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STRENGTHENING ENTREPRENEURSHIP AND ENTERPRISE DEVELOPMENT (SEED)

DAIRY VALUE CHAIN MAPPING AND ASSESSMENT Technical Report No. 34

July 2018 This publication was produced for review by the United States Agency for International Development. It was prepared by AECOM.

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STRENGTHENING ENTREPRENEURSHIP AND ENTERPRISE DEVELOPMENT (SEED) DAIRY VALUE CHAIN MAPPING AND ASSESSMENT CAIRO, EGYPT JULY 25, 2018 Submitted to: Ingi Lotfi, COR USAID/Egypt Authors: Aly Zein Elabdeen Kassem, Dairy VC Mapping and Assessment Consultant Main Contributor: Mahmoud Emara, VCs Development Sector Advisor, Dairy & Fishery Other Contributors: Dalia El-Molla, Team Leader – Integration of MSMEs in Progressive VCs Hassan Elbadawy, Technical Coordinator – Integration of MSMEs in Progressive VCs Activity name: C.1.1.1 VC Assessment and Cost-Benefit Analysis Contract: AID-263-C-16-00003 Contractor: AECOM International Development DISCLAIMER: The authors’ views expressed in this document do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

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Contents ACRONYMS AND ABBREVIATIONS .................................................................................. 5 ACKNOWLEDGEMENTS ..................................................................................................... 6 EXECUTIVE SUMMARY ...................................................................................................... 7 ASSIGNMENT BACKGROUND ........................................................................................... 8 CHAPTER 1: DAIRY SECTOR MAPPING ........................................................................... 9

EGYPT’S DAIRY PRODUCTS VC OVERVIEW ........................................................................... 9 EGYPTIAN DAIRY SECTOR & VC OVERVIEW ........................................................................ 11

Animal Health .............................................................................................................. 11 Milk Production ............................................................................................................ 12 Mapping of Milk Production .......................................................................................... 14 Mapping of White Cheese Factories ............................................................................ 17 Consumption ................................................................................................................ 18 Export .......................................................................................................................... 20

CHAPTER 2: MAPPING AND ANALYZING DAIRY SUBSECTORS ................................. 30

A. MEETINGS WITH KEY DAIRY STAKEHOLDERS & SUPPORTING ORGANIZATIONS .................. 30 A.1. Egyptian Organization for Standardization and Quality (EOS) .............................. 30 A.2. Industrial Control Authority (ICA) .......................................................................... 32 A.3. Food and Agro Industries Technology Centre (FAITC) ......................................... 33 A.4. Food Export Council (FEC) ................................................................................... 33 A.5. Industrial Modernization Center (IMC) .................................................................. 35 A.6. Food Technology Research Institute (FTRI) – Dairy Technology Research Department (DTRD) ..................................................................................................... 35 A.7. Chamber of Food Industries (CFI), Federation of Egyptian Industries (FEI) .......... 36 A.8. Industrial Development Authority (IDA) ................................................................. 37 A.9. Micro, Small, and Medium Enterprises Development Agency (MSMEDA) ............ 38

B. VALIDATION VISITS TO DAIRY MSMES ACROSS EGYPT ................................................... 41 C. FOCUS GROUPS WITH KEY STAKEHOLDERS ................................................................... 41 D. DAIRY VC CONSTRAINTS AND BOTTLENECKS ................................................................. 42

D.1. Governmental Entities .......................................................................................... 42 D.2. Dairy Business Climate......................................................................................... 42 D.3. Dairy MSMEs level ............................................................................................... 44

E. DAIRY PRODUCTS MARKETING CHANNELS ...................................................................... 45 E.1. Vegetable Oil Cheese ........................................................................................... 46 E.2. Domiati Cheese .................................................................................................... 46 E.3. European Cheese, i.e. Gouda & Edam ................................................................. 46 E.4. Syrian Cheeses, i.e. Ackawi & Halloumi ............................................................... 46 E.5. Ghee..................................................................................................................... 46 E.6. Ras Cheese .......................................................................................................... 46 E.7. Malawi Cheese ..................................................................................................... 47 E.8. Processed Cheese ............................................................................................... 47 E.9. Instant-Milk-Powder Products ............................................................................... 47

CHAPTER 3: RECOMMENDED INTERVENTIONS ........................................................... 82 A. REVIEW OF PERVIOUS DAIRY VC PROJECTS ................................................................... 82

A.1. Dairy Processing MSMEs Development, FAITC, SFD and AfDB .......................... 82 A.2. Technical Assistance for the Improvement of the Quality of Milk and Dairy Products in Egypt, FAITC, AINIA and SCA ................................................................................. 82 A.3. Egypt – Dairy Sector Development, EU, 2012 ...................................................... 83 A.4. Ras Cheese Consortiums, FAITC and UNIDO, 2013 ............................................ 84 A.5. From Farm to Fork, Dairy Stakeholders Analysis, Knowledge Economy Foundation

USAID’s Strengthening Entrepreneurship and Enterprise Development (SEED)

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(KEF), 2015 ................................................................................................................. 84 A.6. Promoting Mediterranean Dairy Products, LACTIMED project, EU, 2015 ............. 85 A.7. Rural Income and Economic Enhancement (RIEEP) Project, ADB, 2015 ............. 85 A.8. USAID SEED Summary Analysis of VCs Assessment and Priorities for Interventions, September 26, 2016 .............................................................................. 86

B. SUGGESTED INTERVENTIONS TO IMPROVE THE DAIRY VC ............................................... 86 B.1. Technical Assistance ............................................................................................ 87 B.2. Technology Transfer ............................................................................................. 88 B.3. Training ................................................................................................................ 89 B.4. Quality .................................................................................................................. 91 B.5. Environment ......................................................................................................... 92 B.6. Marketing .............................................................................................................. 92 B.7. International Trade ................................................................................................ 94 B.8. Investment and Finance........................................................................................ 95

ANNEX I: VALIDATION VISITS TO DAIRY MSMES .......................................................... 97 1. Khair Company, Mahala Kobra, Gharbia .................................................................. 97 2. Event-Aga, Dakahlia ................................................................................................ 99 3. Habiba, Giza ............................................................................................................ 99 4. The Egyptian Lebanese Company, Monufia ........................................................... 100 5. Farm Cheese Company, 6 October, Giza .............................................................. 101 6. Egyptian Syrian Co. for Dairy Products, 6 October ................................................. 102 7. Arab French Company, Borg El-Arab Industrial Zone, Alexandria .......................... 104 8. Alfa Milk, Edku, Beheira ......................................................................................... 106 9. Awlad Gabr (AG), Kafr Eldawar, Beheira ............................................................... 107 10. Mohamed Elsharkawy drying store for adjusting cheese moisture, Beheira ......... 108 11. Miro, Arab Cultivators Tanbouli Co., Sadat .......................................................... 110 12. Abinar, Beheira .................................................................................................... 111 13. Alamir Malawi Cheese, Minya .............................................................................. 111 14. Horus, Malawi cheese, Minya .............................................................................. 113 15. Elfath, vegetable oil cheese, Minya ...................................................................... 113 16. Dairy Processing Unit, General Federation of NGOs, Minya ................................ 114 17. Small Dairy Farms, Minya .................................................................................... 115 18. Elsabagh, Domiati ................................................................................................ 116 19. Animal Rennet Manufacturer, Damietta ........................................................... 118 20. “Lotus” for Cheese Packaging Cans, Damietta ..................................................... 119 21. Healthy Milk, Sharkia ........................................................................................... 119 22. Dairy Land for Food Industries Alzahar, Sharkia .................................................. 120

ANNEX II: FOCUS GROUPS WITH KEY STAKEHOLDERS ........................................... 122 Focus Group 1: Dairy SMEs, Minya ........................................................................... 123 Focus Group 2: Dairy SMEs, Dakahlia ....................................................................... 124

ANNEX III: LIST OF AVAILABLE PRIOR DAIRY VC REPORTS .................................... 126 ANNEX IIII: TABLES ........................................................................................................ 128 REFERENCES: ................................................................................................................ 143


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LIST OF TABLES Table 1: Number of cases of communicable and infectious livestock and animal diseases by

governorate (top five), 2016 ......................................................................................... 11 Table 2: Numbers of cattle and sheep vaccinated, 2016 ..................................................... 11 Table 3: Number of cows and buffaloes treated for productivity diseases, 2016 .................. 12 Table 4: Cattle and animals treated for infertility and cases of artificial insemination by

governorate (top five), 2016 ......................................................................................... 12 Table 5: Quantity of domestic production and average per capita of milk, 2015 .................. 12 Table 6: Ratio of self-sufficiency for raw milk, 2015 ............................................................. 13 Table 7: Estimated numbers of livestock of cows, buffaloes, and goats (2004–15) ............. 13 Table 8: Local production of crude milk (2004–15) .............................................................. 13 Table 9: Percentage distribution of annual household expenditure in Egypt, by main and sub-

group (milk, cheese, and eggs) and by type (urban, rural) ........................................... 19 Table 10: Annual production and international trade, quantity available for consumption and

annual average per capita (kg) Q (tons) ....................................................................... 19 Table 11: Dairy product imports, exports, and trade balance, 2017 (thousand $) ................ 21 Table 12: Exported dairy products annually by volume (2012–17) (top five) ........................ 25 Table 13: Tariff numbers and rates of milk and dairy products amended (2013–16) ........... 28 Table 14: Divisions of the CFI by membership (March 11, 2018) ........................................ 36 Table 23: SEED summary analysis of Dairy VC assessment .............................................. 86 Table 15: Prices of raw materials for vegetable oil cheese in Gharbia, March 2018 ............ 97 Table 16: Consumer prices of dairy products in Giza ........................................................ 100 Table 17: Syrian cheese wholesaler, consumer, and export prices ................................... 103 Table 19: Feed recipe and prices in a small farm in Minya ................................................ 115 Table 22: Cheese prices of wholesalers in Damietta Governorate .................................... 117 Table 24: Central Bank of Egypt (CBE) definition of MSMEs ............................................. 128 Table 25: Tariff numbers and custom rates for detailed dairy products ............................. 129 Table 26: Time trend analysis for cattle heads development (2004–15) ............................ 133 Table 27: Time trend analysis for crude milk production (2004–15) ................................... 133 Table 28: Gross expenditure, number of enterprises, and employment opportunities for milk

and dairy sector MSMEs financed by MSMEDA in 2017 by governorate ................... 134 Table 29: Governmental entities & NGO representatives attending focus group on discussing

Dairy VC recommended interventions (June 4, 2018) ................................................ 135 Table 30: Dairy VC field visit questionnaire ....................................................................... 136 Table 31: Focus group questionnaire ................................................................................ 142 LIST OF FIGURES Figure 1: Egyptian Dairy VC 10 Figure 2: Milk quantities from cows, buffaloes, and total cattle, 2016 (liter) 14 Figure 3: Governorates & districts by cow milk production (top ten), 2016 15 Figure 4: Cow milk quantities by cow strain (local, mixed, and foreign), 2016 16 Figure 5: Governorates by buffalo milk production (top ten) 16 Figure 6: Governorates by total cow and buffalo milk production (top ten) 17 Figure 7: Distribution of white cheese factories by governorate, 2016 18 Figure 8: Maximum and actual capacity of white cheese factories, 2015 18 Figure 9: Importers of Egyptian milk, dairy, bird eggs, natural honey, and edible products

2012–17 (top four) (million $) 22 Figure 10: MSMEDA expenditure on financing dairy MSMEs by governorate, 2017 39 Figure 11: Number of MSMEDA-financed dairy MSMEs by governorate, 2017 40 Figure 12: Employment opportunities for MSMEDA-financed MSMEs by governorate, 2017

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ACRONYMS AND ABBREVIATIONS

AECID Spanish Agency for International Development Cooperation AfDB African Bank for Development AHRI Animal Health Research Institute AOAD Arab Organization for Agricultural Development ARC Agricultural Research Center CBE Central Bank of Egypt DTRD Dairy Technology Research Department EBWA Egypt Business Women Association ECS Egyptian Commercial Services EITPs Egyptian International Trade Points EOS Egyptian Organization for Standardization and Quality EU European Union FAITC Food and Agro Industries Technology Center FDA Food and Drug Administration FEC Food Export Council FEI Federation of Egyptian Industries FIC Food Industries Chamber FTRI Food Technology Research Institute GAFI General Authority for Investment and Free Zones GCC Gulf Cooperation Council GDP Gross Domestic Product GOE Government of Egypt GOEIC General Organization for Export and Import Control ICA Industrial Control Authority ICTI Industrial Council for Technology and Innovation IDA Industrial Development Authority ILO International Labor Organization ISO International Organization for Standards IMC Industrial Modernization Center KEF Knowledge Economy Foundation KSD Knowledge Company for Sustainable Development MALR Ministry of Agriculture and Land Reclamation MoF Ministry of Finance MoFA Ministry of Foreign Affairs MoHP Ministry of Health and Population MPC Milk Protein Concentrate MSIT Ministry of Supply and Internal Trade MSME Micro, Small and Medium Enterprises MSMEDA Micro, Small and Medium Enterprises Development Agency MTI Ministry of Trade and Industry NFSA National Food Safety Authority NGO Non-Governmental Organization NNI National Nutrition Institute RIEEP Rural Income and Economic Enhancement SEED Strengthening Entrepreneurship and Enterprise Development SFD Social Fund for Development TBTT Technical Barriers to Trade TOT Training of Trainers UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development VC Value Chain WTO World Trade Organization


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ACKNOWLEDGEMENTS

This publication was made possible as a result of the support provided by the Ministry of Trade and Industry (MTI) and the Federation of Egyptian Industries (FEI), as the main partners for USAID’s Strengthening Entrepreneurship and Enterprise Development (SEED) Project. The authors wish to express their sincere gratitude to the representatives of the following agencies:

• The Micro, Small & Medium Enterprises Development Agency (MSMEDA) • The Food and Agro Industries Technology Center (FAITC) • Food Export Council (FEC) • Food Technology Research Institute (FTRI) • The Chamber of Food Industries (CFI) and its Dairy Division • Egyptian Organization for Standards (EOS) • Industrial Modernization Center (IMC) • Industrial Control Authority (ICA) • Industrial Development Authority (IDA)

Furthermore, the authors would like to thank the representatives of micro, small, and medium-sized dairy-producing and processing enterprises, dairy manufacturing raw material importers, development agencies, large dairy processors, and other governmental agencies that have given USAID’s SEED Project critical support and insight on the bottlenecks that the dairy value chain (VC) faces in Egypt, as well as suggested solutions and approaches for integrating MSMEs into the VC. This report is a product of the “Dairy Value Chain Mapping and Assessment” assignment (February – June 2018) completed by USAID SEED


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EXECUTIVE SUMMARY

This study provides an in-depth sub-sector analysis to assess possible bottlenecks, constraints, and opportunities within the Dairy VC, especially for integrating MSMEs in the VC and defining required interventions to address the identified reasons for bottlenecks and constraints. The report is divided into three main chapters. The first, “Dairy Sector Mapping,” provides an overview of Egypt’s Dairy VC and highlights the dairy sector’s critical issues such as animal health, milk production, white cheese processing, consumption, exports, customs, and tariff rates. The second, “Mapping and Analyzing Dairy Subsectors,” categorizes the key market players and supporting organizations in the Dairy VC, as well obstacles and suggested interventions from stakeholders’ points of view to improve the Dairy VC, drawing upon previous studies and key sources. Three informative tools were employed: a semi-structured survey with key dairy stakeholders, a questionnaire with representatives of dairy SMEs across the Dairy VC, and focus group discussions. The third chapter, “Perceived and Recommended Interventions,” outlines previous projects’ efforts to integrate the Egyptian Dairy VC. Also included are suggested and needed interventions to improve the Dairy VC based on perceived obstacles surveyed in Chapter 2. The recommended interventions are classified under eight main categories:

1. technical assistance 2. technology transfer 3. training 4. quality 5. environment 6. marketing 7. export 8. investment & finance


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ASSIGNMENT BACKGROUND

The main tasks of this assignment were as follows:

• Review all available prior reports, including the Value Chains Assessment Study1 and those funded by the donor community, relevant to the VC;

• Develop a physical mapping of the sub-sector VC that includes, among others: o Illustration of the process and flow of a product from raw material through final

sale, showing all of the key participants and stages of the VC; o Identifying and categorizing the key market players and supporting organizations

including governmental entities, quasi-government, private-sector large and SME businesses, business and sector associations and institutions; service providers, consumer groups, etc.

o Profile MSMEs in the VC; illustrate estimated numbers, types, and sizes of contribution in the VC, as well as their geographic distribution, formal and organic (unplanned) clusters, representing associations/institutions;

o Illustration of market channels through which products reach the final customer and end markets;

o For the end markets, check tariff structure on imported dairy products and subsidies for exported dairy products to conclude whether domestic products are protected with high tariffs and whether exported products are subsidized/supported by the government.

• Conduct an in-depth sub-sector analysis to assess possible bottlenecks, constraints, and opportunities within the VC, especially for the integration of MSMEs in the VC. This would include, among others, conducting interviews and consultation sessions, focus group discussions, and roundtable meetings with representatives of key VC stakeholders to:

o Identify the underlying reasons for bottlenecks/constraints that are preventing the VC from creating and offering opportunities for MSMEs to develop and integrate into the VC;

o Identify opportunities that have the potential to expand the engagement and integration of MSMEs in the VC;

o Define required interventions to address the real reasons identified for bottlenecks and constraints and highlight if any interventions are currently underway by governmental entities, quasi-governmental organizations, private-sector companies, NGOs, and/or donor or development partners of Egypt;

o Assess the capacity of (and incentives for) key stakeholders to respond and engage in potential interventions, as defined below; and

o Highlight pathways to leverage identified opportunities and sustain defined interventions.

• Give recommendations on proposed interventions, with as much specificity as possible. • Recommend names of entities and/or individual stakeholders to act as champions or to

join an informal task force to facilitate and support SEED managing and implementing the recommended interventions.

• Participate in a workshop organized and facilitated by SEED with broader representation of VC stakeholders to present the mapping, assessment findings, and conclusions, as well as proposed interventions by SEED. The purpose of the workshop is to validate the results of the study and to articulate SEED’s development intervention approach.

1 USAID’s’ SEED Project, Value Chains Assessment Study, September 25, 2016.


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CHAPTER 1: DAIRY SECTOR MAPPING

Egypt has a competitive advantage in milk and dairy production, which is one of the main sources of animal protein for impoverished communities. In 2015, Egypt produced about 5.59 million tons of dairy products, while exporting dairy products equivalent to 1.07 million tons of milk with a total value of $408.7 million (AOAD, 2016). The same year, Egypt imported about 1.42 million tons with a total value of $839.4 million, while the trade balance deficiency of milk and dairy products reached $430.3 million. The total consumption deficit was around 5.95 million tons; the self-sufficiency ratio was around 94.10%. In 2015, dairy production was lower than the (2008–12) average by 3.62% (Ministry of Agriculture and Land Reclamation (MALR, 2016)). The number of registered white-cheese factories reached 1,147, having a capacity to receive 0.58 million tons of milk and produce 0.16 million tons of cheese. However, these plants received only 0.38 million tons of milk and produced only 0.10 million tons, representing 64.59% and 37.06% of their respective operating capacity in the same year. This may reflect the deteriorated situation in this vital Egyptian agricultural sector, despite local and international projects, to be discussed in detail in Chapter 3, aiming to improve the efficiency and performance of the Egyptian dairy sector over the last decade. However, technical support efforts are not enough to achieve the desired goals alone. What must also be in place are integrated marketing, financing, legislation, and regulatory and trade policies.

EGYPT’S DAIRY PRODUCTS VC OVERVIEW

The Dairy VC in Egypt, as illustrated in Figure 1 below, consists mainly of three levels: the main VC, secondary VC, and organizational VC. Dairy VC First Level: The first VC level starts from pre-raw milk production, raw milk production, milk collection, milk and dairy product manufacturing, post-milk manufacturing treatments, and dairy product wholesaling, retailing, and exporting. Dairy VC Second Level: The second level consists of importing milking and dairy production accessories (i.e., powder milk, fat milk substitutions, stabilizers, emulsifiers, rennet, colors, packaging, materials, packaging materials, and salt), importing milking and dairy production equipment, manufacturing milking and dairy production accessories, and manufacturing milking and dairy production equipment. Dairy VC Third Level: The third level, or what would be called the organizational VC, consists of technical assistance, vocational training, technology transfer and innovation, research and development, and financial and information systems.

In 2015, dairy products represented 27.1% and 9.7% of the total animal production value and total agricultural production value, respectively (CAMPAS, census 2017, chapter 5; agriculture).


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Figure 1: Egyptian Dairy VC

Pre-Raw Milk Production

Vetinerary services

Feeding

Raw Milk Production

Rural households

Small business

farms

Specialized farms

Milk Collection

Milk collection

points

Milk collection

centers

Milk & Dairy Product

Manufacturing

Manufacturing different kinds

of milk and dairy

products, i.e., Domiate

chees, Ras cheese, UHT

milk.

Post-milk Manufacturing

Treatments

Cold storage

Moisture adjusting

Packaging

Dairy Products

Wholesaling

Wholesale traders

Hypermarkets

Dairy Products Retailing

Grocers

Dairy product

workshops

Exporting Dairy

Products

Importing of Milking & Dairy

Production Accessories

Importing of Milking & Dairy

Production Equipment

Manufacturing of Milking & Dairy

Production Accessories

Maunfacturing of Milking & Dairy

Production Equipment

Technical Assistance

VocationalTraining

TechnologyTransfer &Innovation

Research &Develoment Finance Information

Systems


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EGYPTIAN DAIRY SECTOR & VC OVERVIEW

This section highlights critical issues in the dairy sector, such as: animal health, milk production, white cheese processing, consumption, export, customs, and tariff rates.

Animal Health

Although buffaloes are more resistant to diseases in comparison with cows, their fertilization rates are lower; therefore, livestock numbers of cows are increasing while buffaloes are decreasing. Foot and mouth disease (FMD)2 was discovered in cattle in 320 locations across Egypt in 2016, an increase of 219 locations in 2015. This increase in infection rates was due to new strains of foot and mouth disease virus being discovered that are immune to currently available vaccines or serums. Lumpy skin disease3 reached 59 locations across Egypt in 2016, up from 44 locations in 2015, an increase of 34.1%, which was due to the infectiveness of treatment methods, vaccines, and serums used in some governorates. For example, the governorates of Qena, Kafr El-Sheikh, and Beni Suef recorded the highest infection rates, with 33 locations across these governorates registering infected cattle, representing 55.9% of the total number of cases nationwide.4 As shown in Table 1, the number of heads infected with FMD and lumpy skin disease in Egypt was estimated at 379, with the majority being FMD with 320 cases. The governorates with the highest amounts of infections of both diseases were Beni Suef (62), Dakahlia (43), Qena (34), Kafr El-Sheikh (33), and Beheira (26), representing 52% of the total number of cases in the country in the same year. Table 1: Number of cases of communicable and infectious livestock and animal diseases by governorate (top five), 2016

Governorates (Top Five)

FMD Lumpy Skin Disease

Total

Beni Suef 52 10 62 Dakahlia 39 4 43

Qena 22 12 34 Kafr El-Sheikh 22 11 33

Beheira 25 1 26 National Total 320 59 379

Source: CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017 Table 2 indicates that 6.7 million cattle 5.1 million sheep were vaccinated in 2016 against triple vaccine strains of FMD and Rift Valley fever. That same year, 1.7 million cattle and 0.54 million sheep were vaccinated against lumpy skin and Hemorrhagic Septicemia. Table 2: Numbers of cattle and sheep vaccinated, 2016

2 Foot and mouth disease (FMD) is a viral disease, a highly contagious epidemic that affects cloven-hoofed animals; it also affects humans, especially children. The virus spread rapidly through the air, tools, and animal products contaminated with the virus. (CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017). 3 Lumpy skin disease is a viral infection that does not affect humans and infects cattle through insects such as flies and mosquitoes, or through touching infected salvia or contaminated instruments. (Center Agency for Public Mobilization and Statistics (CAPMAS), Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017.) 4 CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017.


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Vaccine Cows Buffaloes Sheep Goats Total Triple vaccine strain of FMD

3,716,354 1,966,823 80,316 170,817 6,664,310

Rift Valley fever

2,874,608 1,543,510 585,470 109,767 5,113,355

Lumpy Skin 1,654,344 - 34,788 7,013 1,696,145 Hemorrhagic Septicemia

315,251 174,279 43,385 5,194 538,109

Source: CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017 Table 3, below, shows that in 2016 an estimated 28,533 cows and 18,014 buffaloes were treated for udder disease. The same year, an estimated 38,670 cows and 24,273 buffaloes were treated for neonatal disease. Table 3: Number of cows and buffaloes treated for productivity diseases, 2016

Cattle Udder disease

Neonatal disease Respiratory

System Gastrointestinal

System Food

Shortage Surgical Cases

Total

Cows 28,533 3,979 4,787 916 455 38,670 Buffaloes 18,014 1,911 2,249 1,778 321 24,273

Source: CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017 In 2016, a total of 368,140 cases of artificial inseminations were performed in Egypt. Of these cases, 66% were performed in only five governorates: Assiut, Beni Suef, Fayoum, Beheira, and Monufia, as shown in Table 4. In the same year, there were 185,582 cases treated for infertility, 45.2% of them in Beheira, Fayoum, Monufia, Beni Suef, and Assiut. Table 4: Cattle and animals treated for infertility and cases of artificial insemination by governorate (top five), 2016

Governorate Cases of artificial

insemination

Cases have been treated for infertility

Total

General Total 368,140 185,582 553,722 Assiut 57,530 4,842 62,372

Beni Suef 53,845 7,456 61,301 Fayoum 53,192 16,103 69,295 Beheira 40,738 40,058 80,796 Monufia 38,258 15,487 53,745

Source: CAPMAS, Annual Bulletin of Animal and Poultry Disease Statistics 2016, June 2017

Milk Production

As shown in Table 5, domestic milk production in Egypt was estimated at 5,787 tons in 2015, with net amounts targeting food purposes reaching about 5,482 tons. In the same year, per capita milk consumption was estimated at 61.6 kg annually. Table 5: Quantity of domestic production and average per capita of milk, 2015

Domestic production

International trade

Available supply

Seed Losses Food Per capita (kg)

Import Export


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5.787 1 9 5,778 85 211 5,482 61.6 Source: CAPMAS, annual bulletin of agricultural commodities 2015, January 2017. Egyptian Population at midyear almost 89 million people Q: thousand tons. As shown in Table 6, domestic production exceeded consumption and therefore self-sufficiency in raw milk production in Egypt for 2015 was estimated at 100.1%. Domestic production was estimated at 5.245 thousand tons, while milk available for consumption was estimated at 5,238 thousand tons. Table 6: Ratio of self-sufficiency for raw milk, 2015

Ratio of self-sufficiency

Available for consumption

Domestic production

Raw milk 100.10% 5,238 5,245 Source: CAPMAS, Annual Bulletin of Agricultural Commodities 2015, January 2017. Q: thousand tons Table 7 reveals the average number of cows (4.73 million), buffaloes (3.93 million), and goats (3.87 million) during the period 2004–15. Table 7: Estimated numbers of livestock of cows, buffaloes, and goats (2004–15)

Year Cows Slaughtered cows

Buffaloes Slaughtered buffaloes

Goats Slaughtered goats

2015 4,883 47 3,702 390 4,046 19 2014 4,762 41 3,949 440 4,186 17 2013 4,745 43 3,915 531 4,153 13 2012 4,946 35 4,165 512 4,306 13 2011 4,780 27 3,983 458 4,258 14 2010 4,729 42 3,818 443 4,175 21 2009 4,369 82 3,845 659 4,139 25 2008 4,485 103 3,885 793 4,473 25 2007 4,610 79 3,937 596 4,211 21 2006 4,933 76 4,105 625 8,377 23 2005 5,023 56 4,053 505 3,803 17 2004 4,525 89 3,839 722 3,879 17 Avg. 4,732 60 3,933 556 4,501 19 Min 4,369 27 3,702 390 3,803 13 Max 5,023 103 4,165 793 8,377 25

Source: CAPMAS, census 2017, chapter 5; agriculture. Q: thousand The time trend analysis as seen in Table 26 (see Annex II) reveals that the number of cows and buffaloes has not changed significantly in the last decade, while there has been a significant increase of about 1.9% in goat herds. On the other hand, slaughtered cattle have increased significantly in the last decade; annual slaughtering rates have increased for cows (7.7%), buffaloes (4.1%), and goats (2.3%). As shown in Table 8, average crude milk production during the period 2004–15 was estimated at 5.61 million liters, with a minimum of 4.82 million liters in 2004 and a maximum of 5.89 million liters in 2006. The average participation of cows, buffaloes, and goats in total crude milk production in the same period was 2.89, 2.60 and 0.127 million liters, respectively. Table 8: Local production of crude milk (2004–15)


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Year Total Cows Buffaloes Goats 2015 5,245 2,729 2,394 122 2014 5,601 2,553 2,923 125 2013 5,554 2,908 2,523 123 2012 5,849 3,154 2,565 130 2011 5,803 3,107 2,568 128 2010 5,774 2,995 2,653 126 2009 5,624 2,803 2,697 124 2008 5,980 3,211 2,641 128 2007 5,925 3,187 2,610 128 2006 5,787 2,980 2,679 128 2005 5,551 2,802 2,622 127 2004 4,682 2,282 2,267 133

Average 5,614.583 2,892.583 2,595.167 126.833 Min 4,682 2,282 2,267 122 Max 5,980 3,211 2,697 133

Source: CAPMAS, census 2017, chapter 5; agriculture. As shown in Table 26 (see Annex II), total crude milk production has not changed significantly in the last decade, nor has cow and buffalo crude milk production. However, in the same period there has been a slight increase of 0.45% in goat crude milk production.

