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Egyptian exporters look to HEIA for future success

EGYPT, April 2000 - Potential is high and conditions look ripe, with Egypt witnessing year-on-year growth in export sales. But time seems to be of the essence on the road to Egypt becoming an international world class exporter. Andrea Baron reports from the third strategic action planning conference of the ATUT/RONCO project in Egypt.

On the southern-most tip of the Sinai, where the barren desert meets the delicate coral reef of the Red Sea and Italian tourists abound, a 150-strong delegation meets, to plot the best possible path that will drive Egypt ahead to becoming a world- class fresh produce exporter. A sense of determination fills the air and you can almost hear the whispers: "we are ready, we are progressing, we have what it takes". This somewhat contagious enthusiasm is, however, met with the acknowledgement that a tremendous amount of work still remains to be done.

Aid for development

The strategic action planning conference that took place in Sharm El Sheikh from March 30 to April 1 is the third in the lifespan of the ATUT/RONCO project, which is a five-year development programme sponsored by the Ministry of Agriculture and Land Reclamation, Government of Egypt, and the United States Agency for International Development (USAID).

	The HEIA-ATUT/RONCO project collaboration aims to support innovators to take risks and pave the way for other exporters to follow.

The marked difference of this year's conference is that it focussed on the strategic development of the Horticultural Export Improvement Association (HEIA), which is the first working NGO for fresh produce exports in Egypt and a focus of much technical assistance from the ATUT/RONCO project. The aim is to increase the volume and value of Egyptian exports and the formation of a sustainable industry. Five and 10- year practical visions were drawn up to attain this end.

The formation of such an association on a sustainable basis is imperative to the long-term security of Egypt's horticultural export industry. The ATUT/RONCO project terminates on September 1, 2001 and HEIA is viewed as the heir that will take on it's role - which concentrates on providing services such as farm management training for farm supervisors, technical and marketing information dissemination and quality assurance programmes for a fee.

The Agricultural Technology Utilisation and Transfer Project (ATUT) began in 1996 with the aim of profitably reorganising Egypt's horticultural export industry. Meanwhile, RONCO is an international professional services firm that provides public and private sector clients with advisory, training, implementation and management assistance in agriculture.

HEIA was established in 1996 and is a non-profit grower association, which is export-oriented and member-driven. Membership has increased from 25 to 117 over its lifetime and it provides a forum within which members can discuss problems and issues affecting them.

"I am very excited to be here for this conference," says Harvey Schartup, chief of party for RONCO Consulting Corporation. "In organising this strategic planning conference we are planning the future of Egyptian horticultural exports."

Ripe Conditions

In the past, the quality and consistency of Egyptian exports were not up to EU standards. However, the conditions in Egypt are now ripe for major advancements to be made and the ATUT/RONCO project is helping progress gain momentum. Egyptian grape exports have increased by 25 per cent a year for the last three years. Strawberry exports increased by 60 per cent last year. And grapes exported to the Dutch market this year earned the highest prices of all grapes in the market at this time. "Egyptian strawberry exports for the November to February window in the European market have great potential. Conditions in Egypt are now ripe; agribusiness is being developed and there has been substantial investment," says Ibrahim El Nashar, strawberry project manager for Americana Agricultural Development which exported 390 tonnes in total last year, 60t of which went to the UK. "Morocco is closer to the EU market but starts production later, in January, and Israel is concentrating on seed breeding programmes."

The HEIA - ATUT/RONCO project collaboration aims to support innovators to take risks and pave the way for other exporters to follow. "Before HEIA, companies like PICO had to fight single handed against all the constraints," says Alaa Diab, managing director of Diab Agriculture Reclamation Company, PICO Group, which exports about 50 per cent and 60 per cent respectively of total Egyptian strawberry and seedless grape exports to Europe. "HEIA is leaning on the existing success of the big growers, as well as foreign expertise, to increase the number of smaller growers to follow in their steps. The contribution of HEIA has been so remarkable that even a large company like PICO has joined to exchange information for mutual benefit." The desire to enter the European market is so great that some exporters have been willing to financially break even just to become a player.

A central tenet of the conference was that grower/exporters must keep reinventing themselves to survive - especially as consumer tastes, supermarket demands and advances in technology continuously change. Co-operation through consolidation is viewed as the way forward. "The more you do the harder it is to maintain your position," says Hisham El Meleigy, director of Blue Nile. "The market is becoming increasing competitive and you must continuously reinvent yourself and improve or you are out." In a strategy to cut costs, Blue Nile sent the first land-sea-land container, containing green beans, via the Port of Kopers, Slovenia, to the UK mid March.

Strong emphasis was laid on staff training and the education process. Much produce is still lost through the uneducated use of technology, such as refrigerated trucks. And the turnover rate for agricultural workers can be as high as 90 per cent a day, with a large percentage of young women leaving when they come of marrying age.

