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October 23, 2008

Egypt aims to increase potato production

By Erika Sherk

The focus has always been on rice, wheat, and maize — the world’s most important food crops. This focus has turned into a spotlight lately, with the dramatic heights the prices of these crops have hit, some almost doubling in 2008.

Behind these three superstars, however, lurks a humble, knobbly vegetable. Though potatoes have been languishing in the shadows of the cereal crops, it would seem that this won’t last for long: The world is starting to take notice of the many-eyed tuber and, according to some, the potato just might save the world.

A lofty claim, so first some background: The much-discussed food crisis that sparked riots in Egypt this spring is still being felt across the country. People are going hungry, with no way to keep up with the rising price of their breakfast. This painful situation is the impetus behind a United Nations-backed movement to bring potatoes to the top of the list of potential solutions to the worldwide food crisis, going so far as to declare 2008 the International Year of the Potato.

In Egypt, those who know potatoes say that the lowly, oft-mocked crop could feed the hungry and pump cash into the economy. Big aspirations for one little vegetable, but the government hopes to increase potato production in the country by 60% over the next 10 years, planning to increase both consumption and export sales, which, they say, will feed the country’s hungry citizens and voracious economy.

Even before the recent UN attention, the vegetable had been moving into a spot of importance in Egypt over the last 20 years and especially the last five. Today, potatoes are the country’s number one vegetable export. Egypt ranks among the top potato exporters globally and is number one in Africa. When one considers that potatoes are being lauded as a savior for countries much less suited for potato growing, it is unsurprising that Egypt is focusing so much on Chipsy’s raw form.

While it’s possible to grow potatoes almost anywhere, there are about 100 countries planting potatoes for commercial use, according to Dr. Ramzi El-Bedewy, president of the African Potato Association and member of the UN Food and Agriculture Organization (FAO). In 2007, 350 million tons of potatoes were produced worldwide. Of the 100 producing countries, more than 20 are in Africa. Egypt is tops in the continent because the climate, coupled with the loamy soils — the potato’s favorite — make for the ultimate incubator.

“Egypt is considered a greenhouse,” says Dr. Mohamed Abu-Zaid, director of field crop research at the Agricultural Research Institute of Egypt. This is due to the fact that the country can produce three crops of potato each year — the summer, winter, and ‘nili’ (planting mid-August to the end of October) seasons. Another bonus in Egypt is the high productivity — the fields here produce a high crop yield, says Dr. Abu-Zaid, ranging between 20 tons and 50 tons per hectare (8.4–21 tons per feddan).

This can be compared to an average of 40 tons in developed countries and about 20 tons in developing countries, according to the Peru-based International Potato Center (CIP). The CIP is a privately-funded research organization working to reduce poverty through promoting potatoes as a way to increase food security. Last year, 300,000 feddans in Egypt were cultivated with the crop, producing about 2.6 million tons of potatoes. The amount of potato-cultivated land in the country has grown in recent years, moving from 292,000 feddans in 1995 to 300,000 feddans in 2005 — an increase of 2.6%. Not a major jump, but potatoes are rising up as other crops decline. Potato-cultivated land area as a percentage of total cultivated land rose by 19.9% in that period.

Potato crop yields have increased by 90% in the last five years, due to the introduction of high-yield varieties and improvements in disease control and fertilization. This is the one thing that has saved farmers as they battle the growing cost of growing. Production costs rose from LE 3,000 per feddan in 2000 to LE 3,700 in 2005 — an increase of 25%, due to the all-encompassing inflation in the country, according to Dr. Samir Farag, deputy director of the Horticulture Research Institute in Doqqi.

It’s becoming more difficult all around for farmers, says El-Bedewy, who works as a potato consultant with small to corporate-scale farms. Fertilizer and pesticide prices have increased. Land rent has increased by 300% in the last three years, he says. However, despite these increases, the crop has remained profitable — though it costs more to produce the potato, the costs are recovered because the yield is so high.

The other reason farming potatoes is a good financial move is the flipside of global inflation — selling prices are rising too. Export prices have increased between 70% and 100% over the last five years, according to El-Bedewy.