Mapping of Milk Production

Figure 2 states that Lower Egypt is the largest source of crude milk, with 2.70 million liters representing 54.4% of total crude milk production in Egypt in 2016. Upper Egypt, Middle Egypt, and the governorates outside the Nile valley were responsible for 19.1%, 18.6%, and 7.9% of total milk production, respectively. Cow milk was the dominant source of milk in Lower Egypt and governorates outside the Nile valley, while buffalo milk was the primary source of milk in Upper and Middle Egypt. Figure 2: Milk quantities from cows, buffaloes, and total cattle, 2016 (liter)

Source: MALR, Animal Wealth development sector, 2017.

2,62

9,90

2

344,

705

455,

552

425,

096

1,40

4,54

92,33

4,29

3

45,2

98 492,

255

501,

606 1,

295,

134

4,96

4,19

5

390,

003

947,

807

926,

702

2,69

9,68

3

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Total Egypt Outside Nile Valley Upper Egypt Middle Egypt Lower Egypt

Cows Buffaloes Total Cattle


15

As shown in Figure 3, below, Beheira Governorate, and specifically its district of Nubaria, is the leading governorate for cow milk production in Egypt in 2016, combining for a total share of 26%. Assiut Governorate was the second governorate in producing cow milk, ahead of Sharkia and then Gharbia. Cumulative production of the above-mentioned four governorates represented about 48% of total cow milk production. Cumulative production of the above-mentioned four governorates in addition to Monufia, Kafr El-Sheikh, Beni Suef, Minya, and Sohag represented 73% of cow milk production in 2016. Figure 3: Governorates & districts by cow milk production (top ten), 2016

Source: MALR, Animal Wealth development sector, 2017 As illustrated in Figure 4, mixed-strain cows produced 56% of cow milk in 2016, while pure local and foreign strains were responsible for 26% and 18% of cow milk production, respectively. Mixed-strain cows were the dominant source of cow milk in Lower and Upper Egypt; furthermore, mixed-strain cow participation in cow milk production was significantly higher in Lower Egypt in comparison with Upper Egypt in that same year. On the other hand, Middle Egypt depended mainly on local strains in producing cow milk, while the governorates outside the Nile valley depended on foreign strains in their cow milk production.

117,840

120,840

130,357

134,961

145,471

188,355

191,580

194,714

260,953

419,794

0 50000 100000 150000 200000 250000 300000 350000 400000 450000

Sohag

Minya

Beni Suef

Kafr El-Sheikh

Monufia

Gharbia

Sharkia

Assiut

Nubaria

Beheira

Cow Milk Production (tons)


16

Figure 4: Cow milk quantities by cow strain (local, mixed, and foreign), 2016

Source: MALR, Animal Wealth development sector, 2017. Regarding buffalo milk production, Figure 5 indicates that Beheira and Monufia Governorates together produced about 23% of Egypt’s buffalo milk in 2016. Accumulative buffalo milk production of the first 10 governorates were as follows: Beheira, Monufia Sharkia, Minya, Gharbia, Sohag, Qena, Fayoum, Assiut, and Dakahlia produced about 72% of Egypt’s buffalo milk in 2016. Figure 5: Governorates by buffalo milk production (top ten)

Source: MALR, Animal Wealth development sector, 2017 Figure 6 states that Beheira is the top producing governorate of total cow and buffalo milk in 2016, with about 695,000 tons representing 14% of Egypt’s total cow and buffalo milk

695,

033

28,0

08 184,

692

253,

132

229,

201

1,46

2,68

9

103,

037

224,

370

137,

118

998,

164

472,

180

213,

660

46,4

90

34,8

46 177,

184

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Total Egypt Outside NileValley

Upper Egypt Middle Egypt Lower Egypt

Baladi (Local) Mixed Foreign

113,606

119,231

126,589

134,366

143,561

153,309

174,794

195,895

247,811

275,751

0 50000 100000 150000 200000 250000 300000

Dakahlia

Assiut

Fayoum

Qena

Sohag

Gharbia

Minya

Sharkia

Monufia

Beheira

Governorates by buffalo milk production (top ten)


17

production that year. Monufia, Sharkia, Gharbia, Assiut, Nubaria, Minya, Sohag, Fayoum, and Kafr El-Sheikh combined for about 56% of Egypt’s cow and buffalo milk production in the same year. Figure 6: Governorates by total cow and buffalo milk production (top ten)


Mapping of White Cheese Factories

According to the Ministry of Agriculture and Land Reclamation (MALR), there were 1,147 white cheese factories in 2015, with an engineering capacity designed to receive about 0.58 million tons of milk and to produce 0.16 million tons of white cheese. The actual amounts of milk received in those factories in 2015 were only about 0.38 million tons (utilization rate of about 64%) and the factories produced only 0.10 million tons of white cheese (utilization rate of about 65%). Although Dakahlia Governorate has not been listed as a top-ten producer of total cow and buffalo milk, it was, however, the governorate with the highest number of white cheese factories in 2015, with 332 factories representing 29% of registered white cheese factories that year, according to the Food Security Administration (FSA), affiliated with the MALR, that number increased to 1,147 factories in the same year. As seen in Figure 7, Dakahlia, Sharkia, Beheira, Fayoum, Minya, Kafr El-Sheikh, Damietta, and Gharbia are considered as top-class Egyptian producers of white cheese in terms of number of factories, with 82% of white cheese factories located in these seven governorates. Damietta Governorate was considered the number one governorate in terms of the production capacity of white cheese (0.28 million tons), ahead of Alexandria, Dakahlia, Giza and 6 October, Sharkia, Gharbia, Kafr El-Sheikh, Port Said, Nubaria, Monufia, Fayoum, Minya, and Cairo. Although Damietta has the biggest capacity for white-cheese production, Damietta utilizes less than 59% of its white-cheese production capacity. As shown in Figure 8, the highest-ranking governorates in utilization rates of their white cheese capacities were as follows: Beheira (87%), Sharkia (71%), Fayoum (71%), Kafr El-Sheikh (70%) and Monufia

242,091

243,826

261,401

295,637

305,126

313,945

341,664

387,475

393,282

695,545

0 100000 200000 300000 400000 500000 600000 700000 800000

Kafr El-Sheikh

Fayoum

Sohag

Minya

Nubaria

Assiut

Gharbia

Sharkia

Monufia

Beheira

Governorates by total cow and buffalo milk production (top ten)


18

(70%). Figure 7: Distribution of white cheese factories by governorate, 2016


Figure 8: Maximum and actual capacity of white cheese factories, 2015 Source: MALR, Animal Wealth development sector, 2017

Consumption

According to an income, expenditure, and consumption survey published by CAPMAS, as seen in Table 9, the expenditures of an Egyptian household on food and non-alcoholic

1 1 2 3 3 3 5 8 10 10 15 18 1934

78 85 91 94 102116 117

332

0

50

100

150

200

250

300

350

Distribution of white cheese factories by governorate, 2016

870

1,00

5

1,05

5

1,15

3

475 1,50

0 5,33

4

2,03

9

8,99

8

9,33

0 13,2

07

19,3

94

19,4

20

16,6

31

980

1,62

8

1,70

6

1,79

6

1,92

0

2,00

0

7,63

7

9,53

2 12,9

38 16,9

06

18,7

32 22,2

17 27,5

21

28,1

91

0

5000

10000

15000

20000

25000

30000

Maximum Capacity Actual Production


19

beverages in 2015 was estimated at 34.4% in all of Egypt, 30.4% in urban Egypt, and 38.9% in rural Egypt. Table 9: Percentage distribution of annual household expenditure in Egypt, by main and sub-group (milk, cheese, and eggs) and by type (urban, rural)

Main and sub-group (milk, cheese, and egg) of expenditure

Total Egypt

Urban Egypt

Rural Egypt

Food and non-alcoholic beverages 34.40 30.40 38.90 Bread and cereals 39 3.30 4.50

Meat 10.30 9.20 11.50 Fish and seafood 2.30 2.20 2.40

Milk, cheese, and eggs 4.70 4.70 4.70 Oils and fats 2.70 2.10 3.40

Fruits 2.20 2.00 2.40 Vegetables 4.80 3.80 5.80

Sugar, Jam, honey, chocolate, and confectionary 1.60 1.30 1.90 Other food products 0.70 0.60 0.80

Non-alcoholic beverage 1.30 1.30 1.30 Source: Income, expenditure & consumption survey 2015, CAPMAS, September 2016. Table 9 also reveals that expenditures of an Egyptian household on milk, cheese, and eggs represented about 4.70% of total consumption in total Egypt as well as in urban and rural Egypt. As shown in Table 10, in 2013–14 the quantity available for consumption of pasteurized milk was 216,969 tons; the actual production of pasteurized milk was 154,208 tons, from which 5,310 tons were exported and the remaining consumption estimated at 65,820 tons was imported. Table 10: Annual production and international trade, quantity available for consumption and annual average per capita (kg) Q (tons)

Product Actual production International Trade (Q)

Quantity available for consumption

Per capita (kg) Q V Export Import

Pasteurized milk

154,208 1,218,243 5,310 65,820 216,969 2.50

Yoghurt 74,972 1,122,406 444 41 74,533 0.90

White cheese 149,012 2,421,483 56,602 34,853 128,800 1.50

Hard cheese and blue cheese

1,942 95,052 42 2,323 3,807 =

Ghee 34,132 1,476,516 1,670 7,661 40,030 0.50

Ice cream and ice cream powder

33,063 664,744 823 879 33,121 0.40

Processed cheese

13,2081 2,557,885 78,470 5,681 56,684 0.70

Source: CAPMAS, Annual Bulletin of the Movement of Production, Foreign Trade & Available for Consumption of Most Important Industrial Commodities (Public and Private Sectors), (2013/2014), August 2016. The available quantity of yoghurt for consumption was estimated at 74,533 tons in 2013–14;


20

the actual production of yoghurt was 74,972 tons, from which 444 tons were exported, while only 41 tons were imported. Thus, the yoghurt trade balance was positive in the same year. The amount of white cheese available for consumption was 128,800 tons, while the actual production was 149,012 tons, from which 56,602 tons were exported and 34,853 tons were imported to fulfill needed consumption. The category of hard cheese and blue cheese, including Ras cheese, achieved a negative trade balance, where Egypt exported only 42 tons in the production year 2013–14. In this category, the available consumption amount was 3,807 tons, almost twice as much as the actual production of hard and blue cheese, which was estimated at 1,942 tons in the same production year. In the same production year (2013–14), there were an estimated 40,030 tons of ghee available for consumption; of this, only 34,132 tons were actually produced, from which 1,670 tons were exported, with the remaining available amounts for consumption (7,661 tons) exported. Thus, ghee achieved a negative net trade balance. For ice cream and ice cream powder, 33,063 tons were actually produced, almost equal to the available consumption rate estimated at 33,121 tons in the same production year. Quantities of exported ice cream and ice cream powder were estimated at 823 tons, slightly less than the estimated imported amounts of 879 tons, causing a slight negative trade balance. In this same period, Egypt produced a huge amount of processed cheese, estimated at 132,081 tons. Imported amounts were estimated at 5,681 tons, while an estimated 78,470 tons were exported to attain a positive net trade balance. The quantity available for consumption was estimated at 56,684 tons in the same production year. Table 10 shows that per capita consumption of pasteurized milk and white cheese were estimated at 2.50 kg and 1.50 kg, respectively. Per capita consumption of other daily products was as follows: yoghurt (0.90 kg), processed cheese (0.70 kg), hard cheese and blue cheese (0.50 kg), ghee (0.50 kg), and ice cream and ice cream powder (0.40 kg).

Export

Egypt exports dairy products to more than 70 countries, 10 of which receive more than 87% of Egyptian dairy product exports, namely: Saudi Arabia, Jordan, Iraq, Libya, Yemen, Oman, Lebanon, United Arab Emirates (UAE), Kuwait, and Palestine (Food Export Council, 2018). Although the African market is a potential one for Egyptian dairy products, it receives less than 2% of the Egyptian dairy product exports. The leading African countries for importing Egyptian dairy and cheese products are as follows: Madagascar, Djibouti, Ethiopia, Senegal, Democratic Republic of the Congo, Malawi, Niger, Guinea, and Ghana. In 2017, there were 192 companies for exporting Egyptian dairy products, from which only eight are members in the Food Exports Council (FEC), accounting for nearly 75% of Egyptian dairy exports. Egypt’s exports represented 7.8% of global exports of processed cheese in 2016. The country is ranked fourth in the world in terms of exporting processed cheese. From the data in the trade maps detailed in Table 11, Egypt’s total export volume from dairy products in 2017 was about $303.70 million, while estimated total imports were $471.80 million, causing a negative trade balance of $168.20 million. Four of the six main dairy groups achieved a negative trade balance, especially product codes 0402 and 0405, which contain milk powder, Milk Protein Concentrate (MPC), and butter and ghee, in addition to product codes 0404 and 0403, which contain Whey Protein Concentrate (WPC), buttermilk,


21

and curdled milk and cream. Table 11: Dairy product imports, exports, and trade balance, 2017 (thousand $)

Product code

Product label Export Import Trade Balance

0401 Milk and cream, not concentrated nor containing added sugar or other sweetening matter

8,635 470 8165

0402 Milk and cream, concentrated or containing added sugar or other sweetening matter

19,380 185,777 -166,397

0403 Buttermilk, curdled milk and cream, yogurt, kephir, and other fermented or acidified milk and ...

20 335 -315

0404 Whey, whether or not concentrated or containing added sugar or other sweetening matter; products ...

111 57,525 -57,414

0405 Butter, incl. dehydrated butter and ghee, and other fats and oils derived from milk; dairy ...

2,036 120,326 -118,290

0406 Cheese and curd 273,494 107,395 166,099 Total 303,676 471,828 -168,152

Source: Trade Map. Last accessed June 14, 2018. Figure 9 states that the four most important countries in 2017 for Egyptian milk, dairy products, bird eggs, natural honey, and edible products were Jordan, Iraq, Saudi Arabia, and Libya, where the cumulative export volume during the period (2012–16) was $1.3 billion, $539.4 million, $169.3 million, and $54.3 million, respectively. According to data from Export Development Authority (EDA), 96.77% of Egypt’s export volume in 2017 consisted of five main products:

1. processed cheese (not grated or powdered) 2. Fresh white cheese (without any further treatments) 3. Other cheese types 4. Skimmed milk (F≤1%) 5. Powder milk (F≥1.5%) (unsweetened powder milk)

Processed cheese exports represented 58.57% of total export volume, followed by fresh white cheese without any further treatments, which represented about 24.30% of export volume of dairy products in the same year.


22

Figure 9: Importers of Egyptian milk, dairy, bird eggs, natural honey, and edible products 2012–17 (top four) (million $)

Source: EDA website, last accessed June 13, 2018. As shown in Figure 10, the five following countries led in 2017 in terms of importing the greatest estimated volumes of Egyptian processed cheese:

1. Saudi Arabia ($40.3 million) 2. Jordan ($25 million) 3. Iraq ($20 million) 4. Libya ($18.7 million) 5. Oman ($18 million).

In addition to these five countries, Oman, South Sudan, Lebanon, UAE, Kuwait, Palestine, Qatar, Syria, and Madagascar were considered the most important for exported Egyptian processed cheese. According to Table 12, the average export volume during the period 2012–17 was estimated at $364.9 million, with a minimum of $158 million in 2016 and a maximum of $240.5 million in 2012. The export growth rate of processed cheese was estimated at an average of -5.2% during the period (2012–17), with a negative growth rate as a minimum estimated at -27.4% in 2016 and a maximum of 5.7% in 2017.

1,300.00

539.40

169.30

54.30

Jordan Iraq Saudi Arabia Libya


23

Figure 10: Top five importers of Egyptian processed cheese ($million) 2017

Source: EDA website, last accessed 13 June 2018. Figure 11 states that in 2017 the most important countries for Egyptian white cheese without any further treatment, according to export volume, were Saudi Arabia ($25.6 million), Jordan ($11.8 million), Lebanon ($8.8 million), Kuwait ($7.1 million), and the United States ($5.5 million). Figure 11: Top five importers of Egyptian fresh white cheese without any further treatments ($million), 2017

Source: EDA website, last accessed 13 June 2018. In addition to these countries, the next highest-ranking countries in 2017 for exporting white cheese without any further treatment were as follows: UAE, Palestine, Libya, Qatar, Yemen,

40.30

25.0020.00

18.70

18.00

Saudi Arabia Jordan Iraq Libya Oman

25.60

11.80

8.80

7.10

5.20

Saudi Arabia Jordan Lebanon Kuwait UAE


24

Syria, Russia, and Turkey. Table 12 shows that the average export volume of white cheese without any further treatment during the period 2012–17 was estimated at $154.1 million, with a minimum of $77 million in 2017 and a maximum of $104.3 million in 2014. The export growth rate of white cheese without any further treatment was estimated at -1.1% on average during the period 2012–17, with a negative growth rate as a minimum estimated at -13.9% in 2016 and a maximum of 20.2% in 2013. Figure 12 shows the top five countries in 2017 for importing other types of Egyptian cheese, according to export volumes, as follows:

1. Saudi Arabia ($5.5 million) 2. Jordan ($3.2 million) 3. Lebanon ($2.9 million) 4. Libya ($1.6 million) 5. Iraq ($1.3 million).

According to the EDA, Kuwait, Yemen, United States, Palestine, Turkey, Israel, and Syria are considered the most important countries for importing other Egyptian cheese types. As shown in Table 12, the average export volume of other cheese types during the period 2012–17 was estimated at $48.4 million, with a minimum of $17.8 million in 2017 and a maximum of $35.6 million in 2013.

Figure 12: Top five importers of other Egyptian cheese types ($ million), 2017

Source: EDA website, last accessed 13 June 2018.

5.50

3.20

2.90

1.60

1.30

Saudi Arabia Jordan Lebanon Libya Iraq

25

Table 12: Exported dairy products annually by volume (2012–17) (top five)

Year Processed cheese, not grated or

powdered

Fresh white cheese, without

any further treatments

Other cheese types

Skimmed milk (F≤1%)

Powder milk (F≥1.5%) -

unsweetened powder milk

White cheese (Tallaga, Kareesh,

or feta)

Export volume

Export growth %

Export volume

Export growth

%

Export volume

Export growth

%

Export volume

Export growth

%

Export volume

Export growth

%

Export volume

Export growth

% 2017 167 5.7 77 -2.40 17.80 -17.40 7.10 -4.90 16.20 51.80 7.30 1.60 2016 158 -27.40 78.80 -13.90 21.50 -23.40 7.50 5.10 10.70 13.80 7.20 59.50 2015 217.50 -8.20 91.60 -12.20 28.10 -13.50 7.10 -27.80 9.40 10.10 4.50 39.30 2014 236.90 1.20 104.30 1.70 32.50 -8.70 9.80 17.40 8.50 27.80 7.40 118 2013 234.10 -2.70 102.50 20.20 35.60 5.10 11.90 8.30 6.70 199.70 3.40 122.80 2012 240.50 0 85.30 0 33.80 0 11 0 2.20 0 1.50 0 Total 1300 - 539.40 - 169.30 - 54.30 - 53.70 - 31.90 -

Average 364.90 -5.20 154.10 -1.10 48.40 -9.70 15.50 -0.30 15.30 50.50 9.00 56.90 Min 158.00 -27.40 77.00 -13.90 17.80 -23.40 7.10 -27.80 2.20 0 1.50 0 Max 240.50 5.70 104.30 20.20 35.60 5.10 11.90 17.40 16.20 199.70 7.40 122.80

Source: Calculated from Export Development Authority (EDA). Last accessed 14 June 2018. Export volume ($million)

26

Figure 12 shows the top four countries importing skimmed milk from Egypt, in terms of export volume, as follows: Libya ($3.4 million), Italy ($2.4 million), Japan ($2 million), and Palestine ($0.99 million). Figure 13: Top four importers of skimmed milk ($million), 2017

Source: IDA website, last accessed 13 June 2018. According to the EDA, the most important countries for importing skimmed cheese were Syria, Jordan, South Sudan, Saudi Arabia, Yemen, Kuwait, Morocco, Romania, Seychelles, Somalia, Ethiopia, and Bahrain. Table 12 reveals that the average export volume of skimmed milk during the period 2012–17 was estimated at $15.5 million, with a minimum of $7.1 million in 2017 and a maximum of $11.9 million in 2013. Figure 14 shows the top-five countries for importing milk powder from Egypt in 2017, by export volume:

1. Saudi Arabia ($4.60 million) 2. Jordan ($3 million) 3. UAE ($1.70 million) 4. Libya ($1 million) 5. Mauritania ($0.80 million)

The other leading countries for importing milk powder from Egypt that same year were as follows: Sudan, Syria, Iraq, Haiti, Venezuela, Mali, Turkey, Bangladesh, Senegal, Maldives, Somalia, Niger, Burundi, Malawi, Yemen, and Ivory Coast. In Table 12, the average export volume of powdered milk during the period 2012–17 was estimated at $15.30 million, with a minimum of $2.20 million in 2012 and a maximum of $16.20 million in 2017.

3.40

2.40

2.00

0.98

Libya Italy Japan Palestine


27

Figure 14: Top five importers of powdered milk ($million), 2017

Source: EDA website, last accessed 13 June 2018. Finally, as shown in Figure 15, the leading five countries for importing white Egyptian cheese (Tallaga, Kareesh, or feta), by export volume, were as follows:

1. Saudi Arabia ($1.30 million) 2. Lebanon ($1 million) 3. Palestine ($0.97 million) 4. Libya ($0.90) 5. Jordan ($0.59)

The other important countries in this category for the same year were as follows: Morocco, Kuwait, Yemen, Turkey, Iraq, Qatar, UAE, Senegal, U.S., and Mauritius. Table 12 revealed that average export volume of white cheese (Tallaga, Kareesh, or feta) during the period 2012–17 was estimated at $9 million, with a minimum of $1.50 million in 2012 and a maximum of $7.40 million in 2014.

4.60

3.00

1.70

1.00

0.80

Saudi Arabia Jordan UAE Libya Mauritania


28

Figure 15: Top five importers of white cheese (Tallaga, Kareesh, or feta) (US dollar millions), 2017

Source: IDA website, last accessed 13 June 2018. Customs rates for milk and dairy products are illustrated in Table 25 (see Annex II), which contains the most updated customs rates for dairy products in light of the latest modifications according to presidential decrees nos. 538/2016, 25/2016, 69/2015, and 184/2013. Most customs rates for dairy products ranged between 0% and 5%, except cheese products, which had customs rates of 10%. After applying the tariffs modifications from 2013–16, the customs rates for some dairy items increased. Table 13 summarizes dairy products that were amended in 2013–16, all of which were milk in powder form and milk fat derivatives such as cream, butter, and ghee. Table 13: Tariff numbers and rates of milk and dairy products amended (2013–16)

Tariff numbers

Dairy products Customs rate%

0402212000 Cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, not containing added sugar or other sweetening matter.

20

0402219900 Milk, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages.

10

0402292000 Cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, containing added sugar or other sweetening matter.

20

0402299900 Other milk, concentrated, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages.

10

1.30

1.000.98

0.89

0.59

Saudi Arabia Lebanon Palestine Libya Jordan


29

0402911100 Milk, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter, that is put up for retail sale.

20

0402911900 Milk, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter, and is not put up for retail sale.

10

0402912000 Cream, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter.

20

0402991100 Milk, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter, and that is put up for retail sale.

20

0402991900 Milk, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter, and that is not put up for retail sale.

10

0402992000 Cream, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter.

20

0405101000 Butter, in packages of weight less than 10 kg net

10

0405201000 Dairy spread, in packages of weight less than 10 kg net.

10

0405901010 Ghee, in packages of weight less than 10 kg net.

10

Source: Ministry of Finance


30

CHAPTER 2: MAPPING AND ANALYZING DAIRY SUBSECTORS

This part of the study categorizes the key market players and supporting organizations in the Dairy VC, while also drawing on previous studies and key informants to outline obstacles and suggested interventions. To meet this study’s objectives, three informative tools were employed, namely: a semi-structured survey with key dairy stakeholders, a questionnaire with representatives of dairy SMEs across the Dairy VC, and focus group discussions.

A. MEETINGS WITH KEY DAIRY STAKEHOLDERS & SUPPORTING ORGANIZATIONS

For the purpose of defining Egyptian dairy stakeholders and their capabilities, the study designed semi-structured interviews with a number of dairy stakeholders in Egypt in order to gather and validate the available information. In this study, three main opening questions were asked to all the surveyed stakeholders with regards to the effectiveness of their performance in serving the Dairy VC in Egypt:

1. What are the main activities of your association in general, and which of them are specifically assigned to serve the Egyptian dairy sector and increase the value added of the dairy products?

2. Could you describe the human and physical capital of your association that participate in improving the value added of the Egyptian dairy products (staff, equipment, facilities, regional branches, etc.)?

3. From the point of view of multidisciplinary stakeholders, what are the main obstacles of the Egyptian dairy sector?

Finally, the interviewees were asked to suggest interventions related to the mandate of their association that could help in improving the Dairy VC in Egypt.

A.1. Egyptian Organization for Standardization and Quality (EOS)

In 2010 during the era of Eng. Rasheed M. Rasheed, the ex-Minister of Trade and Industry (MTI), a unified guide was developed as a standard for the food industry that covers the entire VC from raw material to finished product. The new unified codes complied with European legislations that included instructions from the first stage in the VC, which is animal breeding all the way through to milk collection and the processing of different types of dairy products. This new code was eventually revoked as it abruptly superseded the prior standards and codes with new stipulations that manufacturers found difficulty in complying with. The unified code’s cancellation meant a return back to the 63 older dairy products standards and codes. The failure to unify codes that aren’t compliant with EU and international standards creates a barrier to export, as Egyptian dairy products aren’t up to international standards. The Egyptian dairy standards contain mandatory prerequisite criterions for dairy producers to abide by as well as non-mandatory quality criterions. Currently all dairy products standards are subjected to a re-revision to comply with the international Codex Alimentarius requirements. Some standards have actually been updated to comply, such as the following:


31

• All standards for yoghurt production were unified under one standard with the title “Fermented Dairy, EOS No. 8042/2016.”

• All dried dairy products standards such as dried milk, dried cream were unified under a single standard with the title “Dried Dairy Products, EOS No. 8073/ 2017.”

• All cream product standards, i.e., liquid cream and frozen cream, were unified under one standard titled “Cream and Prepared Cream.”

• Cow and buffalo milk product standards were unified under a single standard titled “Milk Fat Products, EOS No. 154/2016.”

