{"id":660827,"date":"2025-02-18T00:00:00","date_gmt":"2025-02-18T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/egyptian-agribusinesses-have-to-adapt-to-a-warmer-drier-world\/"},"modified":"2025-02-18T00:00:00","modified_gmt":"2025-02-18T00:00:00","slug":"egyptian-agribusinesses-have-to-adapt-to-a-warmer-drier-world","status":"publish","type":"goinggreen","link":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/egyptian-agribusinesses-have-to-adapt-to-a-warmer-drier-world\/","title":{"rendered":"Egyptian agribusinesses have to adapt to a warmer, drier world"},"content":{"rendered":"

Egypt\u2019s <\/strong>agricultural sector is and will continue to face unprecedented challenges<\/strong> as climate change, water scarcity, and land shortages threaten production and profitability, according to a recent report (pdf)<\/a> on the country\u2019s agribusiness sector from Fitch Solutions\u2019 research unit BMI. <\/p>\n

\n

AGRIBUSINESSES ARE FACING CHALLENGES ON MULTIPLE FRONTS-<\/p>\n

A warming climate is taking its toll on Egyptian agriculture:<\/strong> Egypt is particularly vulnerable to climate change, with \u201cincreased temperatures, changes in precipitation patterns and the potential for more frequent extreme weather events, [posing] a significant long-term risk to Egyptian grain production.\u201d The report warns that heat stress is already leading to lower yields for key crops like wheat and rice. The increased frequency of droughts and heatwaves is also expected to accelerate desertification, further reducing the amount of arable land available for cultivation.<\/p>\n

(Tap or click the headline above to read this story with all of the links <\/strong>to our background as well as external sources.)<\/p>\n

Water scarcity is also a looming crisis for Egyptian farmers:<\/strong> Egypt\u2019s reliance on irrigation-intensive farming makes water scarcity one of the biggest threats to its agricultural sector. The country already ranks among the most water-stressed nations globally, with annual per capita water availability standing at just 560 cubic meters \u2014 well below the UN\u2019s 1k cubic meter threshold for water stress. In 2018, the country\u2019s total freshwater resources \u201cstood at 64.2 bn cubic metres, which implies a water stress ratio of 116.2%,\u201d the report warns. The UN had foresaw that \u201cEgypt could be approaching an \u2018absolute water crisis\u2019 by as early as 2025,\u201d the report reads. \u201cPressures on water supplies and land resources are set to become more acute in Egypt through the medium term, which will require a concerted management effort if domestic production is not to fall,\u201d the report warns<\/p>\n

REMEMBER-<\/strong> Egypt faces an annual water deficit of around 7 bn cubic meters<\/a> and could see its water resources run out in 2025. By 2030, Egypt is expected to import more freshwater \u2014 through virtual water trade \u2014 than the volume of locally supplied water from the Nile.<\/p>\n

GERD remains a key factor in Egypt\u2019s water security:<\/strong> The Grand Ethiopian Renaissance Dam (GERD) continues to cast uncertainty over Egypt\u2019s future water supply, with the report warning that Ethiopia\u2019s ongoing filling of the dam, \u201cthe pace of the fill, as well as the frequency of subsequent refills, will be a critical determinant of the impact of the GERD on Egyptian water supplies.\u201d This would have profound implications for irrigation, potentially leading to lower yields, particularly for water-intensive crops like rice and sugarcane. The Madbouly government's efforts to mitigate the impact feature investments in modern irrigation techniques and water recycling initiatives, but concerns remain over the long-term stability of the country\u2019s agricultural output, according to the report.<\/p>\n

The bigger fear is \u201cthe impact of filling the dam in the wake of a drought,\u201d<\/strong> the report warns. The government had relied on the High Dam water reservoir \u201cto make up for the reduced Nile River flow but this represents a limited, unsustainable solution to reduced flow rate.\u201d <\/p>\n

REFRESHER- <\/strong>Egypt, Sudan, and Ethiopia have been unable to agree on how to divvy out the Nile\u2019s water resources following the construction of the USD 4.6 bn dam, which Egypt says presents an existential threat to its water security. Central to the dispute is the timetable for filling the GERD\u2019s reservoir and how much water Ethiopia will release as the dam becomes operational. Ethiopia has been unilaterally filling the reservoir over the past three years without a binding agreement, angering Cairo which in 2021 pulled out of African Union-led negotiations.<\/p>\n

Land scarcity is another point of concern for the sector:<\/strong> The expansion of urban areas and population growth on the expanse of the country\u2019s arable lands are further straining Egypt\u2019s agricultural resources. Most of Egypt\u2019s lands can\u2019t be cultivated, and the few arable lands we have are mainly dependent on the Nile as a water resource. The report warns that efforts to ramp up land reclamation will clash against \u201cpopulation growth and urbanisation.\u201d It will also cause other unwanted outcomes, \u201crelated to water use, soil degradation and desertification.\u201d<\/p>\n

Existing arable lands are also at risk:<\/strong> BMI also warns that \u201cthe failure to generate sustained, meaningful yield improvements represents a severe challenge to structural output growth over the medium term,\u201d with over-application of nitrogen-based fertilizers worsening soil conditions of arable lands, rather than improving them.<\/p>\n

