agricultural practices and to advocate for increasing the yield of existing area and increase the planted one EU program taken over by the Ministry of Industry Policy advocacy for olive growers Technical and marketing services to olive growers More than 200 members All over egypt With the ministry of agriculture and Food Research Institute under the Agriculture Research Center Registration free of charge With governmental and nongovernmental institutions and with different service providers With governmental and nongovernmental institutions and with different service providers Specialization in olive growing Technical know-how and technology transfer activities Limited portfolio of services Lack of financial resources 14 Industrial Modenization Center (IMC) Trainings, Quality Management Certifications, Other Business Development Services Funding up to 80% of the activities costs Head office in Cairo and regional offices covering most of Egypt Available financial resources General Services to all industries 15 Industrial Training Center (ITC) Ministry of Industry All kinds of technical and business trainings, skills development Cairo Registration free of charge Funding up to 80% of the activities costs Abundant financial resources allocated by the Egyptian Government for the coming 5 years Working through service providers serving a very broad portfolio Not Easy to measure the program impact 21 Nr Organization Food Research Institute under the Agricultural Research Center Objective & establishment Applied research and service provision for the sector Services Provided Technical Consultancy Services for olive growing and processing Nr. of Members/ geographical outreach Located in Giza and services extended to all over Egypt Fees / Resources Fees according to service provided Cooperation With the ministry of agriculture and other research institutes With International Olive Oil Council Strengths Strongest technical expertise in olive growing and processing Weaknesses Governmental Organization. Individual scientists recruited by the private sector on a private basis. Strong history in the agriculture and food processing technical services Limited specific services to other sectors than the fresh produce 13 Horticultural Export Improvement Association (HEIA) To support the horticulture export industry along the whole supply chain Technical assistance on agriculture production and food processing Owner of Cairo Airport Perishable Terminal under a BOT contract 480 members covering most of Egypt, Head office 6 of October City, branch office in Luxor Corporate Membership 20,000 L.E. with annual fees of 5,000 Full Membership 6500 L.E. with annual fees of 1800 L.E. Associate Membership of 500 L.E. with annual fees of 500 L.E. With USAID Programs, CBI, IMC, and other different donors and governmental organizations 5 Development of Business Women Export Ability Association DBWEAA Self financed & an independent NGO Established in year 2000 Main Objective is to help the Alexandrian SMEs to develop their exports Aims to increase the Business Women's Export capabilities to enhance their contribution to Egyptian economic growth through their sharing in the International Trade Will cooperate for the next 6 years with business Development Services support Project BDSSP funded by CIDA to provide technical assistance and export development services to 40 SMEs in 4 main clusters (food, furniture, textile and leather) as well as to promote their products / services in the international market Exporting of Herbs & Spices fresh and processed Supporting the better production of the H&S products by provision of technical support through foreign donors 24 members Permanent Mem: L.E 5000 Annual: L.E 1200 Temporary: L.E 500 Annual Tem: L.E 120 DBWEAA will cooperate for the next 6 years with BDSSP funded by CIDA Strong networking and dynamics Dynamic Government and Donors support Broad line of services not specialized in olive oil 3 ESHEDA Established Feb 2004 Develop & collect H&S through coordination between the different companies to help them export With AERI/USAID program, IMC and other donors Dynamic association in the sector No direct services for olive sector 22 Nr 7 Organization Egyptian Export Promotion Centre MTI Objective & establishment Services Provided Prides it’s services through 16 council: they selected 4 to start with: Agricultural manufacturing, fresh agricultural products, furniture and textiles (ready made clothing and spinning) Nr. of Members/ geographical outreach Fees / Resources Coordinates with the Governmental Service Providers such as Politics Sector, Concordat Sector, EDF, IMC and Expolink Cooperation Strengths Weaknesses 9 Midwest Universities Consortium for International Development (MUCIA) / Agriculture Export for Rural Income Project AERI The goal of the forthcoming Regional Consultation will be to provide a forum where public and private leaders can consider alternative approaches and models for linking farmers to markets, especially to the global food chain. 1. Present information on key factors affecting the competitiveness of national and global supply chains for different high-value commodities or agricultural products. 2. Provide a framework for analyzing and evaluating the critical issues that small-scale farmers currently confront in gaining access to domestic and global markets and then to draw upon various case studies to compare possible solutions. 