Egyptian dairy standards do not comply with the Codex Alimentarius, and this is one of the most frequent complaints from food manufacturers in general and dairy manufacturers in specific. This issue has developed into legal claims against the EOS because the cycle for issuing or updating the standards by the EOS is slow. It took them more than eight years to issue the four new standards mentioned above; this pace is not compatible with industry needs. This is attributable to the shortage of staff at the EOS in general and in staff working in the food department in specific, where there are only two food specialists. Very little time is also dedicated to updating the dairy standards. According to the food department head, meetings with standards committee members for updating the dairy standards only occur on a biweekly basis, and for only two to three hours for each time, which is not enough to keep up with the pace of the industry. These standards committees consist of members affiliated to other organizations and are not EOS staff. These organizations include the following:

• General Organization for Imports and Exports Control (GOEIC) • Industrial Control Authority (ICA) • Animal Health Research Institute (AHRI) • Chemical Administration of the MTI • National Nutrition Institute (NNI) • Food Technology and Research Institute (FTRI) • National Research Institute (NRI) • large scale companies such as Juhayna, Domty, and Bell Egypt

MSMEs are underrepresented in the food industries’ committees. This may be due to them belonging to the informal sector. The involvement of MSMEs is vital in order to develop the Dairy VC, where involving dairy SMEs in the process of issuing or updating the dairy standards would create a balance between their interests and the interests of the large-scale dairy companies. EOS committees depend mainly on the following international references for updating their standards: the Codex Alimentarius, the European Union (EU), and the Food and Drug Administration (FDA). One of the main challenges facing the Dairy VC is also the lack of coordination between the EOS and National Food Safety Authority (NFSA), especially what concerns issuing the NFSA’s mandatory standards for the food sector’s health and safety codes. A number of other obstacles have been observed during our interviews that hinder EOS of achieving its goals, as follows:

1. Budgetary restrictions 2. Conflicting mandates with other associations 3. Inconsistent laboratory testing results for samples drawn from factories 4. EOS’ laboratories are not a one-stop-source for factories to obtain all their


32

needed certificates to operate 5. Laboratories affiliated with the Ministry of Health and Population (MoHP) do

the same job and are also mandatory and produce lab results inconsistent with those from other labs from the same samples.

The EOS also represents Egypt in the Technical Barriers to Trade – World Health organization (TBTT-WHO), Codex Alimentarius – WHO/FAO, and International Organization for Standards (ISO).

A.2. Industrial Control Authority (ICA)

The ICA is ISO 9001: 2008 certified, and it is currently updating the version to 2015. The ICA has 18 branches across the country. The food department has 95 employees to perform drawback studies and inspection campaigns. The food department is composed of nine branches by type of food, namely: dairy products, tobacco, feeding, oils and fats, sweet from pastes, dry sweet and confectionaries, meats (poultry, red meat, and fish), preserved food, and agricultural crops. The number of employees and, therefore, the number of inspection visits are too few to cover all of the food industries. Most of the specialized tests are performed at the ICA’s headquarters in Cairo due to the lack of facilities at the ICA’s regional branches. The inspection campaigns are seasonal, i.e., before Ramadan or Easter. In the case of occasional allegations against a certain manufacturer, unplanned visits do occur. Most of these visits are planned and approved at the beginning of the financial year to cover a certain number of food manufacturers both in the formal and informal sectors. The constraints of these visits are: a lack of manpower and financial constraints to cover the cost of travel required to perform inspection visits. In most cases, the ICA campaigns and planned visits are coordinated with other government agencies such as the Egyptian Consumer Protection Agency (ECPA), Ministry of Supply and Internal Trade (MSIT), and MoHP. The ICA’s performance is affected by the shortage of food specialists. According to the head of the food department, inspection visits by the ICA amount to around 85–100 food factories/month from the HQ, in addition to 200 control visits/month done at the regional level by ICA branches. This number of visits represents approximately 10% of the regular monthly visits before 2011 due to budgetary constraints since then. The scope of ICA visits is to check the hygienic and technical requirements; inspect production lines; storage, either raw or final products; and draw samples to be sent to laboratories (affiliated with the MoHP or the Chemistry Authority). The ICA in coordination with the Industrial Development Authority (IDA) checks the industrial and trade licenses and informs the IDA in case there are any violations. The ICA also report to the IDA with the actual production capacity of the inspected companies to be cross-checked with the registered production capacity. The ICA publishes studies that are also written by this limited number of staff. The ICA publishes three kinds of studies, namely: drawback studies, value added tax (VAT), and sales tax. The drawback studies are performed to calculate the utilization percentage of raw materials that have entered the country customs free under the condition of re-export as a final product. The ICA studies estimate production losses and waste percentages of drawback materials in order to submit a report to the customs administration to ensure compliance. The ICA gains a fee against performing such studies in addition to being paid accommodation and transportation costs. Protein concentrates, stabilizers, flavors, and packaging materials are some


33

examples of dairy raw materials under the drawback permission. Another problem encountered by the ICA as a result of the aforementioned budgetary constraints is exacerbated by the fact that the ICA does not own its own testing facility and, therefore, relies on other government entities for laboratories, such as the MoHP, the Chemistry Authority of the MTI, and the EOS. Not having its own labs and the insufficient size of the assigned budget for testing samples at affiliated laboratories means that the ICA can only test a very limited amount of samples from inspection visits. This budgetary shortage has resulted in an accrued debt to the testing laboratories, making some of them refuse to conduct tests for the ICA until the debts are settled. The average cost for chemically and microbiologically testing one sample was about EGP 1,200 at the time of writing. Around 45–50 dairy samples are drawn per month, an insufficient amount to guarantee quality at the large number of manufacturers that the ICA monitors.

A.3. Food and Agro Industries Technology Centre (FAITC)

The FAITC is the oldest technology center of the 12 affiliated with the ICTI and the MTI. The FAITC’s mission is to provide Egyptian food industries with technological solutions for their manufacturing problems in addition to helping in developing new products, transferring new technologies, and performing sensory evaluations to new products. One of the main reasons for the MTI’s founding of the FAITC in 2011 was for it to be a focal point between agriculture and industry. In other words, the FAITC is supposed to foster proper linkages between scientific research and the food industries’ factories. This is evident in FAITC being located in Giza next to the Ministry of Agriculture and the Agriculture Research Center (ARC) as opposed to being in Cairo next to the MTI. All FAITC services are provided to customers with cost-based prices to guarantee sustainability. The FAITC also provides training and consultations in the field of quality systems such as ISO certifications, e.g., ISO 9000, ISO 22000, and OHSAS. With regards to the Dairy VC, the FAITC has participated in five projects funded by regional and international donors since 2011. Recently, the FAITC has helped food industry MSMEs sell their products through the outlets of the government owned Holding Company for Food Industries (HCFI) and it has also provided fresh graduates with product ideas to assist their start-ups. One of the FAITC’s strengths is its network of communication via social media. However, it suffers from a shortage of skilled experts. Even with this shortage of technical staff, the FAITC has accumulated experience in managing technical assistance projects and hiring outsourced dairy consultants.

A.4. Food Export Council (FEC)

The FEC is the food export arm of the MTI and is tasked with providing the food industry with export opportunities. The FEC provides its members with a package of benefits such as subsidies on export, participation in local and international exhibitions, and transportation. The subsidies on export averaged 5–10%; the export subsidies could reach to 10% from the export volume when their products contain 100% of Egyptian materials. The FEC currently has 3,200 registered food exporters in Egypt, of which only 350 members export around 90% of total Egyptian food exports. FEC membership requires only complying with the requirements of an international quality system, i.e., ISO 9000, ISO 22000, ISO 14000, or ISO 45000. FEC


34

membership requires food companies to have industrial and trade registrations in addition to a tax card. Every year, the FEC organizes the Food Gate exhibition in Sharm El-Sheikh, where more than 1,000 global buyers are invited after a vetting process to verify those that are Egyptian food exporters with cooperation with the MoFA, Egyptian Commercial Services (ECS), and Egyptian International Trade Points (EITPs), affiliated with the MTI. The FEC also recently collaborated with the FAITC to assess food safety and quality issues for potential exporting MSMEs in the dairy sector. According to the FEC, Africa is considered a promising market for Egyptian dairy products. Egyptian export volumes grew to more than 23% in 2017, while Egyptian exports to Arab markets, mainly Iraq, Libya, Yemen and Sudan, shrank by 9% in the same period. Historically, Iraq has been the main importer of Egyptian dairy exports with more than 50% of the Egyptian dairy export volume in some years. For that reason, Egypt has three trade offices in Iraq: Basra, Baghdad, and Kurdistan. Iraq stopped dairy exports from Egypt in 2018 due to adulteration by adding starch to processed cheese by some Egyptian exporters, which required official interference from Ibrahim Mahlab, Egyptian former prime minister and current consultant to the Egyptian president, Abdel-Fattah El-Sisi. This case resulted in stricter inspection procedures for Egyptian dairy products entering the Iraqi market, in addition to factory testing by Iraqi importers before the products are exported. The FEC can assist the entry of Egyptian products to new export markets such as Brazil, Russia, and China. In order for these countries to open their markets, they need to conduct bilateral trade agreements with regards to quarantine procedures, a lengthy process. Brazil, with more than 10 million citizens with Arab origins, has a demand for Ras and other Arab cheeses. Syria, Lebanon, and Jordan are a potential market for Syrian cheese, such as Ackawi and Halloumi, which are increasingly produced by Syrians in Egypt. Russia imports dairy products mostly from the US, EU, Canada, Australia, and Norway, with all imports valued at $2.2 billion annually. Despite this, Egypt has only five or six food companies with permits to export to the Russian market. Meanwhile, the Chinese market is another a potential market for Egyptian food and dairy products as there is demand for soft cheeses. With regards to African markets, it was noticed that most Anglo-African countries do not eat cheese regularly in their diets, while Francophone countries located mostly in west Africa have a big demand for cheese (i.e., Domiati and Ackawi), especially the Arab communities in those countries. The FEC stated that although there is a high demand for Egyptian Ras cheese in Gulf countries, driven by Egyptian communities there, increasing non-conformity rates may be the reason for Turkish imitations of Egyptian cheese competing with Egyptian products, since the Turkish products are more compliant with GCC standards. It is recommended that the FEC assist in the creation of an export consortium for Ras and Domiati cheeses via helping a number of Egyptian cheese producers to promote their products under a unified brand in regional and international markets. According to the FEC, processed cheese represents the majority of the Egyptian dairy exports, where Egypt is ranked as the fourth-largest exporter of processed cheese worldwide. At the same time, processed cheese is a duty drawback industry as most of the ingredients and equipment used are imported. While this encourages exports, it also results in a lower value added for the final product, and, therefore, lower export subsidies are given. The gross value of food exports by FEC members


35

reached $2.9 billion, with a subsidy of $50 million. The FEC prioritizes big food companies since they have the capacity to comply with foreign export requirements. It is important to emphasize that most dairy industry companies are considered MSMEs according to the Central Bank of Egypt’s (CBE) definition of MSMEs. All kinds of subsides are from Export Development Fund (EDF) including transportation subsides that are given by the FEC to their members to cover up to 50% of transportation costs. The FEC provides its members with subsides that cover up to 50% of participation costs in local and international trade fairs. Nevertheless, subsides given to food exporters, paid as reimbursements, are sometimes delayed by up to a year in some cases. Delayed payments may not cause an issue for large companies, but they would cause severe cash flow constraints to MSMEs. One of the biggest obstacles facing Egyptian food and dairy exports is the complicated quarantine approval process, especially for dairy and fish products. The current standards of the veterinary sector and the epizootic situation of livestock in Egypt are still lower than global standards. Since exports between two countries requires the mutual issuing of approval certifications, there is room for improvement across the VC in order to improve the perception of Egyptian products in foreign markets. Another important obstacle encountering food and dairy exports is that financial transactions with countries such as the US and those in the EU require an approval from an intermediary bank in those countries, which means that transactions are often delayed and expensive. One solution for this problem could be to open branches of the CBE in those large markets, as is the case of CBE branches in Kenya and Somalia.

A.5. Industrial Modernization Center (IMC)

The IMC’s purpose is to provide technical support to Egyptian industry through providing trainings and know-how transfer. The IMC has many departments. One is the food industries department; other departments are responsible for rehabilitation of factories or qualifying them to comply with international standards or getting the “Made in Egypt” sign of quality. The IMC’s food department is interested in enhancing production via foreign and local experts who are awarded projects through tenders to enhance the production of the IMC’s customers. Two of the IMC’s programs, namely productivity enhancement and product compliance, could be integrated to increase the added value of Egyptian dairy products and to develop cheese factories that are registered with the IMC, since Egypt’s industrial policy is focused on imports’ substitution and added value increase.

A.6. Food Technology Research Institute (FTRI) – Dairy Technology Research Department (DTRD)

The FTRI of the DTRD is one of the technical institutions affiliated with the Agricultural Research Center of the MALR. The DTRD has three main activities, which are: 1. Research: conducting applied research to solve food/dairy manufacturer’s

problems or to develop or innovate new products. 2. Awareness: for example, the FTRI has participated in the National Council for

Childhood and Motherhood’s project to raise consumers’ awareness with the importance of nutritional values of food.

3. Training: the FTRI provides vocational and food safety systems training. The FTRI’s dairy department has issued a number of patents for research in the field


36

of dairy waste recycling, specifically ways to utilize milk whey and milk permeate leftover from cheese production in producing functional foods or flavored beverages. Some of those patents include ways to successfully extract amino acids from milk whey and use it in the processing of bakery products and other patents for extracting emulsifiers’ substances from buttermilk to be used in ice cream processing. Manufacturers resort to consulting with the FTRI only when they encounter a manufacturing problem and are in need of solutions; otherwise most of them are indifferent to participation in events or workshops organized by the FTRI. It can be said that the FTRI has a number of obstacles; chief among them, from the author’s point of view, are its very limited research budget and its outdated research equipment, which represent vital constraints to improving research quality. When it does succeed with the current resources to produce applicable research outputs, the FTRI suffers from weak marketing capabilities, meaning that research sometimes waits for up to five years before finding a customer. Therefore, in many cases, the outputs do not find a buyer. There is also the issue of high pricing for research products which is another important reason for this failure.

A.7. Chamber of Food Industries (CFI), Federation of Egyptian Industries (FEI)

According to the FEI’s website, the CFI is a non-profit organization established in 1958 by presidential decree no. 453, under the umbrella of the FEI. The CFI is the official representative of the Egyptian Food Industry, with a member base of more than 3,000 companies. The CFI is the platform that represents the food and beverage industry before the Government of Egypt (GOE). The CFI aims to solve and develop every aspect of the business environment that may affect the industry’s competitiveness domestically and globally. As such, the main roles of the CFI are to:

• Protect the combined interest and welfare of members through lobbying on their behalf before different governmental bodies.

• Coordinate with the different governmental authorities for laying out policies related to the food and beverage industry and provide opinion and suggestions on legislation.

• Study local impediments facing the development of the food and beverage industry and suggest solutions.

• Provide access to strategic alliances. • Update members on the latest international trends and standards. • Organize seminars, conferences. • Issue publications. • Act as library with a wealth of information specific to the food industry. • Hosting “Egypt 4 Trade” program funded by GIZ. • Conduct skills development training programs for laborers. • Disseminate information. • Provide social services

Table 14: Divisions of the CFI by membership (March 11, 2018)

Divisions No. of Workers

Members Companies

Total Paid-In Capital

Sugar, Confectionary & Chocolates

104,809 1,148 3,267,813,777

Milk & Dairy Products 37,559 477 7,691,137,152 Juices, Drinks & Water 36,869 327 6,230,859,658 Meats, Poultry & Fish 51,889 1,169 3,216,451,906


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Fruits & Vegetables 40,067 558 1,939,951,179 Oils & Vegetables Fats 27,258 230 9,405,293,153

Specialty Foods, Yeast and Food Additives

7,335 219 1,566,637,384

Different Food Products 42,076 1,373 7,444,820,918 Tobacco & Cigarettes 16,719 68 1,766,178,064 Non-Active Members 1,305 87 67,356,496

Total 365,786 5,656 1,184,144,514 As is shown in Table 14, above, the CFI’s milk and dairy industry member companies totals 477 companies representing 8.4% of the total CFI member companies (5,656 members), behind other food products: meats, poultries and fish, sugar, confectionary & chocolates, and fruits and vegetables, which represent 24.3%, 20.7%, 20.3% and 9.9% of member companies respectively. CFI membership numbers increased after the modification of law 34/1976; law 75/2017 requires membership in a specialized industrial chamber to issue a trade registration for industrial activity in addition to membership in a specialized trade chamber, as in the old law. The number of workers in the milk and dairy industry registered in the CFI was 37,559, representing 10.3% of workers in CFI member companies after sugar, confectionary and chocolates, meats, poultry and fish, different food products, and fruits and vegetables, which represent 28.7%, 14.2%, 11.5%, and 11.0% of member companies, respectively. The total paid-in capital of CFI milk and dairy industry member companies was EGP 6.23 billion, representing 6.5% of CFI members’ paid-in capital totals, after sugar, confectionary and chocolates, meats, poultry and fish, fruits and vegetables, and oils and vegetable fats, representing 27.6%, 27.2%, 16.4%, and 7.9%, respectively. The CFI conducts a number of interventions in the dairy sector. According to Dr. Reda Abdel-Galeel, the technical portfolio manager of the CFI, the CFI participates in studies for TetraPak and macro to determine the best practices for establishing standard milk collection points to supply pasteurized tetra-packed milk to macro. In a study prepared for the Ministry of Finance (MoF) concerning the proper utilization of milk collection centers affiliated to Misr Food & Milk Company, the CFI recommended turning over the operations of five milk collection centers to large milk and dairy products companies such as Juhayna, Domty, and Danone in order to develop them. This plan has not been implemented yet. The CFI’s database is outdated and needs more frequent updates. At the same time, member data needs to be verified more carefully before being accepted and registered in the CFI database.

A.8. Industrial Development Authority (IDA)

According to the MTI’s official website, the IDA’s role is to support industry and make Egypt into one of the leading industrial countries in the Middle East and Africa by developing local manufacturing, expanding high value-added and high-tech industries, and creating a proper climate for attracting Arab and foreign investments. The IDA’s mission is to set the necessary servicing plans and mechanisms for industrial zones, establish specialized industrial clusters, support sustainable development plans, and achieve optimum usage of available resources, with the aim of increasing the added-value of Egyptian industrial products. The IDA is tasked with ensuring that:

1. the plant is qualified to perform its stated industry, 2. the registered capacity of the plant could be achieved with the current capital

assets, and


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3. all regulations (environmental, civil defense, industrial security, hygienic, occupational health, safety, etc.) are fully fulfilled.

If an establishment complies with the aforementioned criteria, it will receive its industrial registration from the IDA. The IDA then informs the ICA with the all registered establishments in order to conduct planned inspections to verify that the industrial registration data is still valid and in place. According to Eng. Hussein El-Garhy of the IDA, the CBE’s definition of MSMEs does not represent the current status of Egyptian MSMEs. The CBE defines companies with up to EGP 200 million in annual turnover as MSMEs. From his point of view, the CBE should consider the following criteria:

• Micro Enterprise: EGP 0–200,000 • Small Enterprise: EGP 200,000 to EGP 20 million • Medium Enterprise; EGP 20–100 million • Large Scale: greater than EGP 100 million.

Because there is no official, unified definition for MSMEs in Egypt, the IDA according to its own authority informally considers the abovementioned definition in classifying MSMEs. Although industrial growth in Egypt is expanding, the IDA, like other previously mentioned agencies, suffers from a shortage in workforce. This results in there being only six food specialists in the IDA’s headquarter, in addition to just three other food specialists in regional branches. These specialists are responsible for performing the mandate of the IDA’s food department, with its nine food branches, from there are 394 registered milk and dairy manufacturers. The IDA could take the lead in formalizing the informal dairy sector by providing the specialists with assistance in cooperation with related agencies such as the FAITC, MSMEDA, etc. According to IDA officials, industrial registration and operation licenses are both issued within 30 days for low-risk industries such as the dairy industry. Also, there is flexibility in issuing industrial registrations for dairy MSMEs that meet the minimum and principal requirements. This industrial registration only needs to be updated every five years. Law No. 15/2017 – concerning “facilitating procedures for issuing industrial enterprises registration” – gives the IDA the right to issue a temporary one-year industrial registration for unregistered enterprises that do not meet the minimum requirements and regulations, until they reconcile with the IDA’s requirements. According to the same law (15/2017), the IDA has power to issue studies such as environmental impact assessment studies, which are mandatory in some cases, with a cost from EGP 2,280 to EGP 9,120.

A.9. Micro, Small, and Medium Enterprises Development Agency (MSMEDA)

The MSMEDA is the successor agency to the SFD, providing beneficiaries with a package of financial and non-financial services. Financial services and trainings include low interest loans and subsidized exhibitions, while non-financial services include technical assistance and marketing and branding. The MSMEDA’s expenditure on financing dairy MSMEs in 2017 stood at EGP 4.91 million across 16 governorates, representing 2.55% of total expenditure on animal production projects worth EGP 192.44 million. The MSMEDA finances milk and dairy manufacturers in 16 governorates, namely: New Valley, Sharkia, Dakahlia, Kafr El-Sheikh, Monufia, Assiut, Alexandria, Sohag,


39

Beheira, Qena, Cairo, Qalyubia, Port Said, Giza, Suez, and Aswan. As shown in Figure 10, expenditure on financing milk and dairy MSMEs in New Valley Governorate represented about 25.38% of total expenditure on financing milk and dairy products in 2017. Meanwhile, 72% of the MSMEDA’s expenditures on financing milk and dairy products was in five of the 16 governorates, namely: New Valley, Sharkia, Dakahlia, Kafr El-Sheikh, and Monufia respectively. Figure 11 shows that 159 milk and dairy product MSMEs were financed by the MSMEDA in Sharkia Governorate in 2017, representing 30.81% of the total number of milk and dairy MSMEs financed by the MSMEDA. The number of financed milk and dairy MSMEs were as follows in these governorates: New Valley (85), Dakahlia (60), Sohag (37), Kafr El-Sheikh (35), and Monufia (31), representing 48.1% of the total number of milk and dairy MSMEs financed by the MSMEDA in 2017. Figure 10: MSMEDA expenditure on financing dairy MSMEs by governorate, 2017

1,24

7,88

0

830,

500

639,

840

480,

140

342,

080

293,

000

261,

000

251,

100

247,

500

106,

500

99,0

00

40,0

00

32,0

00

26,0

00

15,0

00

5,00

0

0

200000

400000

600000

800000

1000000

1200000

1400000

MSMEDA expenditure on financing dairy MSMEs by governorate, 2017


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Figure 11: Number of MSMEDA-financed dairy MSMEs by governorate, 2017

As shown in Figure 12 below, 981 total employment opportunities were created in 2017 through the MSMEDA’s financing of milk and dairy MSMEs. Of these opportunities, 25.55% were in the New Valley governorate alone, while 63.07% were in Sharkia, Dakahlia, Kafr El-Sheikh, Monufia, Assiut, Alexandria, and Sohag. Figure 12: Employment opportunities for MSMEDA-financed MSMEs by governorate, 2017

11246

1418192123

313537

6085

159

0 20 40 60 80 100 120 140 160 180

SuezAswan

Port SaidGiza

QaliubiaCairo

AssiutQena

BeheiraAlexandria

MonufiaKafr El-Sheikh

SohagDakahlia

New ValleySharkia

Number of MSMEDA-financed dairy MSMEs by governorate, 2017

13568

2021

485052

5967

96128

166251

0 50 100 150 200 250 300

AswanSuezGiza

Port SaidQaliubia

CairoQena

BeheiraSohag

AlexandriaAssiut

MonufiaKafr El-Sheikh

DakahliaSharkia

New Valley

Employment opportunities for MSMEDA-financed MSMEs by governorate, 2017


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B. VALIDATION VISITS TO DAIRY MSMES ACROSS EGYPT

This study depended, in its validation visits, on a sample of 15 dairy MSMEs that expressed their interest in participating in the B2B event organized by USAID’s SEED Project to connect Egyptian dairy exporters with selected Arab and African buyers. SEED arranged matchmaking sessions between a number of dairy exporters and buyers from Gulf and African countries, in order to market their products directly to foreign buyers and create export opportunities for local MSMEs. Also, six milk and dairy SMEs in Minya Governorate, in addition to four dairy equipment manufacturers in Damietta were visited in cooperation with MSMEDA offices in the aforementioned governorates. A questionnaire was designed (see Annex IIII) to gather information from milk and dairy SMEs about raw material accessibility, staff training, R&D, quality issues, environmental concerns, production lines, recipes, sales, pricing, and marketing channels.

C. FOCUS GROUPS WITH KEY STAKEHOLDERS

Focus group discussions are a method for extracting ideas about predetermined decisions or solutions of a specified subject or problem. Focus group discussions consist mainly of predetermined questions that are directed to a small group of people to receive their answers, which represent new opinions and ideas related to suggested decisions or solutions. There are three types of questions that can be used in focus group discussions: 1) engagement questions to introduce the discussion subject and make the audience comfortable, 2) exploration questions to make the audience participate in discussions, and 3) exit questions to bring forth any unasked questions from the audience. For this study, three focus group were organized (see Annex II). Two of them targeted two small groups of different players in the milk and Dairy VCs in Minya and Dakahlia, including manufacturers of different types of cheese, small milk farmers, NGOs, entrepreneurs, agricultural administration representatives, dairy science and technology teachers and academic professors, owners of grocery and dairy product outlets, and the heads of MSMEDA offices in either governorate. The third focus group targeted governmental partners, ministry representatives, and industry stakeholders in Cairo. In both governorates, the focus group discussions were divided into two main sessions. The first discussed solutions related to crude milk and other production requirements, while the second discussed milk and dairy product marketing. Both sessions were 90 minutes long. At the first session, five main questions were asked, in addition to an exit question, as follows:

1. What are the best districts (in your governorate) for establishing milk collection points or centers?

2. Do dairy manufacturers or dairy products factories need to establish specialized milk production farms nearby?

3. From the point of view of milk production farmers or breeders, is milk production profitable?

4. Is there a need to establish nearby rennet production enterprises? Or, if a rennet production enterprise is created, will it find demand from the manufacturers?

5. Is there a need to establish nearby packaging material enterprises?


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6. Are there any questions we haven’t covered so far?

In the second session, the following questions were asked:

1. What is the recommended mechanism for integrating specific cheese manufacturers – Malawi cheese in Minya and Domiati and Ras cheese in Dakahlia – to work under unified registered brand names for their unique cheese types?

2. Is contracting between manufacturers and crude milk and other dairy processing additives necessary? And if so, what are the suggested mechanisms to promote contacting throughout the Dairy VC?

3. What is a suggested mechanism for linking rural cheese manufacturers with hypermarkets? First, however, does it even make sense?

4. What is a recommended mechanism for vertical integration through the Dairy VC (i.e., establishing a cheese factory attached to a milking farm or milk collection point, or an outlet affiliated with a cheese factory)?

5. To what extent is financing new marketing functions accessible, i.e., cold storage for cheese?

6. Any other questions?

D. DAIRY VC CONSTRAINTS AND BOTTLENECKS

In light of the previous analysis of the Dairy VC subsector, constraints and bottlenecks hampering the Dairy VC can be categorized into three main levels: governmental entities, dairy business climate, and dairy MSMEs.

D.1. Governmental Entities

The visited governmental entities in this study encounter a number of bottlenecks such as: financial restrictions, critical shortage of technical staff, neglected regional branches and over centralization, conflicting mandates between different governmental entities, and a slow cycle of issuing or updating standards. Furthermore, surveillance control visits are very rare and MSMEs are absolutely absent in the developing of dairy standards. There no standardized reference lab for milk and dairy products for producing accurate results; current government-run labs produce conflicting results from the same samples and outdated databases. In addition, R&D entities suffer from very limited research budgets, outdated research equipment, and weak marketing capabilities. They also conduct research that is disconnected from real industry needs. Finally, there is exaggerated pricing for selling research outputs to the private sector.

D.2. Dairy Business Climate

On the level of dairy industries, many bottlenecks were noticed, such as: 1. Customs items differentiations: The customs numbers do not consider the

differences between the protein percentages of MPC and treat them as equals. Customs rates should be higher on high-protein MPC, as it is a more valuable product. Instant milk powder, for instance, has a low protein content; however, its duty is as high as the customs duty of regular milk powder, and is affected by the fluctuations that are common in the regular milk powder market.

2. Delayed Export Subsidies: Export subsidies may last up to a year in some

cases before being disbursed.


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3. Low-quality competitors: Low-quality Egyptian cheese exports negatively affect the image of Egyptian processed cheese. Low-quality, inexpensive exports are allowed to reach foreign markets, negatively affecting the image of Egyptian cheese.

