Meet SulleX: A company aiming to transform food manufacturing. SulleX is a cold chain developer that’s building an innovative project south of Giza, which will help cut down on food waste and change how food producers operate. We spoke with Andrew Daniel (LinkedIn), the founder and chairman of SulleX, to learn more about the company and what it does.

The problem: Egypt sees an average of 91 kgs of food wasted per capita each year, according to estimates by the National Center for Social and Criminological Research cited by the UN’s FAO. Nearly two thirds of food loss occurs during production, handling, processing, and distribution, while one third occurs at the consumer level, according to a publication by FAO. A significant portion of that loss comes on the back of inadequate refrigeration and transportation systems. Below are edited excerpts of our conversation with Daniel:

SulleX is the first industrial and logistics cold chain hub in Egypt. The company was established two years ago. We secured a 509k sqm plot of land in Giza and are in the process of turning it into a refrigerated logistics industrial zone — dubbed SulleX-TRC — that serves five governorates: Giza, Fayoum, Beni Suef, Minya, and Assiut.

Refrigerated food manufacturing in Egypt faces a double whammy: Firstly, the capital expenditures needed to set up cold chains are very steep. The rule of thumb for investing in chilled products and concentrates is to allocate two-thirds of capex to refrigerators — with just just a third of expenditures going into factory establishment. The hefty costs of refrigerators are a significant barrier to entry, discouraging many from investing in chilled food production.

Secondly, there’s the issue of underutilization. Take potato producers, for example. Their expensive refrigeration units sit idle for two months out of the year. This inefficiency drives up the price of the final product due to fixed overhead costs.

In a bid to address these two challenges, we studied the market in the five governorates we are targeting. Our research found that 30% of vegetables and fruits are lost due to a lack of proper cold chain infrastructure. For instance, tomato farmers shared how, during some seasons, they leave their crops to spoil due to the high costs of transporting them, opting instead to convert them into fertilizer.

These insights paved the way to our solution:A shared network of cold chain infrastructure located near farms that would allow farmers to extend the shelf life of their crops and sell them off season — all whilst cutting costs for agricultural producers. Our cold chain approach is different; we build an industrial zone, invest in refrigerators on behalf of agricultural factories, and place these refrigerators strategically throughout the zone so that there is one at the back door of every factory. This model of shared refrigeration allows factories to focus on production without the crippling costs of individual refrigeration units. Instead, we give them the flexibility of paying for a monthly storage fee per pallet position.

In addition to refrigerator rental, we offer factories through turnkey sales contracts known as engineering, procurement, and construction (EPC) agreements. We provide two different factory sizes and can tailor factories to cater to the producer’s needs. We also help producers secure financing through a bank that we are currently negotiating with.

SulleX-TRC will have five collection centers that operate within a hub and spoke model. Each center collects produce from farmers and transports it via refrigerated trucks to our central hub in Giza, where it is stored in large-scale refrigerators. Factories access this stock for production, and finished products are then placed back into the refrigerators if not immediately sold. Farmers only pay for the services they receive — maximizing their resource utilization while gaining access to an export zone.

We aim to cut back food loss along the cold chain by 30% — 16% will be saved in the farm-to-collection centers process and 8% will be saved in the transport of goods using refrigerator trucks.Some 6% will be saved during the manufacturing process — which we will achieve by addressing leakage problems and cooling defects in the production process.

Next week, we’ll sign a contract with Schneider Electric that will allow Sullex-TRC to become the first smart industrial logistics city in the Middle East. We will work with Schneider to roll out a tracking system “from farm to fork.” For example, we’ll be able to track a tomato’s journey from the field in Egypt all the way to the final consumer in Italy or Spain — all through a label.

Smart solutions all around: One of the problems with refrigerated transport that has tarnished the reputation of some Egyptian products is that some refrigerated truck owners would turn off their refrigerators for some time mid-journey, causing the products to spoil. To address this, we’ll be equipping trucks with data loggers. We want to introduce smart solutions that track factors like temperature, lighting, cooling, and security at every stage.

The city will run on solar energy to cut back electricity costs, which account for 85-90% of refrigeration expenses. Solar power will cover 40% of the city's total energy consumption, estimated at 80 MWh. We are trying to secure a plot of land in Giza’s industrial city of Tarboul to expand our solar capabilities. Leveraging solar energy is essential to SulleX, whose sister company, IRSC, is a major renewables player. Set up in 2011, IRSC is a leading company in installing solar stations for industrial and commercial facilities in the local market.

The hub’s first factory is expected to come online in 12-15 months and we hope to complete the entire project within 4.5-6 years from now. The hub will encompass 60 factories alongside 13 refrigerators with a capacity of 15k pallets each. So far, 60% of the space available in our first phase has been reserved by manufacturers. The goal is to recoup refrigerator costs within 7 years of operation and factory costs within a little over 3 years.

Food security cannot be achieved without sustainability. We want to build an export hub that meets global sustainability requirements and we aim to leverage solar energy to do so. The EU’s Carbon Border Adjustment Mechanism (CBAM) currently targets five energy-intensive industries, including fertilizers, which indirectly affects the food industry. We expect that sooner or later all industries will be subject to the requirements of CBAM, so we’re gearing up to meet any future sustainability requirements from buyers worldwide. All our refrigerators will be ISO-certified, and the factories will strive to receive the EDGE green building certification.

Plans are in place to set up four more hubs like SulleX-TRC in Egypt, each catering to five governorates. One will be located in Beheira’s Badr city, where there is a big market gap, seeing as it is home to Egypt’s largest strawberry production. This refrigerated logistics industrial hub would also serve the eastern delta region. We are also looking into establishing another hub near the Mediterranean Sea to support the western delta region, a third city in the Bahariya Oasis, and a fourth in eastern Uwaynat.

Producers get a host of perks: We are in talks with one of the world’s largest shipping companies to facilitate exports for producers. We also help producers market their products abroad, and we’re working with the Agriculture Ministry to set up a residue analysis lab to meet export standards. SulleX will also offer producers incentives in the form of a rewards application and ins. services.

The project’s potential extends beyond Egypt’s borders: Talks are underway with an African country that’s interested in replicating the SulleX model. While Egypt sees 30% food loss due to inadequate refrigeration, some 75-80% of dairy products in Africa are lost due to the same reason as well as electricity shortages. Our model of integrated, self-sufficient cities powered by solar energy and batteries can address critical infrastructure needs in Africa as well as other regions.

Your top green economy stories for the week:

• USD 1.2 bn in green financing in the works: Negotiations have started for Egypt to access USD 1.2 bn in long-term, low-cost climate financing from the IMF's Resilience and Sustainability Facility, according to the Environment Ministry.
• A whole lot of green projects up for grabs: Egypt’s green economy offers USD 120bn worth of potential investments through 2035.
• Sun Way acquires two local firms: Egyptian renewable energy firm Sun Way Egypt has completed its acquisition of Go Solar and Green Solar both of which operate in the installation and supply of solar energy projects.
• No need to stop for gas: Our friends at renewables firm Infinity will be providingcharging solutions for owners of the MG4 EV models under a strategic partnership with the exclusive importer of MG vehicles in Egypt Mansour MG Automotive.