Currency turmoil driving prices in Egypt's poultry sector

The poultry sector depends heavily on imported feed
calendar icon 30 March 2023
clock icon 3 minute read

Last year, Ihab Gomaa was managing 12 chicken farms in Egypt's Fayoum, an agricultural region south-west of Cairo, according to a report from Reuters

Now five are shuttered, after the poultry sector, which depends heavily on imported feed, was pummelled by a foreign currency shortage and repeated devaluations of Egypt's pound.

The industry's woes are one example of how the economic turmoil over the past year has impacted both local businesses and consumers, with soaring poultry prices stretching Egyptians' budgets despite government efforts to curb inflation by importing cheap chickens from Brazil.

"There's no stability in feed prices," said Gomaa, standing in an empty 500-square-metre concrete broiler farm where bright red drinkers, used to dispense water, dangle from the ceiling unused. "This is the worst period in years for the industry."

Egypt, a major buyer of basic commodities, has been suffering from a foreign currency crunch that sent the pound tumbling by nearly 50% against the dollar, suppressed imports, and pushed official headline inflation to 31.9%, its highest for five and a half years.

Its poultry sector holds investments estimated at 100 billion Egyptian pounds ($3.2 billion).

By last October, around 2 million tonnes of corn and soybeans, key sources for feed, were stuck at ports as traders and banks struggled to source dollars.

Though some of the backlog has gradually been cleared, prices have stayed high. Gomaa said he now pays 24,000 Egyptian pounds ($775.45)for a tonne of feed, up from around 12,000 pounds last September.

Global inflation, the weakening currency and central bank rules - now lifted - restricting imports, all contributed to the increases, said Abou El Fotoh Mabrouk of the Cairo Chamber of Commerce.

About 40% of small-sized farms suspended operations in November, but some are gradually re-entering the market ahead of the start of Ramadan last week, Mabrouk said. Still, Egypt has only been producing around 60 million to 70 million broilers a month since October, compared with about 120 million prior to the crisis, he said.

CHICKEN FEET

Some farmers, including Gomaa, have sold premature chicks. Others resorted to the more drastic measure of culling.

Chicken, and even eggs, have become luxury items for many as prices surged. Government agencies invited scorn in December by encouraging people to eat chicken feet as an affordable alternative.

As inflation accelerated, led by food prices, the government ramped up imports of corn and Brazilian chicken to increase supply and push down prices. It also incentivised local farming and rolled out early Ramadan discounts.

Prices cooled a little, but are still far above last year's levels.

At a market in Cairo's affluent Helioplis neighbourhood, shoppers darted in and out of stores ahead of Ramadan, the holy month when Muslims feast with family and friends to break their fast.

Shaden, a 65 year-old mother of two, said she couldn't bring herself to forsake cooking duck on Ramadan's first day, even though the price per kilo has more than doubled to 135 pounds.

"It's because my children are used to a duck," she said. "I'll buy it once and that's it."

The price of a kilo of chicken has risen to 90 pounds from 30 pounds one year ago, said Mostafa El Sheikh, a worker at a nearby poultry store.

Many shoppers blame producers and traders for raising prices, but small farmers complain that they have no choice.

Gomaa said his earnings have slid to 6,000 pounds monthly from 15,000 pounds.

"[Chicken] prices are already out of reach for those working in the farm," he said.

($1 = 30.9499 Egyptian pounds)

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