4. Need for bilateral quarantine agreements: Bilateral agreements between Egypt

and potential dairy export markets such as Brazil are absent. This contributes to the current negative situation of the veterinary sector and the epidemic situation of animal wealth in Egypt which is still not up to global standards.

5. Need to penetrate new and potential markets for dairy products: China, Africa, and Russia are potential markets for Egyptian dairy products and thus are in need of more concentrated effort from Egyptian dairy exporters.

6. Lack of an official English translation of Egyptian standards: An official English translation of Egyptian dairy standards by the EOS is not available since the standards are only in Arabic. Foreign non-Arab markets sometimes require an official English version of the Egyptian dairy standards for approving the entry of Egyptian dairy products.

7. Slow financial transactions: Financial transactions take a long time, especially in case of trade with the US and EU, where it’s necessary to get approval of intermediary banks in those countries. One suggested solution is to open branches for the CBE in those countries, as is the case with the CBE branches in Kenya and Somalia.

8. The need for an Egyptian standard for nutrition: In Egypt, there is a nutrition labeling law, but there is no Egyptian standard for nutritional value. Therefore, the process of issuing a certification for nutritional value is complicated and slow and may result in losing many export opportunities.

9. Inactive research institutes: In one instance, a large dairy processor had difficulties fortifying their processed cheese products through adding iron and zinc, which act as antioxidants. Such issues can be solved by research from dedicated institutes.

10. Complicated customs procedures: Customs procedures need to be more streamlined; wasted time in customs procedures is deducted from the final products’ shelf life in addition to the time that is consumed during shipping.

11. Absence of some laboratory tests: In some cases, some rare tests such as packaging emigration tests are not available in any lab in Egypt. There are also no laboratories that perform nutrition facts and calorie tests in an accurate and timely manner. Enterprises also encounter problems with official laboratories in terms of inaccuracy of results and slow response times.

12. Shortage of high-quality local packaging material: The local market lacks access to high-quality packaging materials, especially aluminum foil, which is the basic packaging material for processed cheese.


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13. Shortage of high-quality local cheddar and butter manufacturers: The quality and quantity of cheddar and butter available in the local market are insufficient. The presence of local cheddar and butter with required quality and amounts is vital to create a more competitive advantage for Egyptian processed cheese in export markets, especially when the world prices of cheddar and butter drop.

14. Bad practices along the forward supply chain: Companies such as Milkana have suffered from poor product handling practices by retailers and wholesalers, so much so that they occasionally resort to providing these retailers and traders with GMP and GHP trainings, which has succeeded in reducing the rate of return items by 53%.

15. Non-unified definition for MSMEs: Most dairy industry companies are considered MSMEs according to the CBEs’ official definitions of MSMEs; therefore, most agencies use their own narrower definitions.

16. Expanded informal sector: Although the number of cheese processing enterprises exceeds 4,000 companies, only 477 of them operate in the formal sector and only they are allowed membership with the CFI. The IDA’s registered dairy products establishments were at 394 establishments.

17. Unavailability of more accurate data.

D.3. Dairy MSMEs level

1. Location: In most cases, milk and dairy processing MSMEs are located in residential or agricultural areas, not in dedicated industrial zones.

2. Quality testing: Most milk and dairy processing MSMEs possess no laboratory instruments. Field visits revealed that the only test performed regularly is the clot test to verify the microbiological quality and the heat stability of milk by boiling. No adulteration tests take place.

3. Specifications: Protein content percentage is supposed to range between 6.5% and 8% in vegetable-oil-based processed cheese. Since adding protein is expensive, we found that many companies resort to reducing the cost, with the quality being reduced simultaneously. The average protein contents in the Feta and Tallaga cheese of some MSMES were 4–4.5% and 5.5–6.5% respectively.

4. Training: Most milk and dairy products SMEs’ staff and laborers have not received any formal training.

5. Environmental issues:

• The use of groundwater in rural areas is prevalent in dairy processing MSMEs.

• There are no tests performed to control water quality. • Water used in processing is not reused and drained immediately, leading to

tremendous waste. • Whey protein that is created by heat as a by-product of dairy processing is

rarely used; some manufacturers use whey in processing cheese by-


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products, i.e., Mish and Shenklish cheese, or they sell the whey to confectionaries. Others drain the whey untreated into regular sewage drains which ends up contaminating the soil.

• Alfa Milk contracted with Lacto Misr company (Misr Lactose, industrial zone in Hod Issa, Beheira) to supply them with 1,000 tons of whey daily for 10 years. Misr Lactose provides 80 refrigerated cars with a capacity of 5,000 liters per car to collect whey three times a day (1,200 tons daily). Such pioneering initiatives are effective in dealing with the problem of waste whey but are in need of expansion as most whey is drained to the sewage.

6. Marketing:

• Traditional soft cheese manufactured from crude milk, i.e., Domiati, Malawi, and Fayoumi, are increasingly disappearing as market demand shifts to inexpensive, low-sodium, vegetable-oil-based processed cheeses. This causes many traditional cheese makers to switch to manufacturing processed cheese.

• R&D efforts are needed to develop traditional soft cheese manufacturing made from pure crude milk by helping manufacturers use pasteurization, safer powder rennet, new packaging, and barcoding.

• In most cases, traditional soft cheese manufacturers have no brands and sell their products in unlabeled containers.

7. Technical problems:

• The increased acidity percentage and lower protein is a common problem affecting the quality of raw milk.

o The estimated time for middlemen and traders to collect the needed amounts of milk is more than three hours, without any refrigeration performed on the milk. Traditional Ras cheese manufacturers sometimes consider cooling as a sign of un-fresh milk.

• One of the common problem encountering Ras cheese processing is weak consistency, “spongy texture.”

o This might be due to the high initial acidity in raw milk or improper pressing, leaving some air bubbles and cavities in the cheese wheel.

• Non-conformities during adjusting moisture: o High acidity: contributes to higher cooking temperatures, lowering

quality and affecting taste. This results in decreasing the cheese price by EGP 2–3.

o Gas forming: gas forms in the base of the cheese wheel when the milk is adulterated by H2O2 or starch. This results in decreasing the cheese price by EGP 7–10.

o Curdled milk: this occurs when the milk used in the processing is curdled due to high acidity before adding the rennet.

o Cracked cheese wheels: contributes to excessive loading on the base wheel when they are stacked on racks or due to improper and rough handling. The occurrence rate of these faults was about one to two molds a year.

E. DAIRY PRODUCTS MARKETING CHANNELS

This part of the study offers a brief analysis of the marketing channels of some main


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dairy products, namely: vegetable oil processed cheese, Domiati cheese, European cheese, Syrian cheese, ghee, Ras cheese, Malawi cheese, processed cheese, and instant powdered-milk products.

E.1. Vegetable Oil Cheese

Dairy MSMEs, especially those in rural areas, find no alternative to wholesalers and cheese traders as the only marketing channel for their products. Sometimes producers attempt direct sales to retailers via refrigerated cars to surrounding villages or even adjacent governorates. Other marketing channels for such types of cheese include renting a place in surrounding governorates to serve as refrigerated distribution points that will perform their marketing and selling functions. In some cases, factories have their own outlets to directly reach the final consumer. A small amount of the surveyed dairy MSMEs export their products through an exporting agency to regional markets.

E.2. Domiati Cheese

In most cases, manufacturers of Domiati cheese sell their products to cheese traders before the cheese has aged, due to a lack of financial capabilities. Some Domiati cheese manufacturers export a part of their products via exporting agencies. A small portion of Domiati cheese is stored for the manufacturers at facilities owned by traders. Payments are deferred, to the detriment of the manufacturers, who have little leverage since a trader has a monopoly in every.

E.3. European Cheese, i.e. Gouda & Edam

These special types of cheese are mainly sold to restaurants, hotels, and hypermarkets, such as Ragab sons, Spinney’s, HyperOne market, Carrefour, Khair Zaman, and Metro.

E.4. Syrian Cheeses, i.e. Ackawi & Halloumi

Syrian cheeses such as Ackawi and Halloumi represent new recent dairy consumption patterns in Egypt. Syrian cheese is sold to hotels, especially in Hurghada and Sharm El-Sheikh, in addition to wholesalers and retailers via their sales teams. In most cases, Syrian cheese is sold in specialized Syrian dairy product grocery stores, in places where Syrian communities are located, such as 6 October, New Cairo, etc.

E.5. Ghee

Ghee products, especially those produced in rural areas, are sold mainly to rural households and confectionary factories. A new marketing pattern for ghee has recently been noticed, where ghee is collected from factories and supplied to large-scale companies.

E.6. Ras Cheese

Ras cheese is sold mainly to cheese traders. A small portion is held by traders in storage houses to be ripened for the account of manufacturers due to their lack of financial capabilities. Manufacturers feel forced to depend upon traders that control pricing and payment terms. Stored molds are carefully selected in the beginning of the season in winter (November or December). Ras cheese is exported to Arab countries via export agencies or, rarely, by the manufacturer. Vacuum-packed Ras


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cheese of ½ kg, 1 kg, 5 kg, and 12 kg molds are exported to Canada and the US for the Arab populations there.

E.7. Malawi Cheese

Malawi cheese is sold mainly to cheese traders to be distributed in Assiut, Qena, Luxor, and New Valley Governorates. The peak season for sales of Malawi cheese is during Ramadan. Malawi cheese is produced on an industrial scale in just two to three dairy product MSMEs in Malawi, Minya Governorate. One of these factories has its own cheese outlet.

E.8. Processed Cheese

Because processed cheese is mainly considered an export product, export markets are the first market channel. Other marketing channels are wholesalers and retailers.

E.9. Instant-Milk-Powder Products

Instant-milk-powder products are mainly sold to hypermarkets, i.e., Metro, Khair Zaman, Fathallah, Raya, and Othaim. Other marketing channels are sales agents and retailers.

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Figure 13: Egyptian dairy MSMEs marketing channels by product

Vegetable Oil Cheese

Wholesalers

Retailers

Refrigerated distribution points

Outlets

Supply to companies

Export (via an exporting agency)

Domiate cheese

Cheese traders


Restoring a small portion

European cheese

Restaurants

Hotels

Hypermarkets

Syrian cheese

Hotels

Wholesalers

Retailers

Ras Cheese

Cheese traders


Restoring a small portion

Malawi cheese

Wholesaling traders

Hypermarkets

Processed cheese

Export

Wholesalers

Retailers

Ghee

Large scales companies

Confectionary factories and

shops

Rural households

Instant Milk Powder

Products

Hypermarket

Sales agents

Retailers

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CHAPTER 3: RECOMMENDED INTERVENTIONS

This first part of this chapter is concerned with reviewing previous project that concerned the Egyptian Dairy VC, highlighting their main objectives and the interventions they provided before this study was conducted. The second part of this chapter is dedicated to recommended interventions to enhance the performance of milk and dairy products’ VC, in light of the results of chapters 1 and 2, in addition to the results of previous studies.

A. REVIEW OF PERVIOUS DAIRY VC PROJECTS

This section gives a description of the main objectives of the most important pervious projects that have been implemented by local and international donors.

A.1. Dairy Processing MSMEs Development, FAITC, SFD and AfDB

In 2011–12, the “Dairy Processing MSMEs Development” project was launched as a and funded by the African Development Bank (AfDB) to assess the technological gaps of dairy products MSMEs. The project was co-funded by the Social Fund for Development (SFD) through providing technical solutions by direct consultations, on-job trainings, and workshops. The project was implemented in two phases, with the first phase being a diagnosis study held to survey and technically assess the dairy MSMEs supported by the SFD. For this reason, 74 dairy MSMEs were visited in 13 governorates, and their technical needs were as follows. First, poor food safety practices due to lack of awareness related to quality and food safety standards resulting in nonconforming products. Second, dilapidated, non-hygienic equipment and poor infrastructure. Third, misunderstanding of the basics of dairy science and technology. Building on the findings of the first phase, six awareness seminars were held in Dakahlia, Beheira, Gharbia, Fayoum, Minya, and Assiut to build the capacity of 140 dairy MSMEs in terms of quality and food safety standards to be applied in their production. In addition, participants were educated in policies that increase productivity and reduce losses and non-conformities; trainings were also offered on how to extend the shelf life of their dairy products. In that way, six on-the-job training courses were implemented in Dakahlia, Sharkia, Kafr El-Sheikh, Fayoum, and Minya to train 71 technicians from dairy MSMEs on how to make processed cheese, mozzarella, recombined cheese, set and stirred yoghurt using pure isolated cultures, Labneh, and Qarish cheese. In addition, 42 technical consultancies (field visits) were designed to solve special technical problems encountered by dairy MSMEs, after surveying their technical problems and checking their production lines either individually or in groups. For improving the capability and competitiveness of traditional dairy MSMEs that depend mainly upon their inherited experience, the project introduced new products such as sour cream, Labneh, and set and stirred yoghurt using pure isolated cultures. These new products were chosen carefully according to the technical needs of the selected companies and their technological level. Finally, eight technical feasibility studies were conducted by FTC dairy experts to help new and current manufacturers who want to produce Domiati cheese, Ras cheese, processed cheese, recombined cheese, yoghurt, mozzarella cheese, ice cream, and sour cream. This was in addition to two additional technical feasibility studies for liquid milk packaging and milk collection centers.

A.2. Technical Assistance for the Improvement of the Quality of Milk and Dairy Products in Egypt, FAITC, AINIA and AECID

In 2012, the FAITC in cooperation with the Spanish AINIA Technology Center implemented


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the “Technical Assistance for the Improvement of the Quality of Milk and Dairy Products in Egypt” project, funded by Spanish Agency for International Development Cooperation (AECID). The project consisted of five phases. The first was a revision of diagnosis and quick scans. The second consisted of Training of Trainers (ToTs) and a study visit to Spain for six Egyptian dairy experts. The third phase was conducted by Spanish experts. With assistance from the Spanish-trained Egyptian experts, they provided technical assistance to 12 dairy MSMEs and 10 milk production farms. The fourth phase, performed by the Spanish-trained Egyptian experts, provided 76 trainees in 35 dairy MSMEs in Damietta, Dakahlia, Sharkia, Gharbia, and Beheira on “Systematic Cheese Making.” This on-the-job training introduced new Spanish hard cheeses such as the “Mahon” and another napkin cheese, which are like the Egyptian Ras cheese, but with a higher conversion rate (8 liters of milk produce 1 kg of cheese). These kinds of cheese were successfully evaluated by dairy manufacturers and experts, but the practical dissemination of the new cheeses needed more hygienic practices that were not applied in most of the selected dairy MSMEs. The final phase was for knowledge dissemination and matchmaking.

A.3. Egypt – Dairy Sector Development, EU,5 2012

The overarching goal of this EU-funded project, implemented from 2011-12, was to identify needs and propose actions aimed at improving the performance of agricultural MSMEs, focusing specifically on small and medium farmers. The rationale was to strengthen and increase the economic efficiency of the Egyptian dairy sector by improving small farmers’ livelihoods, linking them to the market, improving their productive and allocative capacity, creating employment, and reaching a sustainable development model. The specific objectives of the project were as follows:

1. To provide a study on the dairy sector in Egypt; 2. To formulate terms of reference (ToRs) for a technical assistance (TA) program

aimed at: • Strengthening one or more elements of the Dairy VC; • Bringing small farmers at the appropriate level of sanitary and phytosanitary

standards • Developing small farmers’ marketing capacity and build contractual

partnerships amongst agri-business stakeholders.

The objectives of this study were divided into three phases, aimed at gradually identifying and focusing the scope of intervention of the TA:

1. An evaluation of the current situation and dynamics of the Egyptian dairy sector by focusing specifically on: type and size of dairy farmers and agri-business, production, processing and distribution channels and the links between small farmers and the agri-businesses. The evaluation identified the main gaps and bottlenecks as well as potential areas for sector development. This phase allowed for an evaluation and subsequent choice of different VC development scenarios for further analysis and for the eventual identification of a subsequent TA intervention.

2. Developing specific recommendations for an intervention and a proposal of several development scenarios for one element of the Dairy VC and sector development. An analysis of the scenarios was provided, and the rationale for the choice of these scenarios identified and justified. The recommendations also outlined the potential for development, specifically focusing on small farmers and, including realistic proposals

5 http://www.veteffect.eu/project/egypt-dairy-sector-development


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to overcome constraints and investment estimations (both from public and private side).

3. Provision of a TA program in the selected element of the Dairy VC. The program included the formulation of a financial plan and TA program focused on achieving improvements for small and medium farmers, either directly or indirectly.

A.4. Ras Cheese Consortiums, FAITC and UNIDO, 2013

The FAITC implemented the “Ras Cheese Consortiums” project from 2013 to 2014 in cooperation with the United Nations Industrial Development Organization (UNIDO) under the project “Export and Origin Consortiums” to unify the marketing efforts of four dairy Ras cheese manufacturers in Dakahlia and Beheira and sell their cheese with the same specifications for Ras cheese to the Gulf Cooperation Council countries under one agreed-upon brand.

A.5. From Farm to Fork, Dairy Stakeholders Analysis, Knowledge Economy Foundation (KEF), 2015

This study aimed at analyzing the dairy manufacturing chain in Egypt to stand upon the mean characteristics of small, medium, and large enterprises working in the Egyptian dairy industry, with a focus on describing the channels that links them with the farmers. The study discussed the part of the VC concerned with dairy MSMEs and large-scale enterprises, their input channels with milk suppliers, and their marketing channels to reach the final consumer. The main objectives of the study were as follows:

• Shedding light on some dairy manufacturers, both MSMEs and large scale, and describing their main profile characteristics.

• Analyzing the milk supply distribution channels of the dairy manufacturers • Analyzing the final product distribution channels of the dairy manufacturers.

In order to collect the needed information related to the dairy manufacturing, both MSMEs and large scale, the study methodologies were as follows:

1. The study conducted a field questionnaire with MSMEs depending on an existing database of traditional dairy manufacturers.

2. Large-scale manufacturers were contacted directly, by telephone, or by email to help describe both the input and distribution channels and at the same time answer the main question: “Are they willing to help in establishing milk collection centers: yes or no, and why?” Large manufacturers are critical in developing milk collection centers.

3. In the case of large-scale companies, the study also depended on other sources of information such as the company’s website, media interviews, and newspapers announcements.

A sample of 24 field visits to dairy processing MSMEs in five governorates was chosen. The study resorted to deliberate sampling due to the impossibility of randomly surveying varied dairy products manufacturers, either those using fresh raw milk or skimmed powder milk. At the same time, the geographical framework of the study was also carefully chosen to best represent the Egyptian dairy sector, as the study was conducted in the most important governorates, in terms of either producing milk or manufacturing traditional dairy products. Meanwhile, a sample of 10 large-scale dairy processing companies was chosen to be surveyed, namely: Juhayna, Almarai, Danone, Lactel, Dina Farms, Labanita, Lamar, Green Land, Obour Land, and Domty. These companies control most of the Egyptian market share


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in terms of UHT milk, yoghurt, cheese, and other types of dairy products. The study used some of the statistics tools i.e. the arithmetic mean “average”, minimum, maximum and the variation coefficient.

A.6. Promoting Mediterranean Dairy Products, LACTIMED project, EU, 2015

The LACTIMED project aimed to strengthen the skills and links between the different stakeholders of the Dairy VC in pilot territories. The aim of this project was to lead Dairy VC stakeholders to develop a common understanding of constraints facing the Dairy VC as well as improve communication to support the implementation of policy instruments, such as industrial cluster formation. Thus, representatives of farmers, processors, and institutional bodies will be better armed to act as relays between the private sector and local/national authorities. A grant of 40,000 euros was given to establish a milk collection center in Abou El-Ata village, Nubaria, Beheira Governorate. The milk collection center was designed to receive 5–10 tons of fresh milk daily from the five surrounding collection points affiliated with the national cooperative associations. The project surveyed the potential beneficiaries supplying their milk to the milk collection center in order to estimate their cattle needs in terms of nutrition, veterinary care, etc. The project also hygienically redesigned the milk collection center and reconstructed it from the point of view of food safety and international and local legal requirements and standards for establishing food facilities. Milk collection center staff were selected and trained on sanitation and hygiene in milk collection units, chemical analysis of milk, Hazard Analysis Critical Control Point (HACCP) certification in milk collection centers, and cheese and fermented dairy product processing. The machinery and equipment needed for the milk collection unit were specified, purchased, and installed, in addition to cooling tanks attached to corporative associations and a car equipped with a 5 ton refrigerated tank. The crux of the project was its dependence on cooperatively operated milk collection points to supply milk to the center. Unfortunately, the cooperative associations did not fulfill their duties in receiving milk from farmers and so the collection center failed to achieve its goals.

A.7. Rural Income and Economic Enhancement (RIEEP) Project, ADB, 2015

This project aimed to contribute to the improvement of the socio-economic livelihood of the economically active rural smallholder farmers/producers engaged in the production, processing, and marketing of selected horticulture and milk and dairy products. Specifically, the project assisted in integrating small farmers/producers and agricultural workers equitably into domestic and international VCs of horticultural, milk, and dairy products through enhancing their efficiency and productivity and increasing the quality of their products, while promoting entrepreneurship, encouraging and supporting the establishment of high-value added businesses, and contributing to income generation and the creation of direct and indirect job opportunities. The technical needs were evaluated of milk collection units affiliated with the agricultural cooperative associations in Beni Suef (El-Halabya, Ibshana, El-Newaira, Beni-Madi, and Nazlt Ikfas). Also, a VC analysis was conducted in these villages and centers to design a training program to bridge the technical gaps (six training days, 150 trainees). Five complete technical, marketing, and financial feasibility studies for the Beni Suef cooperative associations were prepared to enhance milk production, handling, processing, and sales all over the Dairy VC, namely: a dairy farm in Ibshana, a milk collection unit in Ihnasia, a mini-dairy processing unit in Beni-Madi, a dairy processing plant in Ibshana, and a dairy product outlet in Ibshana. All the above-mentioned feasibility studies were submitted to


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the AfDB as deliverables of the RIEEP project and were approved for financing by the SFD.

A.8. USAID SEED Summary Analysis of VCs Assessment and Priorities for Interventions, September 26, 2016

In this summary analysis, USAID’s SEED Project considered the Dairy VC as one of seven identified VCs in order of priority for SEED to develop. The table below presents a sub-sector description and brief economic indicators (as available), as well as governmental priorities, the main constraints identified by the report and other sources, proposed interventions from SEED’s point of view, potential mezzanine organizations, and recommendations and/or justifications. Table 15: SEED summary analysis of Dairy VC assessment

VC Government Priority

Main constraints

Potential Interventions

Potential Mezzanine

Organizations

Recommendations and Justifications

1. Dairy Milk production and marketing is dominated mainly by the informal private sector, including producers, collectors, middlemen, processors, traders, and customers. Small family producers with 1–8 cattle constitute the majority of dairy producers and are the major source of raw milk (80–85% of milk production). 70% of milk production is traded as loose milk.

The MTI supports the Food Export Council (FEC). MALR supports research for increasing agriculture and livestock production to increase food security (e.g., Animal Reproduction Research Institute)

- Poor production practices. - Fragmented milk production community and absence of modern collection, cooling, and transportation of milk. - Lack of access to finance. - Weak marketing channels and access to market information (middlemen dominate).

- VC mapping - VC assessment - Building technical and managerial capacity of milk collection communities (MCCs) including market linkage. - Promoting viable commercial linkages between MCCs and large milk processors. - Access to finance to small producers. - Market information system. - Dissemination of technical information of research centers to small producers.

- ITC - Egyptian Milk Producers Association (EMPA) - Chamber of Food Industries - CARE Egypt - KEF

This a typical area for adding value to the sub-sector, where most of the milk production and producers currently lack formalization, hygiene controls, and modern technology.

B. SUGGESTED INTERVENTIONS TO IMPROVE THE DAIRY VC


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This section highlights the efforts of previous projects aiming to integrate the Egyptian Dairy VC. Also, needed interventions are suggested to improve the Dairy VC based on perceived obstacles surveyed in Chapter 2. Recommended interventions to enhance the Dairy VC are classified under eight main categories:

1. Technical Assistance 2. Technology Transfer 3. Training 4. Quality 5. Environment 6. Marketing 7. Export 8. Investment Finance.

Suggested interventions were discussed in the presence of dairy stakeholders at the USAID SEED office on June 4, 2018, as part of the third focus group, with key dairy stakeholders.

B.1. Technical Assistance

1.1: Technical assistance for increasing quality, safety and nutritional values of milk and dairy products organic clusters

The FAITC, FTRI, Animal Health Institute, Animal Production Institute, and other related research institutes and dairy science departments in Egyptian universities should be invited to provide, either individually or through an integrational proposal, a “from farm to fork” technical assistance program for selected milk and dairy enterprises across the Dairy VC. Technical assistance is necessary to help MSMEs overcome technical problems that affect the quality and safety of dairy products and enhance their nutritional values. The size of the manufacturer should be taken into consideration when designing a technical assistance package. since the needs will be significantly different depending on the size of the business. An intervention funded by a donor agency and/or a leading large scale dairy company as a Corporate Social Responsibility (CSR) initiative is needed to support the above-mentioned governmental entities. Technical assistance targets current enterprises along the Dairy VC from farm to fork, including basically the first and second tiers of the VC as described in Chapter 1, i.e., small milking farms, collection points and centers, milk and dairy product factories, rennet processing factories, and dairy equipment manufacturers. Priority should be given in this intervention to organic clusters in the top-ten milk and cheese production governorates such as . Beheira and Dakahlia.

1.2: Qualifying informal dairy MSMEs to join formal economy The majority of Egyptian dairy enterprises belong to the informal sector, where they have not been registered due to partial or total absence of industrial registration requirements. At the time of the study, there were 394 registered dairy MSMEs in the IDA and 453 in the Food Industries Chamber. The informal sector is estimated to have between 4,000 and 5,000 enterprises at the time of the study. An official enumeration of informal dairy MSMEs is needed. This intervention will move informal dairy MSMEs into the formal economy through a package of incentives provided by related stakeholders, i.e., the FAITC, FTRI, EOS, MSMEDA One Stop Shops (OSSs), and non-financial services (barcoding support through a 50% GS1 discount, exhibitions, and loans). The FAITC, FTRI, and EOS in cooperation with the IDA can provide informal dairy MSMEs with awareness, training, and specialized consultations so they comply with legislations and requirements. The MSMEDA can provide


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other kinds of incentives represented in discounts on purchasing from MSMEDA beneficiaries. The IMC has the ability to subsidize training fees to informal dairy sector members in national or private associations with industrial activity. A primary agreement between the FAITC, which had success in converting dairy MSMEs to the formal economy, and the IDA was initiated and recommended by the study, starting with a pilot of two to three informal dairy enterprises and building their capacity to comply with industrial registration requirements according to Law 15/2016. This law incentivizes the formation of industrial clusters provided that enterprises show the potential for development and reconciliation of their informal activities to relocate to such clusters. The FAITC also offers another incentive to reconciled informal sector businesses, which is to be granted access to their retail outlet network of more than 6,000 outlets affiliated with the MSIT.

1.3: Dairy Business Incubators It is recommended to establish two to four dairy business incubators in the most important milk and dairy governorates in Lower and Upper Egypt, i.e., Dakahlia and Beheira in Lower Egypt and Fayoum and Minya in Upper Egypt. The MSMEDA, FAITC, IMC, and FTRI are potential partners to work toward establishing and managing these incubators. The main role of such incubators is to prepare and introduce new entrepreneurs for the Egyptian dairy sector along the Dairy VC.

B.2. Technology Transfer

A lack of linkages between industrial needs and academic research is a vital concern that hinders the growth of Egyptian industry in general. Proper communication between manufacturers and researchers needs to be established in order to feed academic research with both research ideas and budgets to achieve the expected results. The pricing system of research needs to be reviewed as in many cases conflicts between manufacturers and researchers occur due to either exaggerated pricing from researchers or underestimation of their value by manufacturers. Thus, a systematic research pricing technique is required. On the other hand, study visits revealed that establishing or/and strengthening Egyptian packaging, powder rennet, and dairy equipment represents a current need in the Egyptian dairy sector. The Academy of Scientific Research and Technology (ASRT) can be invited to issue a call for proposals and to fund these interventions.