3. Facilitate the dissemination of appropriate best practices and lessons learnt across the region through case studies, interactive discussions, field tours, and other experiential mechanisms. 4. Facilitate communications and networking among the participating public, private, NGO and donor agency representatives, both within and across national boundaries. Focus on Upper Egyp Egyptians: L.E 1150 None Egyptians: $ 260 Funded by the U.S. Agency for International Development (USAID) and the World Bank University of Illinois at UrbanaChampaign (UIUC), Chemonics International, International Arid Lands Consortium (IALC) CARE International,, ACDI-VOCA, the QED Group, Chemonics International Access to international technical expertise Olive is not one of their strategic crops Funded effective training programs 10 COMIBASAL Established in 1958 A port in Alexandria famous for dealing with onions Intermediary between buyers and sellers Lab testing Centre Inspections Quality of the product + ship control Perforates Calibrating for oil Training feasibility Centre Working certified in the following companies ASM, GAFTA and FOSFA 23 Nr 11 Organization 6th Oct. Investors Objective & establishment Services Provided 25 Associations in all fields. General for all companies ( tax problems, environmental problems, quality, technical, financial, and R&D) Lobbing Information center, training with IMC to develop workers skills in factories Nr. of Members/ geographical outreach Fees / Resources 1000-3000 based on factory’s area L.E the Cooperation USAID, Ministries, CIDA, EU Strengths Weaknesses 12 Egyptian Ass. For Development & Technology Established in 1997 It provides Agricultural business development services to support the farmers in post harvesting & support the food processors to ensure the supply of raw materials Provides workshops for the factories on quality problems from farmers and how to set up prices between farmers and processors. Preparing monthly agro business magazine for 10,000 companies working in the agro-food business. Beheira Alexandria and Annual fees: L.E 20 Funded by the Canadian foundation for financing scientific journal for 3 years CIDA, BDSSP 2 BDSSP Executed by Canadian Partners Funded by the Canadian Development Agency CIDA Started 2005-2010 Executed by Canadian partners Help existing units of BDS or building up new ones to provide services for small and medium factories Furniture and Leather Computer usage inside the small projects Provision of the information (working children problems, improving the working environment) AlMenia Business Men Association (a special unit for taxes problems and financial work). They support the electronic gate of the government. Support banks in lending the small enterprises (how to access the credit) Support Fruits & Vegetables and Electricity Appliances sub sectors for exporting. Outreach: They have 2 regional offices: Menia & Alexandria Branches in Alexandria/ Al Menia/ Cairo/ Damyatta Budget is 20 million Canadian dollars We deal with most of the NGO, Ministries or governments authority universities or other supporters Sources to finance small and micro projects No specialization in technical services 24 6. SWOT ANALYSIS OF THE EGYPTIAN OLIVE OIL SECTOR Strengths Weaknesses  Lack of proper extension services and technical assistance Bad quality and mixing of varieties Lack of enough expertise in biological pest control Lack of traceability systems Small number of EUREPGAP certified farms  Opportunities Growing market demand at processors end in terms of number of factories and quantities demanded Potential for increasing yields and quality the 5-year plan is about to be issued (2007-2012) with a potential for increasing the cultivated area Donor supported development programs Long term contractual agreements Improving quality and adherence to post harvest best practices      Threats Competition of other neighboring countries Increased cost of irrigation Increasing labor cost Domination of large and corporate farms The financial support that the EU provides regularly to European farmers Farming    The Egyptian desert soil and climate are very suitable to olive trees cultivation Availability of suitable varieties Low water requirements of olive trees in terms of quantity and quality        Collection/ Local Supply   Outreach to small scale farmers Efficient low cost manual harvesting    Improper harvesting time Less focus on quality Less focus on separating different varieties      Processing    Well-established factories with relatively high investments Accumulated experience and know-how built during the last few years Technical assistance received from Europe on the modern oil extraction techniques        Insufficiency of yearly yields reduce the production capacity of processing companies Lack of financial services provided to olive-oil processors Lack of operations management skills Lack of local technical services provided Expensive imported packaging material and lack of good quality local ones Lack of certified labs for quality control     New technologies allow for more efficiency in the olive oil extraction Growing supply by the increase in olive planted areas Industrial modernization programs Growing olive oil businesses in production areas such as Matrouh, Siwa and North Sinai   Inability to meet traceability requirements Backward integration of processing companies towards farming Increased fuel and transportation costs Increased