** We dove into the details and the causes leading to irreversible soil degradation<\/strong> in a previous Going Green<\/a>.<\/p>\n

This all comes as Egypt is trying to reduce its reliance on food imports:<\/strong> Egypt\u2019s push for food self-sufficiency faces major obstacles, particularly given its heavy dependence on imports for staples like wheat. The report indicates that Egypt imported 12 mn tons of wheat in 2023, making it the world\u2019s largest wheat importer. The float of the EGP last year has further driven up food import costs, compounding inflationary pressures and increasing food insecurity risks. The ongoing conflict in Ukraine has also disrupted global grain supply chains, underscoring the vulnerabilities of Egypt\u2019s reliance on imported foodstuffs.<\/p>\n

\n

SOME CROPS AND AGRIBUSINESSES WILL BE AFFECTED MORE THAN OTHERS-<\/p>\n

Climate change is already slashing the yields of some crops: <\/strong>The report highlights that key commodities such as wheat, rice, and maize are already experiencing declining yields, while more extreme weather events like heatwaves and droughts could exacerbate the problem. Higher temperatures are expected to shorten growing seasons, further reducing output and placing additional strain on Egypt\u2019s food security. The country\u2019s reliance on staple crops makes this an even more pressing issue. \u201cWe expect output growth for key cereals to remain subdued over the medium term,\u201d BMI notes, citing climate-related disruptions as a leading factor.<\/p>\n

Wheat and rice production projections show mixed results:<\/strong> BMI forecasts that Egypt\u2019s wheat production will grow modestly to 9.2 mn tons in 2024-25, narrowing the wheat production deficit from 11.63 mn tons in 2023-24 to 11.51 mn tons. \u201cWe have revised down our forecast for Egyptian corn production in 2024-25 from 7.65 mn tons to 7.2 mn tons due to above-average temperatures during the growing phase,\u201d BMI notes, citing a projected domestic corn deficit of 8.4 mn tons \u2014 the widest in three seasons. Meanwhile, rice production is expected to hit 3.9 mn tons in 2024-25, but the government\u2019s plans to limit water use could see rice output drop significantly in 2025-26. \u201cThe prospect of such a course of action poses a major downside risk to rice production in Egypt,\u201d the report warns.<\/p>\n

Sugar faces mounting challenges: <\/strong>Egypt\u2019s sugar sector is under pressure, with BMI noting that \u201csugar self-sufficiency in Egypt fell from 83.1% in 2022-23 to an estimated 72.8% in the now complete 2023-24 season.\u201d This decline was driven by lower-than-expected production and resilient domestic consumption, which rose to a record level despite high prices. The sugar deficit widened to nearly 1 mn tons in 2023-24 \u2014 its largest in over a decade. Looking ahead, \u201cthe share of total sugar production accounted for by sugar beet will continue to rise, as it is a less water-sensitive crop than sugarcane,\u201d BMI states. However, water scarcity remains the primary risk to the sector. The report projects a 2.9% increase in sugar production in 2024-25, but overall self-sufficiency is expected to remain below historical averages.<\/p>\n

Dairy and livestock sectors struggle with supply chain disruptions: <\/strong>BMI expects Egypt\u2019s dairy sector to remain under pressure as local production struggles to keep pace with demand.<\/p>\n

\u201cMilk production growth in Egypt will ease to 0.5% in 2025, with total output expected to increase from 5.15 mn tons to 5.17 mn tons, its highest value since 2021,\u201d the report states. Meanwhile, demand is set to hit a record 5.01 mn tons in 2025, further tightening supply. Egypt\u2019s beef production is forecast to reach a 10-year high of 455k tons in 2025, though demand will continue to outstrip supply. Meanwhile, \u201cEgyptian poultry production is expected to increase by 4.5% to 2.09 mn tons in 2025, its highest level since 2021,\u201d but self-sufficiency is set to decline to 93.8%, the lowest since 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

Egypt\u2019s reliance on irrigation-intensive farming makes water scarcity one of the biggest threats to its agricultural sector<\/p>\n","protected":false},"featured_media":660828,"template":"","categories":[7266],"tags":[97,7286,147,72,7109,364],"class_list":["post-660827","goinggreen","type-goinggreen","status-publish","has-post-thumbnail","hentry","category-going-green","tag-agriculture","tag-climate","tag-climate-change","tag-enterpriseam","tag-going-green","tag-water","wpautop","entry"],"acf":{"mongo_id":"2db37c43-b210-45aa-97bb-bcaa3fd06c66","order":"14","is_powered_by":false,"story_type":"2","photo_url":"https:\/\/ent.news\/2024\/11\/1182.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Egyptian agribusinesses have to adapt to a warmer, drier world","related_issue":[660803],"teaser":"Egypt\u2019s reliance on irrigation-intensive farming makes water scarcity one of the biggest threats to its agricultural sector","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/2\/.f64a82f4-8107-4aef-ba50-2ccb405b7a6a.mp3"},"yoast_head":"\nEgyptian agribusinesses have to adapt to a warmer, drier world - 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