2.1: Technology transfer for dairy packaging subsector Some processed cheese manufacturers who were visited said there is a need for a high-quality Egyptian packaging industry to supply aluminum materials like foil and strips, which are currently entirely imported. Egyptian industrial policy should be more concerned with developing local manufacturing for material and technology used in Egyptian dairy products in general and processed cheese packaging material in specific, as local suppliers are needed to fulfill the requirements of such an important sub-dairy industry. The Plastic Technology Center affiliated to the ICTI is a potential main partner in this intervention. A suggested scenario for this intervention would be to invite investors, manufacturers, and packaging material producers to a focus group workshop to discuss in detail the Egyptian dairy industry’s needs for packaging materials. This will provide a look from the point of view of manufacturers to measure the current capabilities of the packaging industry in order to determine the investment opportunities for current and new investors in this important supplementary industry. The General Authority for Investment (GAFI) and import substitution program officials at the IMC are strongly recommended to be involved in this intervention.

2.2: Technology transfer for powder rennet processing subsector The Egyptian traditional cheese industry is still mainly dependent on animal rennet in


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processing Domiati and Ras cheese. The animal rennet industry, as previously described, depends on illegal raw materials, represented in the abomasum (fourth stomach) of calves which are protected from slaughter. Aside from the legality of the use of the abomasum, there is also the issue of hygienic practices in rennet factories which, being informal, are in need of control and improvement via more advanced filtration technology, among others. Another side of the rennet problem in Egypt is represented in the extreme improper practices noted in Fayoum and Minya Governorates, where most Fayoumi and Malawi cheese manufacturers scrape the coagulated milk inside the raw and contaminated abomasum and then use it, instead of extracting the rennin enzyme using more sophisticated methods. This poor manufacturing practice results in an undesired flavor and aroma that is rejected by most Egyptian consumers, except in the governorates where these kinds of cheeses originate. From a business point of view, Fayoumi and Malawi cheese would receive more market share if proper attention was given to solve this issue. Imported powder rennet, from either microbial or plant origin, is widely used in formal Egyptian cheese factories, especially those making processed cheese with vegetable oil. However, traditional cheese manufacturers do not believe that powder rennet is suitable for ripened white cheese such as Domiati cheese; they also claim that undesired properties of cheese rheology correlate with the usage of powder rennet in cheese. From this, it should be said that an Egyptian powdered rennet industry needs to educate traditional manufacturers on the benefits of powder rennet. More research efforts should be funded to extract rennin, microbial or plant-based enzymes that are suitable for Egyptian traditional cheese. The ASRT is strongly invited to assign a budget and raise a call for proposals to solve this industrial problem. The FTRI, National Research Institute, and food science departments in agriculture colleges could be invited to submit their proposals with the cooperation of industry partners to support the academic efforts and benefit from them.

2.3: Technology transfer for dairy equipment manufacturing subsector The Egyptian dairy equipment industry depends mainly on imported materials, such as different grades of stainless steel, like the 304 and 316 grades to manufacture storage tanks, silos, and cheese tables, which are mostly used in dairy or food equipment workshops or factories. Advanced dairy-equipment manufacturers make pasteurization machines, and chillers, and they mostly depend on importing control panels, pumps, and motors. The Arab Organization for Industrialization (AOI) and the ASRT are strongly recommended to be involved in localizing some of these high-tech components.

2.4: Technology transfer for new dairy products processing The Egyptian dairy industry in general and dairy MSMEs in particular need new dairy products, which can come from Europe, for example, or can even be developed locally. The FAITC exerted efforts in 2012 to introduce two types of traditional Spanish cheeses in cooperation with the AINIA technology center in Spain, where 33 Egyptian cheese MSMEs were trained on processing “Mahon” and a Spanish napkin cheese. But unfortunately none of these MSMEs had the technical capacity in terms of the ventilation and refrigeration facilities required to produce these types of European semi-hard cheese. Therefore, this project can be replicated as a future intervention in tandem with a capacity-building program to bridge the gaps MSMEs face when producing new cheeses. Efforts should be exerted to introduce new local dairy products in cooperation with R&D entities and dairy industry companies.

B.3. Training

Training is vital for developing the skills of currently employed staff in dairy MSMEs, as well


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training to qualifying unemployed youth to help them join the labor market. Some governorates suffering from the lack of skilled labor, such as Damietta, face an issue where laborers are attracted to other industries such as furniture and confectionary, since these industries require less-skilled laborers. Thus, this intervention should be classified into two main categories:1) training programs for current dairy MSMEs staff and 2) training programs for prospective employees in the dairy sector.

3.1: On-the training program for dairy MSMEs’ staff This intervention targets current technical staff in dairy plants, either in the formal or informal milk and dairy MSME sector in Egypt. Vocational, quality, and food safety trainings should be designed. This should come after a training-needs assessment study is conducted for dairy MSMEs in Lower and Upper Egyptian governorates that are distinguished in milk and dairy products. The FAITC and FTRI are the main suggested partners to perform vocational and quality trainings in collaboration with the CFI and MSMEDA to train their beneficiaries. In addition, a list of informal dairy MSMEs to receive these trainings can be suggested by the FAITC, IMC, ICA, and IDA.

3.2: Training for employment in the dairy sector

Many previous projects have aimed to qualify unemployed youth to join labor markets, as previously organized by the IMC and MSMEDA (for young entrepreneurs), for example. This intervention is recommended along the same lines, aiming to deal with the general unemployment problem and to provide the dairy industry with skilled labor via vocational, quality management, marketing, and soft skills training. The vocational training list includes but is not limited to the following items:

• Systematic cheese making • Domiati cheese processing • Processed cheese processing • Ras cheese processing • Yoghurt and fermented dairy products • Ice cream processing • Dairy equipment maintenance • Dairy information systems

Quality and marketing training, including but not limited to:

• GMP and food safety principles in dairy plants • Good handling practices of milk and dairy products • Total quality management in dairy processing plants • Branding management • Marketing and pricing of dairy products • Project Management Professional (PMP) certification • Entrepreneurship program (feasibility study, business plan, etc.) • Primarily soft skills training list: effective communication skills • Problem-solving skills • Leadership skills • Strong work ethics


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• Ability to work in a team

B.4. Quality

4.1: Qualifying dairy MSMEs to comply with international quality systems requirements

Quality management systems such as ISO FSSC (Food Safety System Certificate), ISO 9001: 2015 (Quality Management System), ISO 14001: 2015 (Environmental Management), and ISO 45000: 2018 (Occupational Health and Safety) are vital requirements for businesses looking to expand their market share locally and in export markets. These are also requirements to join the Food Export Council (FEC) and receive their benefits package. He FAITC, FTRI, KAIZEN center, NFSA, and National Quality Institute (NQI) are the primary suggested partners to qualify dairy MSMEs to comply with international quality systems requirements. Target groups of this intervention are registered dairy MSMEs in the IDA and CFI, in addition to MSMEDA beneficiaries. An approved private consultant could be invited as well for submitting proposals.

4.2: Program for eliminating the cost of poor quality in dairy MSMEs

Managing and eliminating the cost of poor quality is very important in modern quality management theory. According to BS 6143: 2007, “a guide to the determination and use of quality related costs” waste and poor-quality costs needs to be calculated in accounting standards. From a study to estimate cost of quality in a UHT plant in Egypt in 2013 (Kassem, 2013), poor quality cost an estimated at EGP 9.8 million annually and represented 83.22% of the total cost of quality in the case-study of one factory. These costs were not tracked in the regular accounting systems of the factory; they could only be tracked by establishing a well-designed cost of quality monitoring program. Individual consultants as well public and private associations working in the field of quality could be invited to submit their proposals on creating a training program for MSMEs. Target groups are registered dairy MSMEs in the IDA and FIC that have applied for integrated quality systems.

4.3: Translating Egyptian dairy standards

There is currently an EU ban on the imports of Egyptian milk and dairy products. An obstacle to lifting this ban is the lack of an official translation of Egyptian dairy standards by the EOS, which is also an essential requirement to reaching other foreign export markets in Africa, the Far East, US, etc. Establishing a translation unit in the EOS is highly recommended to encourage Egyptian dairy exporters to communicate properly with export markets and facilitate the completion of transactions.

4.4: Milk & dairy products reference laboratory

A new lab for raw materials, packaging, and final products testing is needed to act as a reference against which test results from other labs are to be measured. This is in order to deal with and prevent conflicts in test results between the current labs. In addition, this reference lab can help in creating an accredited test result valid for all purposes across the VC in local and foreign markets. The FTRI and NRC are potential partners for this intervention in collaboration with other related laboratories. Target groups are all milk and dairy products enterprises in Egypt across the Dairy VC. The reference lab could help in facilitating the efforts of NFSA.

4.5: Developing Egyptian action plan for nutrition

The National Nutrition Institute (NNI) performs nutritional fact analyses on products in the


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Egyptian market, with the goal of verifying the veracity of the nutritional facts printed on products’ packaging. One of the NNI’s goals is to perform quality-control analysis for food products before granting them approval for sale in the market. The procedure of approving nutritional facts for new products by the NNI is complicated and time consuming. On a strategic level, the study suggests developing an Egyptian nutrition action plan in the vein of the European Food and Nutrition Action Plan 2015–2020, which states that its strategic goal is

“to avoid premature deaths and significantly reduce the burden of preventable diet-related NCDs, overweight, obesity and all other forms of malnutrition still prevalent in the WHO European Region, which are strongly influenced by social determinants of health and have a profound negative impact on well-being and quality of life” (WHO, 2014).

This action plan will help in facilitating the process of approving nutritional facts labeling for milk and dairy products, as well as other food items.

B.5. Environment

5.1: Developing whey collection centers Whey is a very problematic byproduct of cheese making in milk and dairy factories, especially in traditional dairy MSMEs in rural areas, where they perform no waste-water treatment to mitigate the negative environmental impact of discarded whey. In most cases, traditional cheese manufacturers discard whey directly to the sewage drain. Or, in villages lacking public drainage, the whey seeps into the soil, since the cost of drainage by private trucks is very high. As shown by the field visits, one small dairy enterprise signed a 10-year contract with Misr Lactose to supply a minimum of 1,000 tons of whey daily. Misr Lactose provides its own refrigerated cars to collect the whey three times a day (1,200 tons daily). The whey is analyzed before being accepted via an Eco Scan device to measure protein percentage between 0.5–0.7%. This model needs to be replicated in other milk production governorates, i.e., Dakahlia and Damietta. A technical, financial, and economic feasibility study is needed to evaluate this intervention. Also, R&D efforts are needed to develop new methods to derivate new products from whey, especially “salted” whey, a byproduct of processing Domiati cheese.

5.2: Resources efficiency program for dairy MSMEs’ plants

Previous environmental projects have been funded by GIZ, such as the BRAMA and Waffer projects, which aimed to rationalize the use of material, energy, and water in industry. A similar, more specialized program is recommended to be designed and applied in milk and dairy product MSMEs. Potential intervention partners include the Egypt National Cleaner Production Center (ENCPC), affiliated with the ICTI, in addition to the MTI, FAITC, FTRI, and NRC. The suggested target group beneficiaries include the CFI, IDA, and MSMEDA.

B.6. Marketing

Suggested marketing interventions in this study consist of varied marketing levels on the macro or micro levels.

6.1: Promoting for an Egyptian inter-professional grouping for dairy producers

In Tunisia, as in Pakistan and Saudi Arabia and other countries, a successful experiment of developing a quasi-governmental entity for inter-professional grouping was created with the aim of gathering representatives of all decision makers in the date industry, i.e., farmers, date product manufacturers, and exporters, in addition to representatives of governmental


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associations. The aim was to discuss the date sector’s issues and recommend short, medium, and long-term polices to develop the date sector in each country. Such inter-professional grouping depends financially on a portion of export revenues to finance activities such as technical assistance, training, technology transfer, innovation, etc. In Egypt, the MTI works to develop an Egyptian inter-professional grouping for dates and date products. The same efforts need to be exerted in the milk and dairy products industry.

6.2: Promoting for the first Egyptian milk and dairy products festival in Dakahlia

In 2014, the FAITC in cooperation with the Khalifa International Award for Date Palm and Agricultural Innovation (KIADPAI) of the United Arab Emirates, organized the first Egyptian festival for Egyptian dates in Siwa Oasis. The festival aimed to facilitate matchmaking between Egyptian manufacturers and international buyers, in addition to inviting local and international scientists to submit and present their papers and publications. The festival succeeded in highlighting the Egyptian date sector and encouraging key actors in the date industry to innovate new products and to improve good agricultural practices (GAP) and good manufacturing practices (GMP) in date farms and factories in order to compete on one of 20 prizes provided by the KIADPAI. For the milk and dairy product sector, it is highly recommended to develop a similar festival in Dakahlia Governorate to promote Egyptian milk and dairy products with the same mechanism implemented in the date sector by the FAITC.

6.3: Promoting contractual production in the dairy sector

Contractual agricultural production is an incentivizing marketing strategy that aims to eliminate risks encountered by both producers and manufactures from market fluctuations, either in quantities or prices. This is a type of agreement whereby a manufacturer guarantees to buy certain quantities at agreed-upon prices from an agricultural producer. At the same time, this production strategy could be used as a finance tool for producers if they receive cash in advance at the start of an agricultural cycle or, as in most cases, they receive a portion of their payables from manufacturers at contracting. For the milk and Dairy VC, there is a need for future interventions aimed at promoting contractual production, i.e., between producers and manufacturers, manufacturers and retailers, and so forth. This strategy has already been implemented by some dairy MSMEs that were visited for this study. For example, a cheese manufacturer in Minya Governorate has contracted with a milking farm in Fayoum to supply an agreed-upon amount of dairy milk.

6.4: Registering Egyptian traditional cheeses Registering products through the International System of Appellations of Origin protects the intellectual property rights of regions and countries in exclusively manufacturing and exporting unique, historical products. Many dairy products are produced exclusively in Egypt, i.e., Domiati, Ras, Malawi, and Fayoumi. National efforts should be exerted in registering these dairy products for Egypt. The international agreements sector of the MTI should support taking steps toward registering with the World International Property Organization the appellation of origin protected under the “Lisbon Agreement for the Protection of Appellations of Origin and their International Registration.”

6.5: Inter-governorates matchmaking exhibitions. Matchmaking inter-governorate exhibitions for milk and dairy products are recommended to be regularly organized by relevant governmental or even private entities in governorates producing milk and cheese. This can help as an informative tool to provide key actors in the Dairy VC with much-needed information related to additive equipment suppliers, networking with varied dairy products manufacturers, and merchandizers in local markets. The MSIT is


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invited to participate in organizing such events in cooperation with other involved entities such as the CFI, MSMEDA, etc.

6.5: Marketing, pricing, and branding consultations for dairy MSMEs Milk and dairy MSMEs need to acquire skills and receive consultations to develop marketing studies and strategies for their milk and dairy products. This will help them analyze the competition in their markets, evaluate their marketing channels, and take needed procedures to increase their market share and improve their marketing functions. Individual or associational service providers could be invited to submit their technical and financial proposals for providing a number of milk and dairy MSMEs with such consultations.

B.7. International Trade

7.1: Promoting for Egyptian traditional cheese export and origin consortiums in Damietta

Origin and export consortiums were first introduced in Egypt by a project funded by the United Nations Industrial Development Organization (UNIDO) in 2013. The FAITC was the promoter of establishing two export and origin consortiums in the date and dairy sectors. The purpose of such consortiums was to persuade three to four manufacturers to collaborate in marketing their final products in export markets. They were asked to promote one unique brand and through a legal framework where a unique brand and logo is owned by multiple producers simultaneously. In order to improve their chances in export markets, the consortium members agreed upon a technical protocol governing and specifying the production processes and the final product’s specifications that all the consortiums members are to be fully compliant with, in light of their export market orientation. These consortiums were partially successful with date producers in Siwa, where the KIADPAI founded the first date palm festival in Siwa Oasis. However, this trial failed in the case of milk and dairy products due to disagreements between the cheese manufacturers approached for the pilot. This trial is recommended for replication in Damietta Governorate through promotion by the FAITC, FTRI, MSMEDA, and other related governmental entities, after reviewing the lessons learned from previous projects.

7.2: Forging bilateral quarantine agreement between Egypt and potential export markets for dairy products, i.e., China & Brazil

As previously described in this report, bilateral agreements are needed between Egypt and potential export markets for dairy products, such as China, Brazil, and Russia. Many governmental entities should be involved in this assignment, i.e., the international agreements administration of the MTI, as well as the FEC, quarantine administration of the MALR, MoFA, GOEIC, and Export Development Fund (EDF). These agreements will help in opening the above-mentioned export markets to Egyptian dairy products.

7.3: Differentiating customs rates between similar HS code items

As previously described in Chapter 2, the customs HS code numbers only consider an eight-digit code, not a 10-digit sub-code. Therefore, customs items such as Milk Protein Concentrate (MPC) of 70% or 84% concentration both receive the same eight-digit HS code and are treated as the same product. The same goes for instant or regular powder milk in terms of tariffs. Therefore, the EDA and GOEIC are highly recommended to take steps toward more differentiation between different products with the same classification in terms of HS codes.


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B.8. Investment and Finance

8.1: Guide for investment in the Egyptian dairy sector Comprehensive, full, and integrated feasibility studies (i.e., technical, financial, legal, social, and marketing) for dairy projects in distinguished governorates in milk and dairy production are required to help guide investors. Individual and associational service providers in the field of the above-mentioned feasibility studies are to be invited to submit their technical and financial offers to develop comprehensive feasibility studies for different investment projects all over the Dairy VC, including but not limited to the following: - Dairy VC first level:

o Specialized milking farms o Milk collection centers o Manufacturing of different types of cheese and dairy products such as: Domiati Malawi Fayoumi Ras European semi-hard and hard cheese (Gouda, Edam, etc.) Processed cheese Vegetable oil cheese Yoghurt and other fermented dairy products (Qarish, Labneh, etc.) Ice cream Fat and oil dairy products

o Adjusting cheese Moisture o Cooled Refrigerators o Dairy outlets/ workshops

- Dairy VC second level:

o Milk production additives Powder rennet

• Vegetable origin • Microbiological origin

Organic acids i.e. Citric acid Glucono delta-lactone (GDL) Salt Preservatives Annatto (colors)

o Packaging material Foil Strips Cans Plastic jars

o Manufacturing of dairy equipment Pasteurizers Homogenizers Boilers Motors


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Control panels This intervention will feed the Egyptian investment map with fully detailed feasibility studies that will recommend establishing needed enterprises along the Dairy VC across Egypt.

8.2: Enhancing Rural Women’s income via microfinancing homemade cheese projects

Rural women in Malawi, Minya Governorate, traditionally produce Malawi cheese in their homes for sale to cheese traders. In addition, some rural women in other villages in Minya Governorate collect the abomasum of small calves and produce rennet in their homes. Processing techniques and practices for these rural women entrepreneurs need development via training and technical assistance. This can be one component of intervention B.1, above. In addition, microfinance services should be offered to them in order for them to grow their businesses. All the above-mentioned interventions are to be prioritized by USAID SEED into solid assignments that have main tasks according to service provider eligibility, deliverables, working days, budget, etc.


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ANNEX I: VALIDATION VISITS TO DAIRY MSMES

As mentioned in Chapter 2 of this study, a number of field visits to dairy MSMEs took place to validate the data gathered from other sources. Some of the common environmental issues encountered were that water used in heating and cooling is directed to drain, without any attempt to reuse it. The water used in cheese production is groundwater without filtration; even when routine water analyses are conducted, the water is not treated. It was also noticed that most traditional cheese manufacturers are illegally using small residential sized gas cylinders for heating and cooking instead of the commercial one, as it is cheaper and subsidized.

1. Khair Company, Mahala Kobra, Gharbia

Khair Company for dairy products was established in 2009 in Mahala Kobra, Gharbia Governorate, as a family business to produce vegetable oil feta cheese. It employs a permanent labor force of 10 employees, six of them being trained technicians, in addition to 10 part-time laborers. The company has received international certifications and is compliant with the international standards ISO 9001: 2015, OHSAS 18001: 2007, and ISO 22001: 2005. Its maximum production capacity is a maximum of 6 tons daily, but the actual capacity was less than 1 ton/day in 2018. Raw materials: Khair uses small independent traders in Mit Ghamr, Gharbia, to supply them with most of their vegetable oil cheese additives such as MPC, milk powder, shortening, butter substitute, preservatives, Glucono delta-lactone (GDL), enzymatic rennet, citric acid, etc. Table 16: Prices of raw materials for vegetable oil cheese in Gharbia, March 2018

Accessories Prices EGP

Milk Protein Concentrate (MPC), (20 kg)

1,680

Milk Powder- Finland 985 Milk Powder- Finland 915

Butter Substation (Wilko), (25kg) 700 Shortening El-Nakhltin (EFCO),

(25kg) 370

Potassium Sorbate, (25kg) 2750 Potassium Benzoate, (20 kg) 750

Citric acid - China, (25kg) 500 GDL 400

Competition: The company performed a marketing study funded by an EU project. The study stated that Khair’s competitors are Remas Land, Shehab, and Ramy companies. It has a market share of less than 2% due the domination of large-scale companies in the vegetable oil market with larger portfolios, promotion campaigns, and higher quality. Marketing channels: Khair marketing channels are divided into three main paths. The first and larger path is wholesalers, i.e., Nour Eldin in Tanta, Gharbia Governorate, and a number of independent youth distributers who own refrigerated vehicles. The second is directly supplying larger companies. The third path is reaching 37 retailers in Gharbia, Dakahlia, Beheira, Cairo, and Sohag directly via their two refrigerated cars. Production line description:


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- Mixer 700 L (1400 revs/min (RPM), 3 Horsepower (HP). + 40 RPM, 1/3 HP). - Vegetable oil tank (700 Liters, double jacket). - Milk powder recombiner 1150 L (3000 RPM; 3 HP+ 90 RPM; 1 HP). - Tubular heat exchanger, 36 tubes (tube length 2.7 m, tube diameter 1 inch). - Stainless-steel milk pumps (3, 2 ton). - Single stage homogenizer (4 tons/ HP; 180 bar; 25 HP). - Final product tanks (1300 L, 3000 RPM; 4 HP.), (650L, 3000 RPM; 3 HP). - Stainless-steel trays (25 kg, 17 kg).

Quality and prices: The quality of vegetable oil cheese is determined mainly by the quality and amounts of raw materials used in the processing. The protein content is the most expensive additive material and is the key determinant of the quality of the final cheese. The standard for protein percentage is supposed to range between 6.5% and 8% in final products. But as business-wise and to penetrate markets dominated by large-scale companies, price competition is the easiest way. To reduce the price, the protein percentage is reduced. The average protein content in Khair’s Feta and Tallaga cheeses are 4.5% and 6.5%, respectively. This results in a competitive price for wholesalers and distributors that is between EGP 12.5 and EGP 13 per kg for Feta cheese and EGP 20 per kg for Tallaga cheese. This price is raised by EGP 2 per kg when selling to retailers. The final consumer price of Feta and Tallaga cheese in the market is around EGP 20 per kg and EGP 30 per kg, respectively, at the time of the study. This price is affordable and allows for penetration in urban centers in Gharbia, Dakahlia, and Beheira Governorates, which are the main markets for Khair’s products.

Figure 14: Standard processes for vegetable oil cheese production

Process description: Recombining milk powder and vegetable oil, the recombination heat temperature is between 50 and 60 degrees Centigrade. Vegetable oil is transferred to the recombined powder milk tank through the heat exchanger, after which the cycle between the heat exchanger and the recombination tank is closed until the whole mix reaches 70–72°C. The whole mix is homogenized and transferred to final products tanks in order to add the remaining additives (preservatives, stabilizer, salt, etc.). The final mix temperature is adjusted to 45-50°C, and is then poured into stainless-steel trays to add rennet and Glucono delta-lactone (GDL). The coagulation process takes at least two hours at ambient temperatures (the use of an incubator is preferred, but ambient temperatures also work). The tray then enters the refrigerator at 5°C until the next day. The refrigerated cheese is then cut into cubes and packed into plastic jars without their whey, and re-refrigerated. Quality Testing: A pH meter is used to adjust the whey acidy to 4.5 for Feta cheese. A refractometer is used to measure the total soluble solids in cheese mix (ranging between 38 to 40%).

Cutting and Packaging

Refrigeration

Incubation

Rennent and GDL addition

Recipe and temperature adjustment

Homogenization

Pasteurirzation

Milk powder and vegetable oil preparation


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Training: The owners of Khair have received trainings on Hazard Analysis and Critical Control Points (HACCP), ISO 22000, and Sanitation and Hygiene.

2. Event-Aga, Dakahlia

Event Co. for Dairy Products was established in 2009, with an investment and working capital worth EGP 500,000, not counting sales cars, land, and buildings. The main product portfolio includes Feta, Tallaga (plain, flavored with Istanbuli, yellow with Mish flavored cheese, and flavored with paprika and olive), cream cheese, Mish, Qarish, and yoghurt. It employs five laborers (two technicians + three workers). Their salaries range between EGP 2,000 and EGP 2,200 for production employees, in addition to full accommodation. The actual production capacity ranged between 1 and 1.5 tons daily, distributed evenly between Feta, Tallaga, Qarish, and cream cheese. Raw materials: The price of raw buffalo milk (7% fat, 1.034 specific gravity) was about EGP 8.4, with an average of EGP 1.2 per percent of fat. Qarish cheese dried starter (powder rennet) is sold by additives distributers with a price of EGP 100 per 50 grams. The company sources other vegetable oil additives such as skimmed milk powder from Denmark, while shortening, emulsifier salts, and stabilizers are purchased from a distributer in Gharbia. Production line description: The production line is simple, where the raw milk is received in 200 kg barrels and directed immediately to the separator after raising its temperature to 50°C. The cream is then separated to be processed as butter or ghee, while the skimmed milk is directed to one of the 800 liter or 220 liter double-jacketed tanks.

• 800 litter double-jacketed tank (3,000 RPM, 3.5 HP + 35 RPM, 1.5 HP) • 220-liter double-jacketed tank (3,000 RPM, 3.5 RM + 25 RPM, 1HP) • 200-liter hot water Boiler (using two heaters on a closed cycle with a 200-liter barrel) • 1 stage Homogenizer • 3x4 m2 refrigerator • There is an incubator

Marketing channels: Event has three refrigerated vehicles (1 ton of refrigerated dairy products/car). Event has two sales representatives with a fixed salary of EGP 1,200 and two drivers with fixed salaries of EGP 1,500. Each sales representative and driver share a 2% sales commission (1.5% for sales representative + 0.5% for driver). Event has three refrigerated distribution points in Gamassa, Bahtim in Qalyubia and Mit Ghamr, Gharbia. Seventy percent of Event’s production is distributed to retailers through its own sales team in Gharbia, Dakahlia, Suez, Beheira, and Cairo. The remaining 30% of Event’s production is sold to wholesalers. Event receives a cash payment of 80% from its retailers, while the remaining 20% is received on delivering the second order. In most cases, wholesalers in Gharbia, Dakahlia, Beheira, Suez, and Cairo receive Event’s products without paying, and payments are deferred up to 25 days from receiving the products, without any guarantees. Quality and prices: The prices of Qarish cheese in Event is EGP 22 for retailers and EGP 16–17 for wholesalers. The prices of Qarish is EGP 24. Quality testing: Event performs the clot on boiling test to verify the microbiological quality and the heat stability of milk. Environmental issues: Total electricity consumption averages between EGP 800 and EGP 1,200 / month.

3. Habiba, Giza


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Habiba Company operates a small production line in Giza as well as its own outlets for their products as well as raw milk and other dairy products. Raw materials: Habiba receives 2 tons of buffalo milk daily in 50 stainless-steel cans at night, purchased mainly from Monufia Governorate. The milk is directed to processing in four main dairy-product categories: unaged “lightly salted” Tallaga cheese, Qarish cheese, yoghurt, and dairy desserts (rice pudding with milk, known as “Om Aly”). Habiba pays in advance EGP 15,000 to EGP 20,000 for fresh milk. It buys buy fresh milk from four farms located in Sharkia, Monufia, and Dakahlia. Habib do not produce Ras cheese directly rather they procure it either raw or two-weeks old, just after the preliminary salting from small manufacturers in Quesna, Monufia. The Ras cheese is ripened at two Ras cheese drying facilities located in Giza’s Kirdassa and Badarashin. Production line description:

- 100 and 500-liter double-jacketed tanks (3000 RPM).

