We may be close to self-sufficient when it comes to sugar production, but manufacturers say they’re bleeding cash. As the sugarcane harvest kicks off in Upper Egypt, a sharp divide has emerged between the narrative heralding the strategic success of boosting domestic supply — longtime readers will remember the sugar crises of years past — and the difficult financial reality facing the country’s refiners as they work overtime to ensure supply targets are met.

Annual sugar production stands at nearly 3 mn tons, with consumption only marginally outpacing this at roughly 3.2 mn tons. To secure this supply, the Madbouly government hiked the procurement price of sugarcane to EGP 2.5k per ton and allocated EGP 25 bn to pay farmers promptly, in addition to logistics support, Managing Director of the Sugar and Integrated Industries Company Salah Fathi tells EnterpriseAM. The state is hoping to procure 7 mn tons of sugarcane this season — about 1 mn tons more than it aimed to buy during last year’s harvest, Supply Minister Sherif Farouk has said.

The catch? Local refiners are being squeezed by the higher price they’re paying farms. While the state’s decision to hike farmer payouts secures the harvest and protects farmers, it has locked producers into a high-cost structure that leaves them losing between EGP 3k-4k per ton, one industry source claims.

You’re going to see this issue in the headlines for weeks to come: Manufacturers are lobbying the Madbouly government to extend a ban on the import of raw sugar (it’s set to expire next month) and are asking officials to extend a low-interest financing initiative for farmers. Farmers are warning officials that even a record harvest won’t make them competitive against lower global prices, the source tells us.

Why it matters: If the import ban expires in February, cheap global raw sugar could flood the market just as Egypt’s domestic harvest hits its peak. Producers argue they can’t compete with lower global prices while being forced to buy local cane at a premium and sell to the Supply Ministry at “competitive” (read: capped) prices. Without an extension of the ban or a low-interest financing initiative that the sector is calling for, the economics just don’t work.

It’s good news for consumers with a sweet tooth, as retail prices have stabilized between EGP 26 and EGP 30 per kg — nearly half of what they were this time last year. With local stocks high, there is zero risk of a shortage heading into Ramadan.

Extending the ban on sugar imports shouldn’t lead to price hikes, as prices have remained stable and are down y-o-y, thanks to local producers being able to meet demand, Chambers of Commerce General Foodstuffs Division member Hazem El Monoufi tells EnterpriseAM.

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