prices of imported machinery Increasing cost of energy and unfavorable production economics 25 Strengths Local Marketing  Existing local market channels, infrastructure and logistics Large companies' strong local distribution systems  Weaknesses Low consumption rate in Egypt due to traditional tendency towards the animal-based fats Lack of awareness among the consumers on quality degrees versus the price Low local purchasing power Lack of market information Lack of export market research tools and long term export strategies Government tax system and unfair practices    Opportunities Increasing trend of large supermarket chains Increasing awareness in the local market Increasing demand by continuously growing population Increasing consumption of olive oil around the world Favorable international and regional trade agreements Government and donor supported export development programs   Threats Competition of imported olive oils Competition of informal sector   Export Marketing     Egypt is building its name on the world map of olive oil exporters Competitive prices of the Egyptian products High quality of the Egyptian olive oil Easy access to European markets as the world's largest consumer Local consultants and research centers available Increased awareness towards consultancy and outsourced services             Lack of strong national associations to provide services to olive producers or processing companies Lack of practical experience of consultants with academic background Need for expensive foreign consultancy and technology transfer Lack of transparency of government supported programs High taxes and fees imposed on export businesses Increased shipping prices  Linkages to international organizations/ associations specialized in olive oil Common interest of business stakeholders in establishing strong trade associations    Service Providers     Competition of other countries in the region such as Morocco, Tunisia and Syria Low quality of some companies could affect the name of the Egyptian olive oil in the international market Continuously increasing nontariff barriers Mixing oil types leads to unfair competition Bureaucratic and centralized organizations and services Lack of commitment of different associations Conflict of interest among trade associations' members  Enabling Environment     The partnership agreement with the EU and other trade agreements The agricultural reform program taking place in Egypt Water supply programs to reclaimed lands Financial credit programs supported by different donors       Continuity of export supporting policy by the Egyptian government Special focus on supporting agricultural exports Donors supported export reform programs   Unsustainable support programs Lack of updated information on the market trends and prices 26 Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 7. CONCLUSIONS AND RECOMMENDATIONS The secondary and primary information obtained confirm the strong potential of the olive-oil subsector towards both the local and export markets. The local market is growing and Egypt started to establish its position in export markets with a high potential for continuous growth. Yet enough supply coping with the market growth and even with the present production capacities is a crucial factor in sustaining the growth of this sub-sector. Supporting organizations such as the Union of Producers and Exporters of Horticultural Crops, Chamber of Food Industries and other trade associations such as the Horticultural Export Improvement Association and Food Processing Exporters Association provide supporting services to this industry, yet a country-wide plan to develop and support this industry is still needed. The collection and internal trade of olives are disorganized and sustainable contract-farming mechanisms are needed to regulate and organize the supply. Technical support needs to be provided at the collection and post-harvest stages to assure the high quality of supply. At the factory level the urgent needs are technical support on production and storage techniques, reliable and professional laboratory analysis and on total quality management. At the sales and export level there is a need for training on proper market research techniques and on export logistics and procedures. Based on the SWOT analysis conducted, a number of possible interventions have been identified to positively contribute to the development of the olive oil sub-sector. These services include: 1. Supporting extension services to farmers 2. Provision of technical trainings to agriculture engineers on biological pest control 3. Supporting EUREPGAP farm certifications 4. Provision of training on collection and post harvest practices 5. Implementation of traceability systems among farming, trading and processing activities 6. Facilitation and advocacy for financial support to increase cultivation of olive trees and extending capacities of olive oil processors 7. Facilitation and advocacy for the production of specialized packaging material for olive oil 8. Increase consumers' awareness on benefits of olive oil and on types and degrees of quality versus the price 9. Provision of market intelligence services (updated market research studies, potential export opportunities, quantities and qualities needed in different markets, etc…) 10. Provision of specialized trainings on export procedures and logistics with focus on olive oil 11. Support the establishment of a regional