Though prices have been rising for exported potatoes, those produced for local consumption have remained cheap. In the off-season, one can buy a kilo of potatoes in the market for about LE 2, says El-Bedewy, and about 50 piastres when they are in season. This is because local potatoes and export potatoes are of a different quality and so local potatoes are not tied to global market prices.

“The difference [between local and export potato pricing] is like the difference between the moon and the Earth,” says Salah Hegazy, chairman of Agrofood, a vegetable exporting company headquartered in Cairo. The average price for a ton of export-quality potatoes sold to the UK — the most lucrative market — was about LE 4,500 at press time, including taxes and custom duties. The same volume of potatoes would sell locally for about LE 1,300, he says.

Local potatoes are a natural by-product of export production. Agrofood, for example, exports 60-70% of its potatoes. These are the first class specimens that meet European Union (EU) regulations. Their imperfect siblings, the potatoes that are too big, too small or weirdly shaped then make their way to the market stalls of Egypt and eventually into the nation’s supper pots. This is the magic of potato pricing in Egypt: The country can sell them for lots and eat them for little. Conversely, it is also good for farmers: They can sell the top grade product at global prices and yet a market still exists for the unwanted misshapen leftovers.

Egypt is one of the top 10 potato exporting countries in the world. It began exporting the vegetable about 20 years ago, according to El-Bedewy, shifting 150,000 tons annually. This number remained virtually unchanged until recently. In 2000, the total exports were just 156,000 tons. By 2005 this figure had jumped to 390,000 tons — an increase of 150%. This can be attributed to higher crop yields and trade liberalization between Egypt and the EU. The total value of potato exports increased from LE 92.5 million in 2000 to LE 446.3 million in 2005, according to Farag. Lebanon and Italy are the top markets for the exports, followed by Kuwait, the UAE, Germany, and the United Kingdom.

Egypt’s main potato-exporting season is from October to March. This is where the country has the climatic advantage. While other parts of the world are frosty and cold, potatoes are still growing tucked in Egypt’s warm soil. However, the shipments must make it overseas before the middle of May, says El-Bedewy. Then, the exports from Egypt are taxed heavily to make space for the potatoes harvested in southern Europe.

Egypt’s trade agreements with Europe have made it easy to export, Hegazy says. Increased quotas and reduced tariffs for agricultural goods, resulting from the 2004 EU-Egypt Association Agreement, “opened the gate.” Since the signing of the agreement, Egypt had a quota of 250,000 tons of potatoes that can be exported duty-free. Everything beyond that had a 60% duty reduction.

However, potato trade recently opened up even more — in July Egypt signed an agreement in principle with the EU to remove tariffs on certain agricultural products, including potatoes. A January 2009 implementation is expected. The agreement also removes the cap on the amount of potatoes Egypt can export to the EU, although it is uncertain whether the new regulations will apply year round.

The trade liberalization, the staggered seasons, and Egypt’s high production all make for a favorable trade climate, and this is why so much effort is being made to increase potato production — to take advantage of the cash benefits and to put some of that cash back into agricultural development.

The newly reclaimed areas (NRAs) of Egypt have contributed in a major way to the rise in commercial potato production for exporting. The EU banned Egyptian potato exports for periods in the 1990s due to recurring problems with a disease called brown rot, sending exporters into a panic and balance books into the red. The country had to find virgin soil untouched by the scourge to be able to regain its trade access. This, combined with the general need for more agricultural land, has led to the reclamation of 112,500 acres of disease-free desert land for potatoes, according to Farag.

The NRAs are scattered throughout the country and the land has proved vital to the continued increase in export volumes, as only potatoes from this ‘clean’ land will be accepted overseas. The soil is rigorously tested for disease, and most exporting farmers have had to move their operations to this land.

“All our land is in the virgin land region in the desert [...] to secure that there is no kind of contamination,” says Hegazy, of Agrofood. More land reclamation is needed still, as visions for the future include more potatoes springing from Egyptian soil. “We do have a plan to increase the production in the next 10 years by at least 60%,” says El-Bedewy. But at present, there is not enough usable land. Most of the increase is projected to become processed potato products such as chips and french fries, he says, which means that the potatoes must be grown in the NRAs.