The creation of a brand name to aid identification and differentiation was also seen as essential to increasing competitiveness. "A brand name needs to be developed which has consistent good quality and volume associated with it," says Kelly Harrison, HEIA institutional advisor in the ATUT/RONCO project.

Time is of the essence

Although Egypt has the potential to become a world class exporter, the major players concede that it has a long wat to go. "Egypt has stable weather and cheap resources, but the cost of production remains far too expensive. Costs must be cut through varietal development, post-harvest technology and training," says Hisham S El-Naggar, ceo of Daltex, which is one o the leading potato exporters in Egypt with a 33 per cent market share of total exports.

	Ibrahim El Nashar, strawberry project manager for Americana Agricultural Development.
	Hisham El-Naggar, ceo of Daltex.
	Mohamed S Nounou of Nounou Farms.

Israel and Egypt are the only eountries who do not pick and pack in the field. As a result, yield is relatively low and labour costs relatively high. Fruit is also damaged as produce spends much time in hot conditions. Still, only a small percentage of Egypt's total production is of high quality.

Lack of trust hinders co-operation and solidarity among exporters. "There is a lack of trust between all parties involved, from growers to exporters to exporters and the government. There people do not work as a team says Mohamed S. Nounou of Nounou Farms. "Furthermore, Egyptian people find change hard and it is extremely difficult to alter the mentality of elder pioneers who are the decision makers."

Nevertheless, HEIA is making a good contribution to remedy these problems and is a great leap forward in the right direction. "HEIA is making an effort to unify all exporters in this sector - this is a new concept for Egypt and one of the association's major successes," says Mr Nounou. "And because it is a private sector undertaking we now have a word, a louder voice that enables us to determine to a greater extent what we want to do. Information, from seed varieties to importer product specifications, is also disseminated. This tells us how to plant for specific markets - we know what they want so we can provide it. We must not only target windows in the market. Our price and quality must match all the other players'. We must act as a competitor."

		Building the future
		LOGISTICS are a major hurdle to the creation of cost-effective, good quality exports with a long shelf life. To increase competitiveness, the ATUT/RONCO project is encouraging sea over air freight and a multi-model transportation system is being advanced. It consists of a land- sea-land transfer and reduces the transit time to the UK to five days. Grape exports via Air France have reduced from 150t in 1998 to 50t in 1999, with a correspondent increase in sea freight. "This is the first project to give attention to logistics, from packaging to transportation," says Yasser Yasser Essam, transport specialist for RONCO Consulting Corp. Essam, transportation specialist for the RONCO Consulting Corporation. "We want to be able to transport perishable goods Such as strawberries and are introducing controlled atmosphere reefer containers. Maersk offers this service now and we are in talks with Transfresh." The storage space in charter freight and liner planes is also limited. A problem remains in securing space and only 70 per cent of total produce for export via air gets secured. There is a good network of linking roads but not enough trucks for the number of reefer containers.

Yet, for the moment, HEIA may prove to be insufficient by itself. HEIA facilitates the provision of ATUT/RONCO technical assistance to its members but does not provide the assistance itself. "HEIA does not provide technical support for certain areas such as harvesting," says Mr El Nashar of Americana Agricultural Development, which receives support from other bodies, including Berryworld in the UK which it works in partnership with, and only relies on HEIA for quality control advice. "The association needs to become more comprehensive, which is a long- term development and we are not prepared to wait that long. We don't want to expand too much too soon as infrastructure is not developed enough at present."

This view is echoed by Mr El Meleigy of Blue Nile, which sends between 10t and 15t of produce a day, including green beans, mange tout, sugar snap and runner beans, to the UK. The company receives technical support from Bomford Ltd in the UK as well as HEIA. "HEIA is not enough by itself. We must also get support from others," says Mr El Meleigy. "For more mature players, like ourselves, HEIA should broaden its spectrum and concentrate on technical assistance on the growing side. At present it concentrates more on areas such as packing, which is for exporters just starting out. The association would also benefit from increased staff training."

Uncertainty lies ahead

HEIA still faces all the problems of a young association. It is clarifying its functions, it is growing in size, there is a dramatic increase in d em an d for its services and information and it has both limited staff and budget. "There is still a lot of work to do," says institutional adviser to HEIA, Bill Barbee. "Do all the projects work? Not yet. Do you know what's going on? I don't think that the board members necessarily know what's going on." Clarification of function and financial sustainability will take time, not to mention money.

The desire and enthusiasm is not questioned. What remains to be seen is whether the ATUT/RONCO project has enough time to achieve enough of its goals. Whether Egyptian people will be trained enough to carry out their work without further assistance. And whether HEIA will have progressed enough to stand independently in the face of uncertainty when the project terminates in one year-and-a-half. Only time will tell.