association providing technical services and exchange of best practices in production and marketing of olive oil 12. Facilitation of establishing a specialized trade association on the national level to organize the current producers and exporters, to set collaborative strategies and to provide technical and marketing services 13. Assistance in establishing an information center that will make available all related information on export markets and export opportunities. The center would also issue regular technical publications concerning production and processing techniques. Small and Medium Enterprise Promotion Programme Fruit & Vegetables Processing, Component 2 EL MOBADARA 14. Training of local consultants and providing them with exposure to international service providers 15. Provision of technical trainings on operations management, total quality management and on important technical aspects such as storage techniques 16. Assistance in establishing a certified olive oil laboratory that is internationally recognized for reliable analysis of produced olive oil samples As an outcome of the workshop the attendees prioritized the above mentioned needs and agreed on the following urgent ones:  Raising awareness on olive oil in the local market in two dimensions: the first in increasing the number of olive trees by having new 25 Million trees planted by year 2010, and the second dimension is raising the local consumer awareness on the benefits of olive oil Training to growers and processors starting by a training needs assessment Support in the establishment of a reference olive oil laboratory Support the establishment of an information center Provision of financial support to processors for the working capital.     Annex 1: Olive Oil Sector Guidelines for in-depth Interviews 1. GENERAL INFORMATION 1. Type of interviewee 2. Position of the respondent in the enterprise? 3. Business Address/Locality? 4. Number of years active in this activity? 5. What is the size of your business?    Tones per year Turnover Assets 6. In what other parts are you active in the value chain? Do you grow olives? Do you export? By yourself? Through other exporters? How do you sell in the local market? 2. PRODUCTION 7. Do you produce any other product in addition to olive oil? 8. How many employees do you have in your business (permanent and seasonal)? 9. What is the level of skills of your employees? What needs to be improved? Types of trainings required? 10. What kind of olive varieties are being used in olive oil production? Do you get the suitable ones with the right quality? 11. What types and grades of oil are you producing? 12. What is the technology you are using to produce olive oil? Is your technology up-to date? Does it need any improvement? What type? 13. What type of packaging technology are you using? Is it the most appropriate? Any potential for improvement? 14. Are you doing any research and development? At what level? 3. SUPPLY / PRODUCTION INPUTS 15. Who are your suppliers? (Individual/organizations)? And how do you secure your supply? 16. What are the major bottlenecks facing the supply side and how could the industry help in overcoming them? 17. What are your other production inputs? (chemicals/ packaging material/…..) Are they available in the local market with suitable prices? 4. MARKETING 18. How big is your market share in the local market? How big is the whole local market? Is it growing? And at what rate? 19. What is the potential growth for the Egyptian exports in olive oil? What could be done to boost the export? What comparative advantages does the Egyptian olive oil industry have? 20. Are there any problems concerning selling the production during the last year or before, why (no market, no facilities, etc)? 21. Do you have access to information? Do you search and sell the production to different traders (price, transportation and information)? 22. What kind of marketing information and pricing are available and what is the source and type? (Mention any changes happened during last three years)    Number Size Location 23. Who are your customers (local/international)? (Mention any changes happened during last three years)    Number Size Location 5. SERVICES 24. From where do you receive technical assistance? 25. What is the most important information you received and has it had an impact on your production and income? Source and kind. 26. What kind of problems does olive oil production face related to:              Finance Production Supply and production inputs Marketing Information Technology Others……………. 27. What do you recommend to improve olive oil sector in relation to: Supply and production inputs Technology used Information Financial support (credit) Marketing Others………………. Annex 1: List of Interviewed Companies Name of the Company Wadi Food Nefert Egypt Years in Market 10 years 17 years Market Distribution Export 40% 90% Local 60% 10% Production /year (in Tonnes) 100 50-60 Source of Olive 60-70% from own farm Other farmers Other farmers Other farmers Own Farm Other farmers Other farmers Other farmers Other farmers Other farmers EMCCO 11 years 90% 10% 120 New Salhyiea 8 years 60% 40% 75 Hily Food Eng. Mohamed El Kholy Factory of Abshaway Directorate El-Refaay Factory 3 years 9 years 12 years 100% 90% 0% 0% 10% 100% 12-15 15 1 5 years 0% 100% 10 Olive oil Extraction Unit in Youssef El Sedek (Fayoum) Factory of Fayoum Directorate 3 years 0% 100% 1 8 years 0% 100% 1.5