However, as unappetizing as diseased potatoes might sound, they do no harm to humans. The issue is the effect that brown rot has on the crop: It creates, unsurprisingly, an early rot in the potato, turning it into an oozing brown mess, the reason that the EU has thrown up strict regulations to keep it out. However, this doesn’t mean that the old land cannot be used to grow potatoes for local consumption.

Don’t toss out that Chipsy sandwich though, Egyptians aren’t eating diseased potatoes. Brown rot has been nearly 100% eradicated, it is just that European regulations are so stringent that the EU will not accept even 0.1% incidence of the disease in a shipment.

Though it might seem to be all roses on the potato front, a lot of small farmers are still struggling to keep up. Farming is never an easy business and some fellaheen in Egypt have had difficulty keeping pace with the changing nature of the game. Understanding EU regulations, grasping the necessity of the newly-reclaimed land, and staying on top of new varieties of potato available can be a lot for a farmer who has spent his entire life toiling on his two-feddan farm. And there are a lot of these: Eighty-five percent of farmers own less than three feddans, according to Hegazy. “The only way to do it is to gather them in a self-help organization to have a bigger volume and economic size [...] if we succeed to do that it will affect very much their social and economic situation.” This farm-based problem is not unique to potatoes, but it is an ever-present issue as Egypt pushes the vegetable to the forefront.

Out on his land at the Abou Gazia farm, 15 kilometers from Tanta in the Nile Delta, a glance at Aly Abou Gazia’s leathery skin betrays his lifetime of farming. It is in his blood — the farm has been in his family for more than 400 years. The 74-year-old plants 100 of his 400 acres with potatoes. He has always grown them, he says, because potatoes are always a profitable crop, even if the profits sometimes vary wildly. In 2006 he sold his potatoes for LE 1,800 per ton. In 2007 the price dropped to LE 1,500.

“The farmers who grow potatoes, they are gamblers,” he says. He sells half his potatoes to a local factory and the other half go to the local market. His potatoes are barred from export to the EU because his land is not in an NRA. He worries that he and other Delta farmers may be left behind as farmers on reclaimed land reap all the benefits of exporting.

“When I look to the future, it doesn’t look very good,” he says. “We are afraid for the marketing in the future of [potatoes]. Mainly, will [buyers] concentrate on the newly reclaimed land? What about the Delta? Many are small and middle-class farmers here.”

Taking risks might be part of the fun for the high rollers, he says, but “small and middle-class farmers don’t want to gamble.” They do anyway, evidenced by Abou Gazia’s middle-sized farm — 25% planted with potatoes — but it can be stressful. But despite the risk, at the end of the day, “potatoes are profitable,” he says.

“If you are going to eat only potato you are not going to have any health problems,” claims El-Bedewy. He reels off a list of the vegetable’s nutritional attributes: protein, carbohydrates, oil, vitamin C, vitamins B3, 6 and 12, vitamin C and iron. Potatoes have had a bad reputation for making you fat but the vegetable is not the problem, he says. If you took a block of tofu and covered it in butter and sour cream the end result would be the same. Potatoes alone are a good starch, people just need to be smarter when choosing how to consume them.

The big question, when it comes to the eating issue, is: Will bread-addicted Egypt be able to let go of its favorite carbohydrate and embrace potatoes? “Sure. If you go to a large number of Asian countries they are not using bread like us. They are using rice. If we are going to produce potatoes in large quantities we are going to shift to potato. People learn by doing,” says El-Bedewy.

Others have a harder time believing that Egyptians will give up their beloved bread — used in everything from fuul and tammeya sandwiches to Omm Ali. “We believe the potato is very important,” says Farag, “a very important vegetable crop that we can depend upon in addition to wheat. But as a substitute? No.”

Still, just having a substitute in a country that has seen bloodshed due to rising bread prices in recent months can make a difference. El-Bedewy feels that people can adapt to anything, it just takes time. He figures that if the price of rice and wheat are skyrocketing and there is a surplus of cheap potatoes rolling down the streets of Egypt, hungry people will figure it out. “I’m sure that if we are going to give more attention to potato and sweet potato we can face a large problem of the food gap in Egypt.”