The production line is semi-traditional, packaging yoghurt in plastic cubes of 80 and 110 gram sizes, and packaging Tallaga cheese in plastic jars under the brand name Habiba. Marketing channels: Habiba directed most of its production to be sold in its three outlets in Heliopolis, Cairo, Hadaek El-Ahram, and 6 October in Giza. The second channel for marketing of Habiba dairy products is exports, where Haibiba has contracted with an exporter, Elard Elmobarka, to penetrate Dubai’s market. It exports Istanbuli, white honey, Ras cheese, and Ackawi. Habiba received its export license and exports to Dubai three 60-ton containers a year on average. Quality testing: Habiba uses an Ecoscan instrument in analyzing raw milk. The average milk analysis is 7% fat and 1.029–1.033 lactometer. Quality and Prices: The price of buffalo raw milk sold through Habiba outlets is 12 Ep at the time of the study. The consumer prices of Habiba final products are shown Table 16. Table 17: Consumer prices of dairy products in Giza

Dairy Product Consumer prices (EGP) per kilo or liter

Buffalo raw milk 12 Baramili & Istanbuli 50

Ras (Old) 84 Ras (Medium ripened) 74

Qarish 32 Tallaga lightly salted 40

Cream Cheese 40 Cheddar 110

4. The Egyptian Lebanese Company, Monufia

The Egyptian Lebanese company (ELC) for dairy products was established in 1991 and is located in the Mubarak Industrial Zone, Quesna, Monufia Governorate. The factory produces vegetable-oil cheese, Feta, and Tallaga. According to its owners, the ELC is not currently operational due to non-compliance with the requirements of the IDA. The number of laborers at normal capacity reaches 51. Raw materials: milk powder, butter substitute, shortening.


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Production line description:

- 1,700 liter double jacketed tank (3000 RPM, 90 RPM) - Homogenizer, 3 tons/hour - 600 stainless-steel trays, 13 kg Marketing channels: The ELC currently depends mainly on selling dairy products from other food MSMEs such as juice, jam, and Feta and Ras cheeses and exporting them to Gulf countries (Saudi Arabia, Kuwait, UAE, and Oman) via an exporting agency. The ELC’s exports of dairy products to these countries amounts to around EGP15–20 million a year.

5. Farm Cheese Company, 6 October, Giza

The Egyptian Italian Co. Farm Cheese (FC) for Food and Dairy Industries was founded in 1991. FC operates two factories, one located in the quiet farming village of El-Barageel, Giza, and the other in the industrial city of 6 October, Giza. It is one of Egypt’s leading producers of European cheese, including Gouda, Edam, Cheddar, Brie, and Camembert. It also manufactures processed cheese (Gouda and Cheddar flavored) and soft Italian cheese like Mozzarella. FC’s El-Barageel, Giza, factory has a total area of 1,300 m2 (with a 1,018 m2 production area, 197 m2 fridges, and 85 m2 freezers with a storage capacity of 120 tons). The second FC factory is located in the 6 October industrial zone with a total area of 3,589 m2 (a 700 m2 production area, brine makers, fridges, and freezers across three floors of 500 m2, with storage capacity of 200 tons on shelves). The total annual production of FC is an average of 3,000 tons of cheese. Investment & expansion: FC has invested about EGP 5 million toward replacing old machinery (pasteurization devices and cheese cubers) and increasing fridges and brine makers. FC is currently investing in expanding the processed cheese section with around EGP 3 million to fulfill local and export market demands. FC intends to build a third factory in 6 October with an area around 300 m2, with three floors, at a cost of EGP 15 million. Semi-hard cheese processing needs a relatively large investment in comparison to other dairy product types. In the case of FC, the company holds a lot of money in fridges for months until the ripening stage. Then it can wait for several more months after selling the products before collecting the money. Marketing strategy: FC’s main customers are restaurant chains, hotels, and hypermarkets. Its sales strategy is to maintain a presence in commercial restaurants and hotel outlets in Egypt, especially Red Sea hotels and chains. FC currently targets increasing its direct distribution footprint by 50% in order to cover Cairo, Giza, and Alexandria geographically by the end of 2018. Market share: FC targets increasing its market share in the Egyptian market by 15% in the semi-hard cheese market and 5% in the white cheese market. New Products: FC is launching seven new products (red and white cheddar cheese, smoked mozzarella, among others). Raw materials: FC receives daily about 80 tons of fresh cow milk, mainly from Deir El-Anba Maqar farm in Ibshway, Monufia, in addition to receiving collected milk from small and medium milk collectors. FC depends on raw milk during the winter season until the end of April. The price of raw cow milk at the time of the study was EGP 7. FC receives buffalo milk twice a week.


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Production line description: FC has three product lines for mozzarella cheese, natural 100% raw milk, processed from powder milk with 30% casein or 50% casein. Marketing channels: FC sells its dairy products across more than 100 restaurants in Italy, France, and Egypt. It mainly supplies 390 hotels in Red Sea Governorate and Cairo with mozzarella and semi-hard cheese (Gouda, Edam, Ricotta, and Mascarpone cheese). FC supplies its products to hypermarkets such as Ragab Sons, Spinney’s, HyperOne, Carrefour, Khair Zaman, and Metro. FC supplies about 70% of its products to restaurants and hotels, while the remaining 30% goes to hypermarkets. Restaurants are more preferred by FC, since it can collect the amounts of its products after 40 days, while it might wait for more than 70 days in the case of hypermarkets. The company has about 22 refrigerated cars to transfer its products. Competitors: Frico Co. is the dominator of this segment of dairy products in Egypt, with a market share of 60–70%. Cheesa “Riyada Egypt” has 20% of the market, followed by Farm Cheese with around 10%. Quality: FC is certified with ISO 22000. Prices: FC’s price strategy aims to create a price differentiation about EGP 150–200 less than similar imported products. For instance, its red cheddar price is EGP 115 per kg, in comparison to EGP 200 per kg for other imported brands. Training: FC’s staff has been trained on ISO 22000 requirements. Environmental issues: FC processes two by-products of cheese from whey, namely ricotta and mascarpone, and does not let the whey go to waste. Obstacles to growth from the point of view of FC: The permissibility of importing raw grade-C cheese to be re-exported after repackaging or minimal added-value processing is a problem for FC as it creates unfair competition on price with the actual local semi-hard cheese producers such as farm cheese. Needed intervention: Technology transfer for new products such as Mahon cheese, in addition to helping it to enter the export market and receiving a membership with the FEC.

6. Egyptian Syrian Co. for Dairy Products, 6 October

Egyptian Syrian (ESC) Company is a Syrian family-owned business located in the 6 October industrial zone with a total investment of $250,000 in equipment and fridges. ESC pays EGP 15,000 a month for factory rental. The total labor force is 23 laborers. ESC produces Levantine cheeses under the brand name Victoria, including Shelal, Halloumi, fried Halloumi “Cyprus”, Ackawi, Nabulsia, Shanklish, Embreese, Mashmoula, Turkmani, and Dafai’r “Braids”. Most Syrian cheese is distinguished by its salty taste, where in most cases the salt percentage is 15–20%, and most of it is also pickled by storing in a brine solution. Raw materials: ESC receives 10–20 tons of fresh milk daily. The main source of fresh milk is milk traders from Fayoum and Gharbia Governorate. The designed capacity of the factory is about 25 tons of milk / eight-hour shift, so ESC could at a minimum triple its actual production if it succeeds in increasing demand for its products. The price of sourced milk (3.8% fat) received at the plant was EGP 5.5 at the time of the study. Products: About 40–50% of raw milk is directed to be processed into Shelal and Halloumi, with 30% to be processed into Mashmoula and 20% processed into Turkmani. Ackawi is


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processed in one batch per month; other types of Syrian cheese such as Shanklish and Embreese are processed only when they are demanded from the market. The yield percentage of most Syrian cheeses is 10% only, since most of them are processed and pressed. Marketing channels: The marketing channels of ESC are divided into three main categories: two hotels in Hurghada, two wholesalers supplying Syrian cheese to restaurants in Nasr City and 10th of Ramadan city, and the final one that is created and managed by ESC, where it sells its products directly to about 20–25 retailers in 6 October city, Rehab, Nasr City, and the Fifth Settlement. ESC has two refrigerated trucks for selling its products in addition to renting another truck occasionally, and it is planning to purchase two additional trucks. Table 18: Syrian cheese wholesaler, consumer, and export prices

Cheese Package Wholesalers price (EGP/kg)

Consumer prices

(EGP/kg)

*Export prices (USD/jar & USD/kg)

Ackawi Plastic jar (13 kg)

42 50 $39/jar & $3/kg

Shelal, Nabolssia, Sypris, & Halloumi

(fingers, Galal),

Plastic jar (11 kg)

55 62 $42/jar & $3.81/kg

Mashmoula Plastic jar (13 kg)

56 62 $42/jar & $3.23/kg

Turkmani Plastic jar (13 kg)

35 40 $35/jar & $2.69/kg

*Including transportation cost Competitors: Most competitors do not have factories, i.e., they make homemade products and sell through Syrian dairy product outlets. One competitor is the International Care Company in Faisal, Giza. However, they are cooperating together in supplying products to restaurants in Hurghada under the International Care brand. So, from the point of view of ESC owners, it has almost no competitors in the local market, since the only other specialized factory in Syrian cheese (Moroug El-Sham; in the 6 October industrial zone) exports all of its production to the Levant in addition to Jordan, UAE, Qatar, Saudi Arabia, North Africa (especially Algeria), and Kuwait, which are high-demand markets for Syrian cheese. Environmental issues: ESC concentrates the whey protein by heat (about 80–100 kg/day) and uses it in processing Shenklish cheese or sells it to sweet shops. Therefore, it is not dumped as waste. ESC paid EGP 14,000 for electricity for the period from December 2017 to February 2018. It paid EGP 5,000 for water consumption for the year 2017. Needed interventions: Registration of Syrian cheese is very important issue. Ackawi cheese is prohibited from being exported, as it has been registered by the Czech Republic under the appellation of origin, even though it originated in Acre, Palestine. The EOS is, therefore, urged to issue Syrian cheese standards. Moroug El-Sham and ESC are recommended to establish Syrian cheese export consortiums.


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7. Arab French Company, Borg El-Arab Industrial Zone, Alexandria

The Arab French Company (AFDPL) is a subsidiary of the French Savencia Fromage and Dairy. The company sells its products under the brand name Milkana. AFDPL is specialized mainly in producing processed cheese, in addition to having a small white cheese production line. The total labor force is 240 laborers (including 180 technicians). AFDPL’s production space is 12,300 m2. Raw materials: AFDPL does not use raw milk in processing but rather high-quality imported milk substitutes: MPC (70% and 80%), low-heat milk powder (Fonterra of New Zealand, US, Australia, and Ireland), cheddar cheese, butter (Canada, New Zealand, and US). In addition, it imports foil packaging and other packaging materials like cardboard boxes. All production additives are imported, except salt. Production line: AFDPL production lines are completely imported: the processed cheese cooking machines are the German “Karl Schnell” and the packaging machines are from the Italian brand “Corazza.” Milkana has six processed cheese production lines with an actual and maximum production capacity of 12 tons and 15 tons per hour for each, respectively. The average monthly production per ton is 5,000 tons, 1,000 tons, and 700 tons for triangle, mozzarella sticks, and cream cheese sachets, respectively. Marketing channels: Exports represent the main market channel for AFDPL, with at least 55% of total production (sometimes export volume increases to 70–90% of total production), while the remaining production of 45% reaches the final consumers through either wholesalers B2B or retailers (via distributers). AFDPL has no direct sales team and is only contracted with distributers. Export: AFDPL exports annually about 70% of its processed cheese production to Arab markets such as Yemen, Oman, Jordan, Kuwait, and Saudi Arabia, in addition to the Philippines, Vietnam, and Indonesia, as well as 13 African countries via a sister company. Quality economics: AFDPL has programs for monitoring and control operation efficiency and overall equipment effectiveness. These programs helped AFDPL in reducing the cost of energy, packaging waste, and equipment idling. These programs were applied in AFDPL via Med Test II project under the Switch Med energy saving project of UNIDO. Environmental aspects: The average water consumption of AFDPL is estimated at 86 m3 per month. AFDPL has a small waste treatment unit to meet the required waste treatment standards for liquid waste. Obstacles facing large scale industry, from the point of view of AFDPL:

1. Customs HS code item differentiation: The customs HS code numbers only consider an eight-digit code, not a 10-digit sub-code. Therefore, in terms of customs items, there is no tariff differentiation such as between MPC of 70% or that of 84% concentration. Both receive the same HS code and are treated as the same product. Export subsidies were reduced from 7% to 4%, which may be due to the fact that they depend mainly on imported production materials.

2. Delayed export subsidies: AFDPL states that the export subsidy is usual released

late. According to Eng. Tameem Eldawy of the FEC, this issue was raised at the FEC and procedures are being taken to solve this problem in coordination with the EDF and MoF.


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3. Low-quality Egyptian exporters: Low-quality Egyptian exports negatively affect the perception of Egyptian exports of processed cheese. This is because they products are allowed to reach export markets with inexpensive, low-quality products, resulting in complaints from the final consumers. This previously occurred in the Iraqi market, eventually causing a ban on all Egyptian dairy manufacturers after the revelation of adulteration with starch from some Egyptian processed cheese. This resulted in the ban of sales of Egyptian dairy products entering Iraq, until the problem was resolved with the interference of the Egyptian government at a high level, and the requirement of labelling Egyptian dairy products as “free of starch” on exports to Iraq. But still, according to AFDPL officials, indirect export to Iraq from unqualified processed cheese manufacturers are executed through the Jordanian market.

4. Need for bilateral quarantine agreements: The absence of bilateral agreements

between the Egyptian Quarantine Agency and potential dairy export markets negatively affects Egyptian exports. One such case was when Brazil attempted to import processed mozzarella cheese sticks from AFDPL, but the export process was hindered by the absence of a bilateral agreement between the quarantine agencies in both countries. Egypt has an imports agreement from Brazil, but do not have one for exports. Egypt still needs to reap the benefits of international agreements such as the Mercosur.6

5. Need to penetrate potential markets for dairy products: China, Africa, and Russia

are potential markets for Egyptian dairy products, but they are in need of more effort from Egyptian dairy exporters. Also, more participation is needed to display Egyptian dairy products to potential markets through trade exhibitions.

6. Untranslated Egyptian standards: Dairy exporters are required from importers to

send the official English version of Egyptian dairy standards. This is an important reason to work on issuing an official English version of the dairy standards.

7. The need of Egyptian standards for nutrition: In Egypt, there is a nutrition labeling

law, but there is no Egyptian standard for nutritional facts labeling. The process of issuing a certification for nutritional facts on each product from the National Nutrition Institute (NNI) is a complicated and slow process that may result in losing many export opportunities.

8. Underdeveloped research institutes: For instance, when the AFDPL asked for

scientific consultations in order to fortify its products with zinc and iron as antioxidants, this research needed high-tech nano-technology equipment, and thus the AFDPL were not able find to a research institute with the capacity and technology to make the trials.

9. Absence of some laboratory tests: Some rare tests such as the packaging

emigration test aren’t available at Egyptian testing institutes.

10. Shortage of high-quality local packaging material: The local market lacks access to high-quality packaging materials, especially food-grade aluminum foil packaging, which is a basic packaging material for the dairy industry.

6 Egypt became a member in Mercosur in January 2010. Parties to the Mercosur are Argentina, Brazil, Paraguay, Uruguay, and Egypt.


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11. Shortage of high-quality cheddar and butter local manufacturers: The quality

and quantity of cheddar and butter available in the local market is not sufficient, so the AFDPL depends mainly on importing them from abroad. The presence of local cheddar and butter with required quality and in the needed amounts is vital to create a more competitive advantage for Egyptian processed cheese in the export markets, especially when global prices of cheddar and butter are fluctuating. The average usage of butter in the AFDPL’s factory is estimated at 15–20 tons/monthly (about 240 tons/year), while the average usage of cheddar is estimated at 12–15 tons/monthly (about 200 tons/year).

12. Poor practices along the forward supply chain: The AFDPL suffers from the poor

practices of some retailers and wholesalers during the handling of the product. Therefore, it resorted to providing traders with GMP and GHP trainings, which has succeeded in reducing the rate of market returns by 53%.

8. Alfa Milk, Edku, Beheira

Alfa Milk are a milk and dairy product MSME operating in Beheira’s industrial zone. Raw material sources and prices: 12–20 tons of raw mixed milk daily (90% of it is cow milk with 3.7–4.4% fat). It procures salt from the El Nasr Salines Company at EGP 585/ton. The price of cow milk at the start of the winter production season was EGP 5.50–5.60/kg in November and December, and was EGP 5.25-5.30/kg in January and February. The animal rennet price was EGP 17/kg. Processing line: Four traditional Ras cheese presses (15 wheels per press). Ras cheese processing: The temperature of coagulation is 29–30°C; the percentage of animal rennet is 1.50 kg per 1,700 liters. The yield of Ras cheese is 10.50–11% (1.05–1.1 kg of cheese from every10 kg milk). Ras cheese is salted after processing and aged for 70-–0 days before transferring it to refrigerators. Cheese prices: The starting price for Ras cheese in November was EGP 54/kg; then the price decreased to EGP 45/kg in January and February, before increasing again in March to be EGP 55/kg until the end of April at the time of the visit. Technical problems: One of the common problems encountering Ras cheese processing is a weak consistency and a spongy texture. This may be due to a high initial acidity of raw milk or improper pressing leading to the formation of air bubbles in the wheel, which could lead to it breaking or cracking Marketing channels: Alfa Milk supplies most of its production to companies and wholesalers. Alfa Milk is contracted with a large dairy processor to supply it with 30 tons of cream monthly. Alfa Milk also supplies ghee to confectionary factories and shops. Environmental issues: Alfa Milk is contracted with Misr Lactose company in the Hod Issa industrial zone, Beheira, to supply them with 1,000 tons of whey daily for 10 years. Misr Lactose provides 80 refrigerated trucks to collect whey three times a day (1,200 tons daily). In order to fulfill the contracted whey quantities, Alfa Milk does not rely only on its production of whey; therefore, it relies on other smaller manufacturers for collecting whey as follows:

• 10 small Ras cheese manufacturers, with an average of 60 tons of whey from each. (6,000 tons of whey, more than half the contacted volume).


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• 30–40 micro Ras cheese manufacturers, with an average of 40 tons from each.

The whey is analyzed before being accepted via an Eco scan device (for a protein percentage between 0.5–0.7%). Misr Lactose uses the collected milk whey to produce its own products. Alfa Milk also gets another benefit from this whey by separating whey cream, which yields about 15 kg yellow cream from every 2,700 liters of whey. At the same time, cheese whey is heated to concentrate whey protein; the whey protein yield is 50 kg of whey concentrate from every 3 tons of whey (the price of yellow cream or whey protein 5-7 EGP/kg).

9. Awlad Gabr (AG), Kafr Eldawar, Beheira

AG produce Ras cheese, Domiati cheese, and mozzarella from fresh milk. The average Ras production is 80–90 wheels/day on both morning and evening production sessions. These production figures are actually lower than in previous seasons when it was producing more than 120 wheels/day. This is due to decreasing demand. It employs a permanent labor force of two skilled technicians in addition to five seasonal laborers, five milk collection middlemen, and family workers. The skilled technician salaries range between EGP 5,000 and EGP 6,000/month, while laborer salaries earn between EGP 2,500 and EGP 3,000/month. Raw milk: AG deals with 33 middlemen to bring them 6–7 tons of cow milk for each morning and evening session (with a total of 12–15 tons/day), in addition to 2 tons of buffalo milk per day. Besides middlemen, AG deal with milk traders, one of them supply around 19 tons daily. The total raw milk received in April, for example, was between 28–30 tons/day, while the received amounts in January were 35–40 tons/day. The increased acidity percentage and lower protein content of milk are common problems between AG and its raw milk suppliers, where the estimated time for middlemen and traders to collect the needed amounts of milk is more than three hours, without any refrigeration performed on the milk. A common cultural view held with Ras cheese manufacturers is not to accept cooled milk since it a sign of non-freshness. AG procure buffalo milk at a price of EGP 10.60/kg. The adulteration with adding cow milk to the more expensive buffalo milk is a recent phenomenon, since buffalo milk is sold for drinking at EGP 12/kg. AG pays for the raw milk at the end of the week on Thursday. The middlemen and traders buy the cow milk from rural households at EGP 4.50–4.75/kg. This low price is due to the monopolies exerted by the village middlemen. These low prices of raw milk, in comparison with the high cost of feeding and veterinary care, have caused a large number of small dairy cattle breeders to either cheat the milk through adulteration or to slaughter their livestock for meat to benefit from the increasing prices of meat Other accessories: The price of packaging 20 kg tin cans is EGP 15.83. Natural gas consumption is one commercial sized gas cylinder every day to heat about eight milk storage tanks. The heat is used mainly to perform the milk scalding process (cooking the curd with its whey to separate whey). Production line: The production line is locally made, and constitutes mainly:

• 2 milk double jacketed tanks (1,700 liters capacity). • 4 manual cheese presses (15 cheese wheels). • 2 stainless-steel cheese tables

The price of one manual press (15 wheels) is EGP 9,000 at the time of the study, while one stainless-steel cheese table costs EGP 45,000. Testing: A milkoscan device is used to analyze milk to verify the fat percentage of 4.5–5% for cow milk and 7–9% for buffalo milk. The specific density is ranges between 1.027–1.029 for cow milk.


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Ras cheese: In the summer, the characteristics of milk are not suitable for processing into Ras cheese, so most Ras cheese manufacturers do not producing more Ras cheese after the end of April or mid-May at the most. According to Egyptian dairy standards, Ras cheese should be stored and aged for 90 days before reaching the final consumer. Salting stage: 1.150 kg salt / 20 kg milk cans in the winter months; 1.250 kg salt / 20 kg milk cans in summer cans. The cheese yield is 10–11% in the morning session and 11–12% in the evening session in April. Marketing channels: AG depends mostly on a single marketing channel represented in 18 Ras cheese traders in Manzala, Damanhour, Alexandria, and Cairo selling between 2,000 and 3,200 molds annually per trader. AG transfers the raw Ras cheese after completing the pressing stage to an agreed-upon (with traders) Ras storage facility in Damanhour or Alexandria. During storage at the warehouse, the trader handles the adjustment of the moisture content by a skillful salting and ventilation process. Transportation expenses are handled by AG while the cost of moisture adjustment is handled by the trader. The cost of storage and moisture adjustment in Ras warehouses is EGP 1.50 per kg, every 90 days (or EGP 1,500 per ton including all expenses such as jute wrapping, salt, wooden racks, and transporting to refrigerators after ripening in Damanhour and Alexandria). The cost of storing Ras cheese in refrigerators is about EGP 5 per four-wheel package. Prices: As shown in Table 16, Ras prices started lower in November and December, where the market demand was lower and traders were reluctant to purchase more cheese since they still had commodities in storage from the previous year. Table 16: Ras cheese and milk prices log, 2018

Months Milk price (EGP/kg)

Cheese price (EGP/kg)

November- December

4.50 43–44

January 4.75 49 February 5.20 51–52

March 5.20 52–53 April 5.10 51–52

This lower demand on cheese was reflected, in parallel, on lower milk demand from the manufacturer’s side. This resulted a lower price paid to farmers in the same period that ranged from EGP 4.50 to EGP 4.75 from November to January. At the beginning of February, the market demand increased and, therefore, Ras prices were increased simultaneously to EGP 51–52/kg in February and EGP 52–53/kg in March. Consequently, the prices of milk increased raised from EGP 4.75 to EGP 5.20/kg, where the demand on cheese affected the demand on milk.

10. Mohamed Elsharkawy drying store for adjusting cheese moisture, Beheira

After finishing the pressing stage, and performing the primarily salting stage, moisture content in Ras cheese wheels needs to be ripened via a ventilation process done by professionals who can perform the salting and rotating of wheels on wooden surfaces in a well-ventilated location. This skill prospered in Beheira and Damietta Governorates in specific and in other surrounding areas with Ras cheese plants such as Dakahlia. The standard period for ripening Ras cheese moisture is 80–90 days. Pricing: The cost of storing Ras cheese at this facility ranged from EGP 0.7 to EGP 0.8/kg


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including all expenses as follows: Adjusting moisture cost items:

• Jute cloth: Used to wrap four wheels together after finishing the moisture adjustment period, and before the transfer of the cheese batch to refrigerators. The cost of one jute sack increased to EGP 14 at the time of the study; it doubled from the previous year’s price.

• Wood transport boxes: To prevent the upper and lower cheese molds from being damaged during transporting and storing cheese, each jute package has a wooden cover and base. These two wooden pieces costed EGP 3 at the time of the study.

• Transportation to refrigerators: The transportation cost is EGP 1,000 for every 100 jute cheese parcels (approx. 5,200 kg of cheese). Most refrigerators are located in Cairo and Alexandria.

• Wooden storage racks: All wooden racks are made of imported Swedish wood. The price of this Swedish wood was EGP 5,000–6,000 per square meter.

• Wooden rack depreciation: All wooden racks are replaced every two to three years. • Building rental: The building’s rental cost is approx. EGP 35,000 annually. • Electricity: EGP 15/month • Salt: 3 tons a year • Labor: two skilled laborers; EGP 2,500 per laborer

Number of clients: Mohamed Elsharkawy’s clients at the time of the study were eight cheese traders. Each trader brought in on average between 200 cheese parcels (800 cheese wheels equaling about 10,400 kg) and 300 cheese parcels (1,200 cheese wheels equal to about 15,600 kg) twice during the period January to June. The aggregate actual capacity of Mohamed Elsharkawy’s storage warehouses was 2,500 cheese parcels a year (equivalent to 10,000 cheese wheels or about 130,000 kg). Non-conformities during adjusting moisture:

• High acidity: may necessitate to increasing the cooking temperature, resulting in reduced quality and decreasing the price of cheese by EGP 2–3 per kilo.

• Bubble forming: gas bubbles form in the base of the wheel when the milk used in processing the cheese is adulterated through adding H2O2 or starch. This results in decreasing the price of cheese by EGP 7–10 per kilo.

• Curdled milk: occurs when the milk used in processing the cheese is curdled before adding the rennet.

• Cracked molds: attributable to poor handling and excessive loading on the base wheel while on racks or the dropping of the wheel on the ground. The occurrence rate of this issue is one to two wheels per year according to Mohamed Elsharkawy.

Ras cheese ripening stages:

• Single wheel treatment: in this stage, wheels are salted, moved, and rotated frequently. Adequate salt is added to absorb water from the wheel to form tear-like drops on top of the wheel as a sign for the wheel to be turned upside down. This process is repeated for five days.

• Double wheel treatment: in this stage, the hardest wheels will be placed at the bottom with another softer wheel on top. The salting process as mentioned above is applied every 7 to 10 days, according the status of the wheels. This stage usually lasts 35 days.


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• Three wheel treatment: in this stage, the hardest wheel will be placed at the bottom of two softer wheels. The salting process above is repeated for the surface of the first wheel.

• Cheese cleaning: after adjusting the moisture of the cheese wheels, they can become moldy, so a washing process is performed on the cheese wheels using brushes.

Loss of moisture percentage: during the ripening period, cheese wheels lose 3–5% of their weight during the first 30–60 days. The total loss in moisture after 3–4 months reaches 7-8%. If the cheese molds stay on the wooden racks for 5–6 months, then the total weight loss may become 13–14%.

11. Miro, Arab Cultivators Tanbouli Co., Sadat

Arab Cultivators Tanbouli for Dairy Products established its first factory in 1965. In 1997, it started repacking instant milk powder under the brand name Miro. In 1998, Arab Cultivators Tanbouli launched a new brand name for milk powder called RANBOW, and in 2005 it launched another brand for milk powder called TAMBO. Miro was awarded the ISO 22000 certificate for the first time in 2007. In 2012, Miro opened a new facility in El Sadat city. Miro employs a labor force of 220–230 labors Production capacity: The average monthly production capacity of Miro’s full fat milk products is 200 tons/month in addition to 15–20 tons/month of skimmed milk products. Raw Materials: Miro imported instant milk from the European Union, especially Sweden and Denmark, as well as New Zealand R&D: In 2014, Miro launched its new range of instant flavored milk products (Miro mix), a flavored milk powder product targeting children in three flavors: strawberry, banana, and chocolate. Miro recently introduced more new products including vegetable-oil-based milk powder. Obstacles:

• The most important obstacle encountering Miro is the availability of accurate data related to the industry and the dairy market.

• The customs procedures are very low from the point of view Miro, as they last on average three months, which are deducted from the two-year shelf life of the final product. This is in addition to the time consumed during international shipping.

