Analysis of aquafeed sector competitiveness in Egypt

Abstract

The aquafeed industry acts as a critical development driver along the entire Egyptian aquaculture value chain. This study aimed to analyze the competitiveness of the aquafeed subsector in Egypt, comparing its performance in 2018 with the results from an earlier study based on 2013 data. The current situation, the market and regulatory environment, key risks and potential mitigation measures were all assessed. The key private sector players and their competitiveness within the aquafeed value chain were also identified. Quantitative and qualitative data were collected through a desk review of existing information on the sector, followed by a structured questionnaire that was drafted and distributed to a targeted number of fish feed mills, representing large-scale, medium-scale and small-scale companies, covering different geographical and production regions. The results revealed that the Egyptian aquafeed subsector faced dramatic changes over the five year period from 2013 to 2018. The number of feed mills increased by 67% from an estimated 60 mills in 2013 to around 100 mills in 2018. As a result, Egyptian aquafeed production increased over 77%, from an estimated 800,000 mt to 1,419,000 mt over the same time period. There has been significant local and foreign investment in the fish feed industry in recent years, especially in aquafeed extrusion technology. The sector is dominated by medium-scale (42.6%) and small-scale (33.3%) enterprises. The results also revealed that the aquafeed market in Egypt is highly competitive, and there are clear opportunities to expand both domestic and international aquafeed markets, and export feeds to Africa and the Middle East. However, in the short-term, increased feed production capacity will place financial pressure on existing aquafeed companies, which may render smaller producers unable to compete in the market. Therefore, all companies will have to improve their efficiency and secure their market share; mainly through the investment in other parts of the value chain. International companies have advantages of global sourcing, economies of scale, reputation and research support that will help them through this challenging period. Well-resourced Egyptian companies will also be able to compete and thrive in a future market with fewer, but larger players. Some feed companies already provide credit for operating costs and technical support to their clients. Extending this to include capital investment for modernization of fish farming systems could be possible, where the feed companies act as credit guarantors. The study demonstrates the need of feed companies to improve production efficiency to be able to be competitive in the market.