Despite growing all kinds of other vegetables, Hegazy agrees, “I think potatoes will be the backbone for this country, for feeding these big numbers of population.” Omnia Helmy, lead economist at the Egyptian Center for Economic Studies (ECES), says that from a consumer standpoint, it is certainly possible. “It’s a matter of habit. People here depend on bread more. Of course, if potatoes are available and at reasonable prices and the quantity is increasing [] The pattern of consumption takes some time to change.” She pauses. “But as people are suffering nowadays from price hikes maybe they are more ready for a change.”

If people can be convinced to eat potatoes instead of bread, it could make a difference economically, particularly with Egypt’s vulnerability as a net importer of food, Helmy says. “I think it might work out to mitigate the implications of the low percentage of self-sufficiency in wheat, high increase in import prices and so on.” The fact that Egypt is a net food importer leaves it at the mercy of world prices and supply. For a more stable economy, the country needs to improve its self-sufficiency, she says.

Reversing the country’s dependency on expensive imported wheat could also cut back on the subsidy cash flowing out from the government budget. The government will spend an estimated LE 87.3 billion on goods and services subsidies in 2008: 28% of its total expenditure and 9.6% of the GDP, she says, citing ECES projected numbers. These numbers have jumped with inflation. In 2007, the government subsidy bill was LE 53 billion, 24% of total expenditure, and 8% of GDP. The economist says this money could be going elsewhere into the country’s developing economy.

Another argument, according to Helmy, for increasing potato exports is the fact that some of Egypt’s other farm exports are decreasing, including beans and the perennial Egyptian classic, cotton, lessening the country’s importance as an exporter. This leaves potatoes as the best bet to keep sales of agricultural products high, and hopefully, to increase them. In 2007, Helmy states, agriculture exports from Egypt were “only $900 million [LE 4.9 billion], and of course we are aiming at increasing it much more.”

Behind the scenes in Egypt, and elsewhere, people are working to improve awareness of the potato potential. In December 2007, a conference was held in Alexandria called Potato, Sweet Potato, and Root Crops Improvement for Facing Poverty and Hunger in Africa hosted by the African Potato Association.

The theme was chosen for the same reason that the UN declared this the International Year of the Potato: “because we realized the food gap problem and we realized that the potato crop can substitute a large quantity of the wheat importation. We found that the potato is not [being put] in the right place in the developing countries. They didn’t realize the potato can replace the other crops, can be used as high cash money crop, and also to [...] fight hunger in developing countries. Therefore we would like people to give more attention to potatoes [...] to decrease the food gap,” says El-Bedewy.

Some countries have paid attention. Developing countries with poorer conditions than Egypt — and hungrier people — provide case studies on the impact of increased potato production. Potato yields in Nepal increased from six to 12 tons per hectare (14 to 28 tons per feddan) between 1986 and 2004, leading to a 600% increase in output between 1970 and now, according to the Swiss Agency for Development and Cooperation. The organization estimates this has positively affected more than one million small-scale farmers — both their nutrition and their profits.

North Korea increased its potato farm area from 50,000 to 200,000 hectares in the same period, increasing its consumption of the tuber from 16 to 60 kilograms per capita. Potato output in Bhutan has doubled since 1970, improving the livelihood of farmers for whom potatoes were the sole source of income. The increase led the country to move from subsistence to exporting — it now exports potatoes and seed potatoes to neighboring countries. India is another example, according to El-Bedewy. The country has increased its potato production by at least 40% in the last four years. “They don’t have the food gap like many countries,” he says.

The potato’s hype is big right now, but as 2008 nears its end, so will its moment in the UN-sanctioned sun. But judging by the passion with which the potato people in Egypt and the world are working, it won’t mean the tuber will retreat back into the proverbial underground. Beyond the passion and the words, there are numbers and case studies to back it up: The potato has potential. It remains to be seen if it will save the world, but if things go according to the UN’s plan, people may soon rethink their potato prejudices and see instead a big, lumpy, nugget of edible gold lying in the dirt.

Business Today Egypt

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