• When Miro tried to introduce low lactose milk as a new product, it had to deal with bureaucratic procedures from the NNI of the MoHP, where regulations on a lactose-free product label do not exist in the Egyptian standard and thus cannot be marketed as such.

• There are no accurate and timely laboratories to perform nutritional and caloric facts analyses in Egypt and the company has encountered problems with government laboratories in terms of inaccuracy and slow procedures.

Competitors: Nestle’s NIDO, Arla’s Dano, and Riri baby food are the most relevant of Miro’s competitors, as well as Neilson. According to Miro, its market share in the Egyptian market share is around one-third, equal to Dano and NIDO. Marketing channels: One of Miro’s main marketing channel is hypermarkets such as Metro and Khair Zaman, in addition to Fathallah market. In addition to hypermarkets, Miro has three sales agents in Aswan, Upper Egypt, and Suez Canal to distribute part of its production through its sales team across Egypt on its 30 sales trucks.


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Marketing strategy: Although most Miro’s competitors have more advantages in terms of distribution, Miro resorted via its marketing strategy to invite final consumers to try and purchase its products by direct promotion in sports’ clubs, subway stations, and public parks, in addition to opening a direct connection with customers through its active account on Facebook and other social media channels. Miro resorted also to rebranding from Rainbow to Tambo to Miro to suit its new products. Miro is also planning on expanding its portfolio in order to increase its product range in the local market. Prices: To compete with multinational competitors, it resorted to price competition by pricing its products 20% lower. Export: Miro has no competitive advantage in export markets, where the transportation cost in both importing and exporting processes elevates its prices in comparison to other global brands, especially in case of full and skimmed milk. Its previous export markets were Senegal, Sudan, Angola, Lebanon, and Palestine. Miro’s Corporate Social Responsibility: Thirty-four Mubarak Technical School students received on-the-job training at Miro.

12. Abinar, Beheira

Abinar is a small processed cheese factory. Production capacity: The daily actual production capacity of Abinar is 750 kg, in addition to 1 ton of processed cheddar cheese a week. Production Line: Abinar uses a processed cheese cooker made in Egypt, in addition to processed cheese triangle packaging machines (60 g and 120g). The protein percentage in Abinar’s processed cheese recipe is 7.5–9%, with protein coming from skimmed milk powder, MPC, and rennet casein. The cheese triangle packaging machine is designed with a capacity of 60 triangles/minute (3,600 cheese triangles per hour). Sanitation: Abinar uses NaOH (2.5%) and Nitric acid (1.5%) in cleaning. Competitors: Abinar’s competitors in its local markets are El-Saidi and Green Valley. Prices: Abinar’s pack of eight triangles is sold at EGP 3.50, only in comparison to an average of EGP 8.5 for an A-class processed cheese brand.

13. Alamir Malawi Cheese, Minya

Raw milk: Alamir procures raw cow milk from Dahnsha, Barsha districts, with specifications of 5.5% fat and 1.027–1.028. The price of mixed milk (2:1 ratio of buffalo to cow milk) at the time of the study was EGP 6.5–7/kg. The average amounts consumed by Alamir were 2.5 tons daily for the two sessions (morning and evening) in comparison to 4–5 tons daily in the previous years, which follows a trend of decreasing demand on Malawi cheese specifically and natural cheese generally in favor of cheaper processed cheese. Production additives: Rennet is procured from Damietta and is utilized in processing Malawi and Minya cheese, it is worth mentioning that Minya cheese is almost identical to Domiati cheese. The price of rennet is EGP 15–17/kg, where only 3–4 gm/kg milk are used. Alamir also procures 20 kg tin cans from Fayoum Governorate at the price of EGP 24–30/can at the time of the study. The price of plastic covers for the cans is EGP 28–30/kg; the cans are bought from Minya, where 1 kg of plastic covers is enough to bottle 60 tin cans.


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Other production cost items: Electricity consumption is about EGP 400/month. One commercial gas cylinder is consumed every two days, with a price of EGP 95. The number of laborers working in Alamir processing factory was two skilled laborers with an average salary of EGP 2,000/labor. Working hours: Working hours in traditional Malawi cheese factories are as follows: a morning session from 8 am to 12 pm and a mid-day session from 3 pm to 5 pm and a night session from 8 pm to 9:30 pm. Malawi cheese processing: Milk is filtered and heated to coagulation temperature 48–50°C in winter or 46–47°C directly. The milk is then sent by pumps to 200-liter barrels to be salted first (9–11% salt). This may be because of the hotter climate of Upper Egypt in pre-modern times necessitated adding the salt to the milk as early as possible to prevent it from souring before the advent of refrigeration. The animal rennet is then added by 600 gm to 1000 gm per 200-liter barrel, according to the rennet strength. After the completion of coagulation in three to four hours, each 630 liters of curd are poured in 2.1 cm X 1.1 cm cheese vat. After one hour, the cheese is stirred to remove the whey and let it settle again. Then, after another hour, it is stirred again to separate the whey. The curd is poured in 12 kg cheesecloths that are hung for 18–24 hours to separate the whey and develop an acidity that gives Malawi cheese its distinguished taste. Another characteristic of Malawi cheese is that the animal rennet used in coagulation consists of all the enzymes (Chymosin and pepsin) which contribute to the unique taste. Recommended interventions: R&D efforts are needed to introduce more developed Malawi cheese to the market after enhancements, i.e., pasteurization, safer rennet, advanced packaging, and barcoding. These potential enhancements are essential on the way to branding this traditional Egyptian cheese to assist in expanding its current limited markets to reach more geographical locations. Production Capacity: The annual production of Malawi cheese in Alamir factory is 4,000–5,000 cans of cheese (20 kg cans). Marketing channel: Alamir depends mainly on 10 cheese traders distributing Malawi cheese in Assiut, Qena, Luxor, and the New Valley. The peak season of Malawi cheese is the month of Ramadan. Prices: The wholesale price of 10 kg of Malawi cheese was EGP 350 at the time of the study. The retailer price of Malawi cheese was EGP 40–50/kg. Competitors: The small size of Malawi city and its surrounding districts means that the three existing Malawi cheese processors are competing in a very small market. Another source of competition is from some rural women who are selling homemade Malawi cheese. Selling raw milk carries a social stigma in Minya Governorate, where it was a sign of poverty in the past, so most rural women resort to manufacturing raw milk into cheese, mostly Malawi or Qarish. Obstacles: The Malawi cheese market, as with other traditional raw milk cheeses, is in serious competition with inexpensive, low-sodium, vegetable-oil cheeses. By products: Buffalo milk cream is separated and converted to butter and ghee. When the milk acidity is too high, Malawi processors resorted to a process of making sour milk called hamid that is used to make Kashk. The milk cream is separated and the remaining acidic milk is filtered through a fine fabric filter. This filtered sour milk is refrigerated and sold as Kashk. The price of 20 kg can of Kashk is about EGP 220 at the time of the study. The


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prices of butter and ghee were EGP 60/kg and EGP 105/kg respectively. Training: In 2015, Alamir laborers attended a training on white cheese manufacturing funded by the AfDB. Testing: A milk analysis device is utilized in analyzing received milk. The price of the Ecoscan device at the time of the study was EGP 26,000.

14. Horus, Malawi cheese, Minya

Horus Dairy Processing Enterprise produces Malawi cheese, “baladi” yoghurt, yoghurt milk, and Mish, Egyptian brine-salted white cheese. Five laborers are hired in both the factory and the retail outlet. Raw material: Horus procures buffalo raw milk from Elbarsha district in summer to be sold as drinking milk through its outlet, while in winter it procures milk from Fayoum Governorate. In addition, it deals with three milk collectors to each bring an average of 400–500 kg/day, for a total amount of about 2 tons per day. Packaging cans cost Horus EGP 12/can. Rennet paste is used in processing Malawi cheese. Horus claims some of the rennet is adulterated through the addition of whey. The price of rennet paste is EGP 15/kg. Prices: Malawi retailer prices of fresh and old Malawi cheese were EGP 32/kg and EGP 48/kg respectively. Processing: After milk is filtered and salted (9–10%), rennet paste is liquefied by adding milk at a rate of 0.75 kg per a barrel of 200 kg at 40–42°C. Coagulation time takes between 2–3 hours, then the curd is poured in cheesecloths (about 7 kg per cloth) and hung for 48 hours. The cheese yield in Malawi cheese is about 30% milk to cheese conversion. Malawi cheese is stored for three months, losing about 20–25% of its water weight during storage. Loss depends on many factors, such as season, type and quantity of rennet, packaging (with or without whey), etc. Marketing channels: Horus displays its production at its own outlet near the factory.

15. Elfath, vegetable oil cheese, Minya

Production capacity: Total production is 1 ton of processed vegetable oil cheese per day. Products: Vegetable oil cheese, i.e. Feta, Tallaga, and flavored white cheese (Baramili, Pepper, etc.), in addition to some Syrian cheeses. Raw material: 500 liters of cow milk are brought in daily from Malawi with a price of EGP 4,500/ton at 3–3.5% fat. Elfath has a collection point collecting 2.5–3 tons of milk daily from other districts. Other accessories: White cheese additives such as milk powder, butter, shortening, and other additives are brought from Gharbia and Alexandria. Sometimes fresh raw milk is used in processing. Sometimes skimmed milk is used in possessing. Packaging materials are brought from 10th of Ramadan industrial city. Danisco is the main source of flavors. The price of skimmed milk powder at the time of the study was EGP 36,000/ton, while the price of MPC 70% was EGP 75,000/ton. Butter substitute and shortening comes from Arma at the price at of EGP 28,000/ton and EGP 15,000/ton, respectively. Table 17: Prices of dairy accessories in Minya


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Product Price EGP/ton

Skimmed milk powder 36,000 Milk Protein Concentrate 75,000

Butter Substitute 28,000 Shortening “Arma” 15,000

Marketing channel: Elfath does not dealing with traders. Elfath depends in selling its products on its sales team of four trucks. The main markets for Elfath dairy products is Minya, Assiut, and Cairo. Prices: EGP 150 per 6 kg jar of Atyab branded butter substitute cheese. EGP 130 per 6 kg jar of Fath branded shortening cheese. EGP 110 per 6 kg jar of Fath branded feta cheese. Table 18: Prices of Elfath vegetable oil cheese in Minya

Product Wholesaler price Consumer price (EGP) Tallaga (butter substitute) 25 35

Tallaga (shortening) 21.66 32 Feta 18.33 30

16. Dairy Processing Unit, General Federation of NGOs, Minya

In summer, 500–700 liters of milk are received daily and processed as follows: 450 kg (yoghurt), 100 kg (buttermilk), and 50 kg (fresh white cheese: Tallaga and Qarish). In winter, 1,000 liters of milk on average are received. The milk devoted for white cheese processing is increased to 600 liters daily. The type of white cheese made in winter is Istanbuli (brine-salted Domiati cheese aged at ambient temperature). In December and January, most quantities of Istanbuli cheese are packed in 4 kg or 8 kg packages and sold fresh, while all cheese quantities in February and March are packed in 15 kg cans and aged for 40 days. Two engineers and five labors represent all the technician labors in the unit. The unit also processes cream, butter, and ghee. New products are included in the unit portfolio such as rice pudding, flavored yoghurt, long-life yoghurt (lasting 14 days instead of just three days for regular yoghurt), and Qarish. Raw material: The price of mixed milk (4% fat) reached EGP 6/kg due to increased demand, especially before Ramadan. Three milk suppliers are responsible for supplying the unit with fresh milk in small quantities (500 kg, 350 kg, and 100 kg in average). Animal rennet and tin cans are brought from Damietta. Packaging can prices are EGP 28 for a 15 kg sized can and EGP 19 for an 8 kg sized can Testing: A small chemical laboratory is attached to the unit. Tests performed include pH, specific gravity, and boiling and alcoholic heat-stability. The pH of received milk should be between (6.6 and 6.9), while the average specific gravity should be 1.027. Production line:

• 2 incubators (1000 cubic cm) plus 1 incubator (600 cubic cm) • 2 cheese table (600kg, 1000 kg) • 2 milk receiving tanks (500 kg) • 2 milk refrigeration tanks (250 kg) • Pasteurization machine (0.5 ton per hour)


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Processing: 11 kg of white cheese (Tallaga and Qarish) are produced from about 50 kg milk, with a yield percentage of 22% in summer; in winter, 16.5 kg of cheese are produced from 50 kg of milk, with a cheese yield of 30% (25–28% on average). On average, 2.5–3 kg of cream are separated from every 100 kg of milk and processed into butter or ghee. Fixe processing cost: Monthly expenses of electricity, water, and gas are EGP 2,000, EGP 300–400, and EGP 900, respectively. Marketing channel: There are two main marketing channels. The first channel sells through traders that receive 90% of the dairy processing unit’s production in terms of yoghurt, Tallaga, and buttermilk. The second marketing channel is an outlet owned by the dairy processing unit that receives 10% of the unit’s production (the average sales of cheese is between 13–26 kg cheese daily). Prices: Cheese is sold to wholesalers (traders) at EGP 52–53/kg to reach the final consumer at EGP 67/kg, while cheese at the outlet is sold for EGP 60/kg. Training: Staff received vocational training provided by the FAITC in 2012 and 2015 in projects funded by the AfDB. Environmental issues: The unit is located in a residential area, while the administration is in the industrial zone of New Minya city. It’s highly recommended to transfer the processing unit to the industrial area. However, the industrial area is far from its milk suppliers.

17. Small Dairy Farms, Minya

Two small dairy farms were visited in Minya Governorate. The first farm contained 10 dairy cows (eight mixed breed cows and two Simmental cows) in addition to a bull. Vaccines against udder disease and FMD were administered. The price of a mixed breed milking cow is EGP 18,000–20,000, while a Simmental cow’s price was EGP 26,000–27,000. Newborn cattle prices ranged between EGP 8,000 and EGP 15,000, according to age. Breast feeding lasts between 30 and 60 days. The period between two births was 12 months. The farms employed two laborers each. Production capacity: The total production was 500 liters per day. The average milk production per head was 15–20 kg of milk per head on average. Milking period: The average milking period is about 180 days per year. Marketing channel: Milk is sold to two traders who sell it to final consumers via tricycles and bicycles. Price: The price of cow milk from the farm directly was EGP 6/liter at the time of the study. Feeding: The main source of feeding is green clovers/alfalfa. Wheat and fresh bread are used also in supplementing the final feeding. The average green clover amounts were estimated at 0.01 feddan per milking cow per day in spring. Concentrated feed is added especially in winter in December and January. Table 19: Feed recipe and prices in a small farm in Minya

Feeding Quantity (Ton) Price EGP/kg Oilseed Meals 1 5.2

Hulls 1 3.9 Maize 0.64 4


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Wheat 0.68 4.12 Bread 0.5 2.5

Mineral Salts 0.015 10 Table 19, above, describes a recipe of feeding in one of the visited milk farms in Minya. Four (1 kg) packages of mineral salts are added per ton. Besides green feed, one (50 kg) package of described feed recipe is introduced to a group five milking cows every two days, with an average of concentrated feed per head estimated at 5 kg/day only. Veterinary: Instances of pneumonia and FMD have occurred twice in the last five months.

18. Sabagh, Domiati

Damietta had a comparative advantage in milk production in the past due to the availability of green pastures. But for the time being, Damietta’s dairy industry is suffering from increasingly lower returns on investment in dairy projects in comparison with available other business projects in the governorate, i.e., furniture, tannery, and confectionary. Damietta suffers from a shortage of trained labor in the dairy industry. The dairy industry requires long working hours and offers lower salaries in comparison to other industries and professions. According to some Domiati cheese manufacturers in Damietta, Beheira and Dakahlia are now the primary sources of Domiati cheese because of the availability of inexpensive labor. Another issue is the higher fat content of milk that causes more technical problems, according to Hassan Sabagh, the owner. According to him, this is the case in Damietta, where the quantity of milk production is small and fat content is high. Milk collection in Damietta might take a long time as a result of the long distances between milk production villages and collection points with poor hygienic practices, resulting in deteriorated milk characteristics. Milk supply: Sabagh buys buffalo milk (7% fat) from Nubaria, Mit Ghamr in Beheira. Damietta has large numbers of cheese manufacturing enterprises. Milk production in Damietta is lower than the needed amounts of manufacturers. Thus, just 10 tons from both morning and evening sessions are brought from Damietta, while another 5–10 tons per session are procured from other governorates. The number of milk suppliers in Damietta are four to five traders only, and most of them reach the cheese factories late (10 am – 11:30 am), so in most cases the acidity of milk is increased to undesired percentage as it has not been refrigerated since collection. Sabagh receives 5 tons of buffalo milk a day to be manufactured into yoghurt and Qarish, with another 10 tons of cow milk (from which 2 tons were produced into Domiati cheese in addition to 8 tons manufactured into Ras cheese). At the end of May, Ras cheese ripening stops and processing begins for raw Ras cheese – sold and consumed without ripening– consuming about 2.5–3 tons of milk/day. Prices of cow milk at 3.5% fat, buffalo milk at 6% fat, and buffalo milk at 8% fat were EGP 4.5/kg, EGP 8/kg, and EGP 12/kg respectively. The 8% fat buffalo milk is cooled milk brought from a specialized farm in Ismailia Governorate when it encounters problems in distributing its milk. Buffalo milk prices increase in Ramadan to EGP 9/kg. While demand on cow milk has decreased, the prices have not changed, nor has the cost of feed. Farmers have had to slaughter their milking herds when milk prices are lower than the cost to produce. When prices increase, they purchase dairy cattle, which results in supply and price fluctuations. It was noticed also that the fat percentage of buffalo milk is low in milk from smallholder dairy farmers, and this may be attributable to poor nutrition. Testing: Milk is rejected if acidity is higher than a pH of 6.6. Processing line:


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• Two vacuum packaging machines (imported from the Netherlands and Italy at an average price of EUR 7,000).

• One 5-ton milk cooling tank. • Boiler hot water. • 2 milk heating tanks (1,700 liter each).

Processing: Rennet addition is 200 g per 200 kg of milk (about 1 kg rennet per 1 ton milk). Although salt percentage of Domiati cheese manufactured in Damietta is about 14%, Damietta locals consume this type of cheese unripened immediately after processing and without pickling in brined whey for 90 days, as is usual for this kind of cheese, according to EOS guidelines. Traders from outside Damietta purchase Domiati cheese and store it for 90 days. 90% of Domiati cheese in Domiati is Istanbuli, which is ripened at ambient temperature, while 5% is “Baramili,” ripened in refrigerators. Recently, imitation Ras cheese, processed with vegetable oil, has appeared in Damietta and has negatively affected the traditional industry. Imitation low-quality Ras cheese is EGP 20 cheaper than traditional Ras cheese made with raw milk. Ras cheese loses 0.5% of its weight during storage in 3–5°C and 70% relative humidity. The storing process is accomplished in well ventilated warehouses for 90 days at 3–5°C. Stored Istanbuli cheese losses about 35% of its weight during storage (9.5 kg remains out of 13 kg at the end of 90 days storage). A trial of substituting dry salting with wet salting in cold water for Ras cheese led to a change in taste and was the reason this trial was rejected. This Ras cheese salting process is performed twice to float acidified cheese wheels: 1 kg salt per 20 kg milk in January and February, increased to 1.1 kg per 20 kg milk in March and 1.25 kg per 20 kg milk in April and May. The scalding temperature is 45°c for 60 minutes. Domiati and Ras cheese production yields were 22.5% (4.5 kg cheese out of 20 kg milk) and 10% (2 kg cheese out of 10 kg milk), respectively. Regarding ghee processing, 2 kg of ghee are produced from 3 kg of cream. Marketing channel: 40% of Sabagh’s dairy products are sold to cheese traders from outside Damietta, 30% is exported to Canada and Saudi Arabia, 15% is sold to retailers and 15% is stored and ripened for the manufacturer’s account by traders. Vacuum-packed Ras cheese of 0.5 kg, 1kg, 5 kg, and 12 kg wheels are exported. The most exported wheel sized of Ras cheese were 1 kg and 5 kg. Export markets occasionally demand 2 kg wheels,7 and 3–4 months (in addition to one month in transportation) for aged Ras cheese.. Prices: The price of a 13 kg fresh white cheese can is EGP 350, while the price of stored white cheese Istanbuli (9.5 kg) is EGP 400. Prices of Ras cheese started at EGP 57/kg in December 2018; then prices decreased in January to EGP 47/kg due to decreasing demand before reaching EGP 53/kg in May. According to Sabagh, these prices fluctuations were attributed traders’ wrong expectations that Ras cheese prices would be decreased in March, so they decided to stop purchasing milk in January and February. However, the price in March increased to EGP 53/kg and stayed at this point until the time of the interview in May. Wholesaler prices of medium-aged (60 days) and old-aged Ras cheese were EGP 65/kg and EGP 70/kg, respectively. The consumer price of Ras cheese was EGP 80/kg. Qarish prices were EGP 32/kg at the time of the study. Prices of ghee, butter, and cream at the time of the study were EGP 110, EGP 60, and EGP 60 per kg, respectively. Table 20: Cheese prices of wholesalers in Damietta Governorate

7 To be ripened during the two-month period of transportation, the net weight during the receipt is about 1.3 kg (losses of about 35%).


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Product Price (EGP/kg) Fresh white cheese 26.92

Istanbuli 42.10 Fresh Ras cheese “green” 53 (in May)

Training: Sabagh received trainings provided by the IMC. Sabagh asked for technical assistance from the FTRI in processing ultra-filtration (UF) white cheese, but the trial did not succeed because the cost of UF white cheese was double that of vegetable-oil processed cheese without whey, the inexpensive substitute.

19. Animal Rennet Manufacturer, Damietta

Animal rennet is a proteolytic enzyme used to coagulate milk that is extracted from the forth stomach (abomasum) of small calves that are illegally being slaughtered.8 But most cattle breeders in Egypt slaughter male calves outside of official slaughtering houses and save females until they reach the legal weight. Figure 15: Animal rennet chain

Raw material: One rennet factory visited for this study used to receive about 12,000 to 16,000 stomachs monthly, but the number decreased to 600 stomachs a month as a result of decreased demand. The price of one stomach at the time of the study was EGP 5–6, up from EGP 3–4 a few years ago. Although relatively inexpensive imported powder rennet (microbial and vegetable in origin) is the substitute of the higher priced animal rennet, many traditional cheese makers still believe that using powder rennet alters their products’ characteristics and refuse to use or even try it, especially because there is a belief that powder rennet is extracted from pigs, which is prohibited in Islam. Processing: Three to four stomachs are sufficient to produce 20 kg of animal rennet. Sodium benzoate, potassium sorbate, and sodium chloride are common preservatives. Boric acid is also widely used illegally as a preservative in animal rennet, while animal rennet manufacturers believe it’s a natural substance, although, according to one interviewed manufacturer, boric acid extends the shelf life of animal rennet by three to six months. Abomasums are opened after being extracted from calves’ stomachs and are then packed and frozen. Good animal rennet should be free of soils and coagulated milk.9 120 abomasums are soaked in a 200-liter barrel filled with 10.5% salted water and other additives until the strength of solution reaches the targeted normality. 8 Egyptian law prohibits the slaughtering of calves weighing less than 120 kg. 9 In some Malawi and Fayoum cheese factories, curdled milk ingested by the calf prior to slaughter is extracted from the abomasum and used to perform the coagulation process.

Illegal slughtering of small calves

ButcherRefrigerated

storing Collecting

Freezing

Distrbuters


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Testing: The pH of animal rennet is between 5.5 and 5.8. The strength of animal rennet in the market is between 0.33 and 0.50. One visited rennet manufacturer has a normality strength of 0.55. Marketing channels: January, February, March, April, and May represent the peak season of animal rennet production and demand. The visited factory had about 30–40 customers all over the country purchasing an average of 1,200 cans weekly directly from the factory. Those customers are located in Alexandria, Cairo, Damanhour, Kafr El-Dawar (Beheira), and El-Manzala (Dakahlia). Half of them pay upfront in cash, while the remaining pay in instalments. The animal rennet market is affected by many factors, such as fluctuations of milk supply, where the demand on animal rennet is a derivative demand on fresh milk. In Egypt, 60% of cheese production is produced by large-scale companies that use imported powder rennet, and the increased size of this segment lowers the demand on animal rennet. Competitors: According to the visited factory, animal rennet manufacturers in Egypt are located in four main districts, with two of them in Damietta, namely New Damietta district and Kafr Saad. The other two main animal rennet production points are in El-Manzala, Dakahlia, and Damanhour (Beheira). Regarding the powder rennet market, these are considered a different segment of competitors. Their presence is vital, where the current production capacities of animal rennet manufacturers could barely cover 40% of market demand. One way that manufacturers adulterate animal rennet is with whey, which is one of the common methods of adulteration in the market. Prices: Prices depend on normality strength; in case of the visited factory, the price was EGP 30–40 higher in comparison to competitors. The average price of its brand this production season ranged between EGP 270 and EGP 280 per 15 kg, while some other competitors were priced between EGP 220 and EGP 240 per 15 kg. Environmental issue: Production waste of stomachs is sold to traditional drum makers.

20. “Lotus” for Cheese Packaging Cans, Damietta

Lotus is a manufacturer of cheese packaging tin cans. According to the owner, different grades of raw tin materials are imported, mainly from China and small amounts from Europe, by two to three importers in Cairo, Mit Ghamr, and Damietta. Importers sell raw tin to cheese packaging manufacturers and workshops to be cut into various sizes (20 kg, 5 kg, 2.5 kg, and 1.25 kg). It is then sealed and sent back to the importers to be painted with a food-grade inner golden layer and for the outer surface to be printed with the cheese (or even rennet) producers’ data.

21. Healthy Milk, Sharkia

Healthy Milk is a family business founded in Minya El-Kameh, Sharkia Governorate, in 2015. It contains a dairy farm that produces fresh milk daily and is attached to a modern well-equipped dairy factory designed to produce pasteurized milk, fermented dairy products, milk fat derivatives, and juice. The factory has two daily shifts (8 am to 5 pm; 6 pm to midnight). Milk: Healthy Milk receives fresh milk directly from its attached milking farm. Friesian from the Netherlands and Switzerland are the dominant dairy cow breeds, in addition to the French Simmental breed. The price of 3.7% fat cow milk was EGP 6.32. Milking is performed three times daily. The dairy farm space is about 80 feddans. The average production of milk is about 50 tons/day, while 20 tons are directed to the factory and 20 tons are sold exclusively to Juhayna. The other 10 tons are purchased by other customers.


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Other production additives: For the full utilization of their production lines and enriching Healthy Milk’s dairy products, skimmed milk powder and 70% MPC from New Zealand is used for pasteurized milk products and yoghurt. Products: Pasteurized milk and juice in glass jars, set and stirred yoghurt (plain and flavored), cream, butter, ghee. and Qarish cheese. Production line:

• Homogenizer 5 tons/hour. • Preparation tanks (5 tons each). • Pasteurizer 5 ton/hour. • Separator 5 ton/hour. • Two glass bottles lines (270 ml, 950 ml) for juice and pasteurized milk.

Competitors: The main competitor of Healthy Milk in pasteurized milk is Dina Farms. Marketing channel: Healthy Milk has eight dairy outlets, four of them located in Cairo.

22. Dairy Land for Food Industries Alzahar, Sharkia

Dairy Land Alzahar’s factory is located in New Salhia, Sharkia Governorate, and was founded in 1996. The main portfolio of Alzahar includes vegetable oil cheese, processed cheese, and analogue mozzarella. The number of laborers was 151 at the time of the study. Quality: Alzahar complies with requirements of international ISO standards: 18000: 2007, 22000: 2005, 14000: 2015, and 9000: 2015. Milk: Alzahar uses fresh milk in winter only if it’s available in suitable quantities and prices. Alzahar suffers from the low quality of milk and its price fluctuations. The price of cow milk with 4.2% fat, 1.032 specific gravity on the Lactometer was EGP 6.1 at the time of the study. The average amounts received are anywhere from 6 to 20 tons/day. Production additives: Alzahar deals with importers of vegetable oil that supply milk powder, MPC, and fat substitutes. The origin of vegetable oil “shortening” is Malaysia and Indonesia, while milk powder origin comes from France, New Zealand, and Germany, and sodium caseinate is sourced from France and Italy. Alzahar also contracts with Danisco and Chr. Hansen to supply food additives. Production line: Processed cheese cookers from Switzerland in addition to some cookers made in Turkey. The mozzarella production line is manufactured by Milky Lab in Italy. The only equipment made in Egypt at Alzahar are the Cleaning in Place (CIP) unit and boilers. Environmental issues: Alzahar have a water reuse system in place. Competitors: Obour Land, Domty, and Green Land are the main competitors. The market share of Alzahar is relatively low due to its small investment size, limited market channels, and less advertising. Price competition is one of the tools it uses to stand against larger competition. The current production of Alzahar is about 4,300 kg/hour in comparison of more than 24,000kg/hour in Domty and Obour Land. Marketing channels: Alzahar has a sales force consisting of 24 sales trucks, in addition to rented trucks when necessary. Only 30% of Alzahar’s production is sold in the local market,


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while the remaining production is exported to GCC countries. Locally, 70% of Alzahar’s dairy products reach final consumer via sales agents in different governorates, while 20% and 10% are sold through hypermarkets and direct sales through the company’s outlets.


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ANNEX II: FOCUS GROUPS WITH KEY STAKEHOLDERS

Focus group discussions are a method for extracting ideas about predetermined decisions or solutions of a specified subject or problem. Focus group discussions consist mainly of predetermined questions that are directed to a small group of people to receive their answers, which represent new opinions and ideas related to suggested decisions or solutions. There are three types of questions that can be used in focus group discussions:

1. engagement questions to introduce the discussion subject and make the audience comfortable,

2. exploration questions to make the audience participate in discussions, and 3. exit questions to bring forth any unspoken questions from the audience.

For this study, three focus group were organized. Two of them targeted two small groups of different players in the milk and Dairy VCs in Minya and Dakahlia, including manufacturers of different types of cheese, small milk farmers, NGOs, entrepreneurs, agricultural administration representatives, dairy science and technology teachers and academic professors, owners of groceries and dairy product outlets, and the heads of MSMEDA offices in both governorates. In both governorates, the focus group discussions were divided into two main sessions. The first discussed solutions related to crude milk production issues and other production additives, while the second discussed milk and dairy product marketing. Both sessions were 90 minutes long. In the first session, five main questions were asked, in addition to an exit questionnaire, as follows:

1. What are the best districts (in your governorate) for establishing milk collection points or centers?

2. Do dairy manufacturers or dairy products factories need to establish specialized milk production farms nearby?

3. From the point of milk production farmers or breeders, is milk production profitable? 4. Is there a need to establish nearby rennet production enterprises? Or, if a rennet

production enterprise is created, will it be find demand from the manufacturers’ side? 5. Is there a need to establish nearby packaging material enterprises? 6. Are there any questions we haven’t covered so far?

In the second session, the following questions were asked:

7. What is the recommended mechanism for integrating specific cheese manufacturers – Malawi cheese in Minya and Domiati and Ras cheese in Dakahlia – to work under unified registered brand names for their unique cheese types?

8. Is contracting between manufacturers and crude milk producers and producers of other dairy processing additives necessary? And if so, what are the suggested mechanisms to promote contracting throughout the Dairy VC?

9. What is a suggested mechanism for linking rural cheese manufacturers with hypermarkets? First, however, does it even make sense?

10. What is a recommended mechanism for vertical integration through the Dairy VC (i.e., establishing a cheese factory attached to a milking farm or milk collection point, or an outlet affiliated with a cheese factory)?

11. To what extent is financing new marketing functions accessible, i.e., cold storage for cheese?


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12. Any other questions?

Focus Group 1: Dairy SMEs, Minya

In Minya Governorate, a focus group discussion was held on April 30, 2018, at the Grand Aton Hotel with an audience of 42 Dairy VC related persons, i.e., Malawi cheese manufacturers, milk production farmers, and entrepreneurs. The following responses were the most important with regards to the questions listed above. • The following districts and locales were suggested for establishing milk-collection points

and centers: Damasheer, Malattia village (Tala, Maghagha Center), Barsha, Da’ir El-Barsha, and Nazlet El-Barsha. Participants stated that although El-Amodeen district has a surplus of milk, there are no sufficient dairy factories there. Some opposing voices said that establishing collection points or centers in these districts will elevate milk prices due to strong, expected competition between cheese manufacturers for milk.

• Milk production farms projects encounter many obstacles such as expensive land costs,

high labor rates, continually increasing feeding costs, etc. Participants suggested that if there is a need for specialized milk production, it should come as dual-purpose farms producing both milk and meat. This suggestion may need more investigation, since meat production has high water needs, which would represent a potential obstacle. The current status of rural cheese manufacturers makes it hard for them to demand high-quality milk that is produced on specialized farms.

• In Minya Governorate, traders collect calve stomachs from rural households. Participants

emphasized that rural women in Abwan village (Mattay district) produce rennet enzymes in their homes. Participants suggested establishing a modern, well-equipped rennet processing factory in El-Amodeen, Samalot, or Maghagha. However, using calve stomachs from illegal slaughtering is an obstacle for such projects.

• Packaging materials are usually imported from outside of Minya. So, establishing a packaging processing factory there is a potentially successful project. To succeed, the factory would need to be big enough to meet demand both in Minya and surrounding governorates. This packaging factory would produce cans and plastic packs for traditional cheese factories.

• At the end of the first session, participants suggested the promotion of development

projects aimed at providing technical assistance, awareness, and extension services to enhance the productivity of traditional cattle in rural areas. This is in addition to other projects that help in utilizing cheese factory waste.

• In the marketing session, participants suggested promoting Malawi cheese as a brand,

making a Malawi cheese standard that would be followed by a consortium of factories, thus maintaining control over the brand name, production quality, and specifications. A number of factories were invited to participate in registering the brand name for Malawi cheese and producing the same product under one shared brand. Opposing voices stated that it would be hard to form a consortium because of uncontrolled competition with homemade Malawi cheese produced by rural women in villages that offered cheaper prices relative to factory-made substitutes.

• Contracting with milk collection centers is a suggested solution to eliminate supply risks,

especially if the cheese factory has forged agreements or contracts to supply its products to local or export markets. One of the participants stated that his cheese factory is contracted with a milk collection center to supply 4–8 tons of 4% fat milk daily from


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November to June and emphasized that contracting is one of the successful tools to prevent and manage price competition.

• A recommended mechanism to link traditional cheese factories with hypermarkets is to

provide them with needed technical assistance to comply with the requirements of hypermarkets, in addition to having a registered trademark and joining the formal economy. MSMEDA offers a package of incentives to encourage informal cheese factories to join the formal economy, i.e., facilitating getting trade and industrial licenses, in addition to giving MSMEDA members a 50% subsidy to obtain barcodes, which an essential requirement to supply their products to hypermarkets. Opposing voices claimed that most hypermarkets have strict and tough requirements to accept traditional cheese products, especially when concerns for hygiene and sanitary requirements are beyond the reach of informal MSMEs. In addition, large buyers such as hypermarkets impose tough financial stipulations on MSMEs by paying 45–60 days after receiving their commodities, in addition to mandatory participation in hypermarkets’ weekly and monthly offers.

• The vertical VC integration is already somewhat applied by participants, such as the

Horus factory MSME which owns its own retail outlet. Also, the Egyptian Business Women’s Association trained rural women on how to manufacture white cheese and yoghurt in their homes and then helped them display their products in outlets affiliated with the association in Minya Governorate. This is a successful example of vertical VC integration that needs to be extended via having other outlets in a number of surrounding districts.

• Projects to finance new marketing functions are available through the MSMEDA, which

offers financing to MSMEs with direct loans or indirect loans with the cooperation of intermediate financing associations such as public or private banks. According to a MSMEDA representative, 5–9% low interest loans are offered for enterprises that fulfill MSMEDA’s membership requirements, i.e., trade licenses, industrial registration (for industrial enterprises), and tax IDs. Other sources of financing new MSMEs are NGOs such as the Business Women Association, which offers microfinance loans ranging from EGP 1,000 to EGP 10,000 with 10% interest rates and repayable within 18 months. The requirement for this loan is just one guarantor in addition to copies of national IDs.

Focus Group 2: Dairy SMEs, Dakahlia

In Dakahlia Governorate, a focus group discussion was held on April 14, 2018, at Mansura University Hotel with a group of 16 dairy-related audience members, i.e., Domiati cheese manufacturers, dairy equipment manufacturers, and entrepreneurs. The following were the most important responses to the focus group questions. • The best villages and districts in Dakahlia Governorate to establish new milk collection

centers are Mit Salsabeel, Simbelaween, Sherbeen, Mataria, and Shahaa. These districts have a large base of milk producers. Most audience members considered that priority should be given to developing current collection points and centers and to enhance their practices, especially in handling and transportation of milk. Establishing farms for dairy animals could be a successful project in Dakahlia governorate to supply medium and large-scale dairy factories. Risks from such a project include the unavailability of sufficient amounts of feed with good prices, serious competition from imported milk powder, increased infection rates of diseases, such as Foot and Mouth disease (FMD), and unstable prices of milk, especially at the season’s beginning, in January and February.

• The Ghasi rennet factory in Belkass is one of the rare rennet enterprises in Dakahlia.


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However, the audience stated that there is no need for more rennet enterprises in Dakahlia since establishing trust in a new brand is not easy, and traditional cheese manufacturers prefer to deal with a rennet manufacturer with a long history of expertise and reputation, especially when they have recently experienced adulteration with powder rennet from new rennet manufacturers. A large-scale rennet powder company is a successful project in the point of the audience’s view, although they stated that traditional cheese manufacturers need to be trained on how to dissolve rennet powder and use it safely. This is a reason that makes them not demand it, especially when they believe that rennet powder is more suitable for soft cheese types that have not ripened.

• The audience stated that there are already many manufacturers of tin cans for cheese

packaging in Dakahlia in addition to factories in Mit Ghamr, Gharbia, and Damietta. Plastic jars for cheese packaging are procured from 10th of Ramadan city in Sharkia and from Damietta. Priority should be given to enhancing the quality of current factories of packaging material and assisting them to produce products that comply with specifications. They also recommended developing the outdated technology and transferring more advanced packaging technologies to enhance marketing capabilities.

• Regarding the idea to create consortiums for Domiati cheese in Dakahlia, the audience

agreed that marketing Domiati cheese under a single unified brand would have many advantages, such as enhancing the marketing capabilities of consortium members in local and export markets. The disadvantages, however, do exist, such as competition between cheese manufacturers and a lack of willingness to cooperate, which would hinder the formation of such alliances. Some audience members suggested establishing an NGO to promote the cheese. Another suggestion was to establish a joint company between three to four cheese manufacturers to participate only in the marketing and the ownership of the brand name.

• The idea of drafting contracts for more integration between different actors along the

Dairy VC has many disadvantages from the audiences’ point of view. These disadvantages were: the risk of non-commitment from either side, needing cultural change to accept contracts where manufacturers in rural areas depend upon oral agreements with well-reputed partners, economic instability, and price fluctuations (increased cost of energy, currency fluctuations, etc.). Audience members stated that advantages of contracting are clearer for larger-scale industry that can forge legal agreements and contracts with forward and backward actors in the VC. Medium- and large-scale companies, according to the audience, can gain more benefits from contracting with hypermarkets, for instance, where they have an upper hand in negotiations, while small enterprises encounter many obstacles in dealing with hypermarkets, such as obligatory fees for every new item supplied to a hypermarket, delays in receiving payments for their commodities, etc.

• Finally, vertical integration to increase the marketing capabilities of all actors in the milk

and dairy product VC was recommended. Many examples of vertical integration were mentioned by the audience, such as the Shehab dairy product company, which owns its own outlets, and the Atayeb factory, which owns its own milking farm. Also, Hala dairy products’ factory has its own plastic jar production company and outlets. This shows that MSMEs have problems cooperating together and, therefore, would rather vertically integrate and grow their businesses alone.


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ANNEX III: LIST OF AVAILABLE PRIOR DAIRY VC REPORTS

Abou El-Amaiem, Waleed. Milk VC Constraints in Dakahlia Governorate, Egypt. 2014. Epidemiol 4:152. doi: 10.4172/2161-1165.1000152 ___. Buffalo Calves Production System in Aga District, Dakahlia Governorate, Egypt: A VC analysis, Asian Journal of Animal Research, Vol 1, Issue 1, 2012. Ain Shams University, Project DAIRY (AIRD) Young Team program: “Understanding the Traditional Milk Supply Chain Functioning in Cairo-Egypt”, Tainting workshop, 2012. https://umr-selmet.cirad.fr/FichiersComplementaires/proceeding_DAIRY_final2.pdf ATLAS of the Traditional Milk Sector Around Greater Cairo in Egypt, CIRAD APRI ICARDA, Cairo University & Ain Shams University, 2016. https://umr-selmet.cirad.fr/FichiersComplementaires/Atlas_finale_BR1_end.pdf Best Available Techniques (BAT) for the Dairy Industry in Egypt, BAT4MED project, 2012. Care Egypt Legacy, 2005–15. https://care.org.eg/wp-content/uploads/2017/10/Legacy-Report_FINAL_LR_justfay.pdf Cleaner Production in the Dairy Sector, Egypt: SEAM program, 2004. Daburon et. al, Evolution of a Milkshed and Role of Alternative Milk Collection Centers in Egypt, Cah. Agric. 2016, 25, 65008. https://www.cahiersagricultures.fr/articles/cagri/pdf/2016/06/cagri160007.pdf Dairy Processing SMEs Development Project, 2012. Developing the Typical Dairy Products in Alexandria and Beheira, LACTIMED project, 2014–15. EBRD & FAO. “Livestock and Dairy Sectors: Challenges and Opportunities for Investment in Egypt.” http://www.eastagri.org/docs/group/280/FAO%20-%20Investment%20in%20Dairy%20and%20Meat_Markos%20Tibbo.pdf Egypt Network for Integrated Development (ENID). 2013 Annual Report. Elkady, A. “The Role of Technological Centers in the Development of Dairy Sector in Egypt.” 3rd Regional Training LACTIMED, Alexandria, Egypt, September 2014. European Bank for Reconstruction and Development (EBRD). “Investment Opportunities in the Dairy Sector in Egypt.” http://www.ebrd.com/cs/Satellite?c=Content&cid=1395248254217&d=Mobile&pagename=EBRD%2FContent%2FContentLayout “Feasibility Study for Technical Assistance Programme,” Egyptian Dairy Sector Report, 2011. Hofi, M. “Contamination in Dairy Chains and Approaches to Quality Control in Egypt.” International Journal of Food Safety, Vol. 13, 2011. http://www.internetjfs.org/articles/Contamination%20in%20Dairy%20Chains%20and%20Approaches%20to%20Quality%20Control%20in%20Egypt.pdf


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Knowledge Economy Foundation. “Dairy Stockholder Analysis: Executive Summary.” From Farm to Fork Project, 2015. Salah, G. “Dairy Chain in the Egyptian Market.” College of International Transport and Logistics, N.D.


128

ANNEX IV: TABLES

Table 21: Central Bank of Egypt (CBE) definition of MSMEs Companies &

Facilities Established

Entities Volume of Business

Established Entities Volume of Labor Force

New (Newly Established) Paid Capital*

New (Newly Established) Volume of

Labor Force Micro Finance Less than EGP

1 million Less than 10 employees

Less than EGP 50,000

Less than 10 employees

Very Small From EGP 1 million to less than EGP 10 million


From EGP 50,000 to EGP 5 million for industrial facilities and EGP 3 million of non-industrial


Small From EGP 10 million to less than EGP 20 million


From EGP 50,000 to EGP 5 million for industrial facilities and EGP 3 million of non-industrial


Medium From EGP 20 million to less than EGP 100 million


From EGP 5 million to EGP 10 million for industrial facilities and EGP 3 million to EGP 5 million for non-industrial


Source: CBE website, http://www.saib.com.eg

*The size of the labor force is a virtual and unspecific definition for the entity or facility. Also, in case of new established entities, paid-up capital is used instead of volume of business for a period of one year from the start of the activity; hence, this categorization will be temporary until the volume of business data is available, and then the definition will be based on volume of business.


129

Table 22: Tariff numbers and custom rates for detailed dairy products Tariff

numbers Dairy products Custom

rate%

0401100000 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 1%.

5

0401200000 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 1% but not exceeding 6%.

5

0401400000 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 6% but not exceeding 10%.

5

0401500000 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 10%

5

0402100010 Milk for infant, concentrated or containing added sugar or other sweetening matter, in powder, granules, or other solid forms, of a fat content, by weight, not exceeding 1.5%.

Free

0402100020 Milk, concentrated or containing added sugar or other sweetening matter, in packages of weight not less than 20 kg, in powder, granules or other solid forms, of a fat content, by weight, not exceeding 1.5%.

Free

0402100090 Milk, concentrated or containing added sugar or other sweetening matter, in other packages, in powder, granules or other solid forms, of a fat content, by weight, not exceeding 1.5%.

Free

0402211000 Milk for infant “half fat,” in powder, granules, or other solid forms, of a fat content, by weight, exceeding 1.5%, not containing added sugar or other sweetening matter.

0

0402212000 Cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, not containing added sugar or other sweetening matter.

20

0402219110 Milk, in powder, granules or other solid forms, in packages of weight from 10 kg to less than 20 kg, not containing added sugar or other sweetening matter.

0

0402219190 Milk, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, not containing added sugar or other sweetening matter, in packages of weight from 20 kg to more.

0

0402219900 Milk, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages. 10


130

Tariff

numbers Dairy products Custom

rate% 0402291000 Milk for infant “half fat,” in powder, granules, or other solid forms, of a fat content, by weight, exceeding 1.5%,

containing added sugar or other sweetening matter. 0

0402292000 Cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, containing added sugar or other sweetening matter.

20

0402299110 Other milk, concentrated, in packages of weight not less than 10 kg, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages.

0

0402299190 Other milk, in packages of weight from 20 kg to more, concentrated, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages.

0

0402299900 Other milk, concentrated, containing added sugar or other sweetening matter, in powder, granules, or other solid forms, of a fat content, by weight, exceeding 1.5%, in other packages.

10

0402911100 Milk, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter, Put up for retail sale.

20

0402911900 Milk, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter, not put up for retail sale.

10

0402912000 Cream, concentrated, in forms other than blocks or powder, not containing added sugar or other sweetening matter. 20

0402991100 Milk, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter, put up for retail sale.

20

0402991900 Milk, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter, not put up for retail sale.

10


131

Tariff numbers

Dairy products Custom rate%

0402992000 Cream, concentrated, in forms other than blocks or powder, containing added sugar or other sweetening matter. 20

0403100000 Yogurt, whether or not concentrated or containing added sugar or other sweetening matter or flavored or containing added fruit, nuts, or cocoa.

5

0403900010 Curdled cream, fermented or acidified cream, whether or not concentrated or containing added sugar or other sweetening matter or flavored or containing added fruit, nuts, or cocoa.

5

0403900090 Buttermilk, curdled milk, kephir, and other milk, whether or not concentrated or containing added sugar or other sweetening matter or flavored or containing added fruit, nuts, or cocoa.

5

0404100000 Whey and modified whey, whether or not concentrated or containing added sugar or other sweetening matter. Free

0404901000 Products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, in packages of weight not less than 10 kg, not elsewhere specified or included.

2

0404909000 Products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, in other packages, not elsewhere specified or included.

5

0405101000 Butter, in packages of weight less than 10 kg net 10 0405109000 Butter in packages of 10 kg net or more. Free 0405201000 Dairy spread, in packages of weight less than 10 kg net. 10 0405209000 Dairy spreads in packages of 10 kg net or more. Free 0405901010 Ghee, in packages of weight less than 10 kg net. 10 0405901090 Other fats and oils derived from milk, in packages of weight less than 10 kg net. 5 0405909010 Ghee, in packages of weight from 10 kg to less than 20 kg net. Free 0405909090 Other fats and oils derived from milk, in packages of weight more than 20 kg net. Free


132

Tariff numbers

Dairy products Custom rate%

0406100010 Fresh (unripened or uncured) cheese, including whey cheese, and curd, in packages of weight up to 20 kg net. 10

0406100020 White cheese of bovine milk, fresh, in salted water, in packages of weight more than 20 kg net. 10 0406100050 Fresh (unripened or uncured) white cheese, in packages of weight more than 20 kg net. 10 0406100090 Other fresh (unripened or uncured) cheese, including whey cheese, and curd, in packages of weight more than 20

kg net. 10

0406200010 Grated or powdered cheese, of all kinds, in packages of weight not less than 20 kg. 10 0406200050 Grated or powdered cheese, of all kinds, in packages of a weight 20 kg 10 0406200090 Grated or powdered cheese, of all kinds, in packages of weight more than 20 kg. 10 0406300010 Processed cheese, not grated or powdered, in packages of weight not less than 20 kg. 10 0406300050 Processed cheese, not grated or powdered, in packages of a weight 20 kg 10 0406300090 Processed cheese, not grated or powdered, in packages of weight more than 20 kg. 10 0406400010 Blue-veined cheese and other cheese containing veins produced by penicillium roqueforti, in packages of weight not

less than 20 kg. 10

0406400050 Blue-veined cheese and other cheese containing veins produced by penicillium roqueforti, in packages of a weight of 20 kg

10

0406400090 Blue-veined cheese and other cheese containing veins produced by penicillium roqueforti, in packages of weight more than 20 kg.

10

0406901010 Other cheese, in packages of weight not less than 10 kg up to 20 kg. Free 0406901050 Other cheese, in packages of a weight 20 kg. Free 0406901090 Other cheese, in packages of weight more than 20 kg. Free 0406909000 Other cheese, in packages of a weight less than 10 kg. 10


133

Time Series Analysis

Table 23: Time trend analysis for cattle heads development (2004–15) Variable

(numbers) Average (2004–

15)

β t R-2 F Annual change

rate Cows 4,732.5 -

11.182 -

0.645 0.199 0.416 -0.24%

Slaughtered cows

60 4.601 2.886 0.674 8.326* 7.67%

Buffaloes 3,933 8.272 0.744 0.229152 0.554 0.21% Slaughtered

buffaloes 556.2 22.853 2.810 0.664 7.898* 4.11%

Goat 4,500.5 85.378 0.815 0.250 0.664 1.90% Slaughtered

goats 18.75 0.437 1.242 0.366 1.544 2.33%

Source: Table 7 *significant at 0.01 significance level Table 24: Time trend analysis for crude milk production (2004–15)

Variable (crude milk)

Average (2004–

15) β t R-2 F

Annual change

rate Cows 2,892.583 -6.597 -0.271 0.0855 0.074 -0.23%

Buffaloes 2,595.166 -8.832 -0.637 0.197 0.405 -0.34%

Goat 126.833 0.566 2.818 0.665 7.940* 0.45%

Total 5,614.583 -14.867 -0.482 0.151 0.233 -0.26 Source: Table 8 *significant at 0.01 significance level


134

Table 25: Gross expenditure, number of enterprises, and employment opportunities for milk and dairy sector MSMEs financed by MSMEDA in 2017 by governorate

Governorate Expenditure Number of Enterprises

Employment Opportunities

Aswan 5,000 1 1 Assiut 293,000 18 59

Alexandria 261,000 23 52 Beheira 247,500 21 48

Giza 26,000 4 5 Dakahlia 639,840 60 128

Suez 15,000 1 3 Sharkia 830,500 159 166 Cairo 99,000 14 20

Qalyubia 40,000 6 8 Monufia 342,080 31 67

New Valley 1,247,880 85 251 Port Said 32,000 2 6

Sohag 251,100 37 50 Qena 106,500 19 21

Kafr El-Sheikh 480,140 35 96 Gross animal production projects 192,448,190 31,496 23,308 Gross milk and dairy processing

projects 4,916,540 516 981

Source: MSMEDA, 2018


135

Table 26: Governmental entities & NGO representatives attending focus group on discussing Dairy VC recommended interventions (June 4, 2018)

Title Association/ Authority

Sex Age Name #

Food Standards Administrative Manager

EOS F 39 Eng. Hanan Fouad Hamed

1

FTRI-vise chairman FTRI F 55 Prof Dr. Iman M. Salem

2

FTRI-Dairy Research and Technology Dep. Head

FTRI F 47 Prof Dr. Wafaa Salama 3

FTRI-Dairy Research and Technology Dep. Professor

FTRI M 56 Prof Dr. Waheed Ahmed Ragab

4

Food Science Specialist EOS F 39 Eng. Noha M. Attia 5 Executive Manager FAITC M 51 Dr. Amgad A. Elkady 6

Public Projects Program Manager

IMC M 51 Mr. Mohib Moafy 7

Industrial Administration, Manager

MSMEDA M - Eng. Hassan Shehata 8

Projects Manager KEF F - Mrs. Amal Matter 9 Technical Specialist KEF F 55 Alia Hetta 10 Managing Partner KSD F Dorra Fiani 11 Dairy Dep. Head GOEIC M 46 Dr. Mohamed A. Ismaeel 12

Head of Central Administration for Food and Agricultural

Imports

GOEIC F 46 Dr. Dalia Talaat Shehab Eldin

13

Food Science Specialist ICA

M 37 Eng. Emad Abdelhakim 14

Marketing Administration Head FEC M 33 Eng. Tameem Eldawy 15 Technical Specialist KEF F 55 Alia Hetta 10


136

Table 27: Dairy VC field visit questionnaire Contact Information: Date: Company Name: Address Telephone: Email: Company Representative:

Title: Mobile:

Company Profile: Foundation year Space (squared meters)

No. of employees Total investment (L.E) Main dairy products

Operating Costs: Item Consumption Monthly amount Solar Gas Water Electricity


137

I. Material

Item Source Price Dosage Storage condition

Acceptance criteria

√ × F TS H pH Acid. Other

USAID’s Strengthening Entrepreneurship and Enterprise Development (SEED) Project

138

II. Equipment

Equipment Capacity Age Price

III. Product design

Item Temp. Time Preparation method Addition method


139

IV. Nonconformity

Nonconformity Frequency Correction time Corrective action

V. Employees

Position Qualifications Years of Experience

Salary


140

I. Distribution Channels 1. To whom do you sell your products? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….……………………………………………………………………………………………………………….. 2. Who are your competitors? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….……………………………………………………………………………………………………………….. 3. What is the size of your market, and what is your market share? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….……………………………………………………………………………………………………………….. 4. Storage facilities

Storage space Owned/Rented Location Rent value Storage conditions (temp., time, etc.)

5. Distribution facilities

Vehicle type Owned/Rented Price Transportation conditions (temp., time, etc.)

6. Marketing & Sales team

Position Qualifications Years of Experience

Salary


141

1. Products prices

Products Sale unit Price


142

Table 28: Focus group questionnaire

USAID SEED’s Dairy VC Assessment Study Results Presentation, June 4, 2018 Recommended Interventions to Enhance Dairy VC in Egypt

From the presented interventions to enhance Dairy VC in Egypt:

1) Prioritize the top-five most important interventions from your point of view? (Put intervention serial no.)

1)………….……. 2)…………..….. 3)……………….. 4)……………….. 5)………………..

2) Pease fill out the following table for the most important intervention

Intervention No.

Potential Partners

Geographical area

No. of Working Days

Main tasks Deliverables Budget


143

REFERENCES

Arab Organization for Agricultural Development. Statistical Year Book, 2016. Central Agency for Public Mobilization and Statistics (CAPMAS). “Annual Bulletin of Animal and

Poultry Disease Statistics 2016,” June 2017. ___. “Annual Bulletin of the Movement of Production, Foreign Trade & Available for

Consumption of Most Important Industrial Commodities (Public and Private Sectors), (2013/2014).” August 2016.

___. Census 2017, “Chapter 5: Agriculture.” ___. “Income, Expenditure & Consumption Survey 2015.” September 2016. ___. “Annual Bulletin of Agricultural Commodities 2015.” January 2017 Datko, J. “Semi-Structured Interview in Language Pedagogy Research,” Journal of Language

and Cultural Education, 3 (2), 2015. Egyptian Export Development Authority. http://www.expoegypt.gov.eg/ Egyptian Ministry of Agriculture and Land Reclamation, Animal Wealth Development Sector,

2017. Egyptian Ministry of Finance. http://www.mof.gov.eg European Food and Nutrition Action Plan 2015–2020, Denmark, 2014, WHO.

http://www.euro.who.int/__data/assets/pdf_file/0008/253727/64wd14e_FoodNutAP_140426.pdf

Kvale, S. Interviews: An Introduction to Qualitative Research Interviewing (Thousand Oaks:

SAGE Publications, 1996). Trade Map. https://www.trademap.org/Index.aspx



https://www.trademap.org/Index.aspx


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U.S. Agency for International Development/Egypt www.usaid.gov

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