The sugar cane production line at the Abu Qurqas factory in Minya governorate in Upper Egypt has closed for the first time in more than 150 years of operation, after the Sugar and Integrated Industries Company, which owns the factory, decided to send the cane crop contracted with Minya’s farmers to the Girga sugar factory in Sohag governorate, because of the small amount of cane supplied this year, only about 10,000 tonnes. According to statements by the chairman of the sugar factories, Major General Essam El-Bedewy, the quantity supplied is not enough to run the factory for five days.
Egypt has recently been witnessing a crisis in the supply and subsidy of basic goods such as wheat, rice and sugar, resulting in an unprecedented rise in the prices of these goods in recent months: the price of a kilo of sugar reached EGP 50, equivalent to USD 1.6, after it had not exceeded EGP 10, while the dollar reached about EGP 60 on the black market.
The ISO-certified Abu Qurqas factory is one of the oldest sugar factories in the Middle East, built in 1869. Its production ranges from white cane sugar and white beet sugar to molasses, pressed beet pulp feed, as well as pure alcohol, denatured alcohol and dry yeast. The factory is located in Minya governorate and is one of eight factories in southern Egypt managed by the Sugar and Integrated Industries Company.
The Government Turns to Imports Instead of Local Production
A source at the Abu Qurqas factory, who preferred not to be named, told Zawia3 that while the ministry refuses to buy cane from farmers at a fair price, which caused the closure of the Abu Qurqas factory’s production line, the government is resorting to increasing sugar imports amid the currency crisis the country is suffering, expecting Egypt’s sugar production to decline, which will negatively affect the state-owned cane sugar factories and further raise sugar prices.
Egypt’s sugar exports in the first half of last year amounted to about USD 185 million, an increase of 21.7% over the same period of 2022, growth of USD 33 million, according to the General Organization for Export and Import Control.
Mohab Abu Zein, a farmer from Minya governorate, believes the crisis lies in the transfer of the sugar company’s affiliation from the public business sector to the Ministry of Supply. He says: “Since then, the price of a tonne of cane has been set by the ministry according to the price of ration sugar”.
Abu Zein tells Zawia3 that the supply price is supposed to be set according to sugar prices on the free market, especially as sugar is not subsidised on the free market; while the ministry insists on buying cane from farmers at the subsidised sugar price, sugar is not subsidised for citizens in the market. He added: “When we were under the public business sector, the cane price was set according to the free price, and then sugar was subsidised”.
He continued: “If cane supply were priced according to the price of sugar on the free market, about EGP 27, the price of a tonne would be EGP 2,700, but the state wants to buy a tonne of cane at EGP 1,500, which means a big loss for the farmer, especially as sugar cane’s growing cycle is a year, in addition to the decline in production because of the weakness of the ‘C 54/9’ variety, which we have been using for 60 years and which the state does not bother to develop, leading to a fall in production from 60 tonnes to 30 tonnes per feddan”.
He pointed out that the government’s supply price of EGP 45,000 per feddan of cane is unfair, making farmers consider one of two options: either abandon growing cane in favour of another crop with a shorter growing cycle, such as wheat, whose cycle is only six months, or sell the crop in the suitable market, namely the presses that produce black honey (molasses), which buy a feddan of cane at prices ranging between EGP 85,000 and 100,000, double the price the government offers, which does not exceed 45,000.
Abu Zein explained that while the government refuses to buy sugar cane from farmers at a fair price, it will have to import to cover the market deficit at a time when the country is suffering a shortage of hard currency, pointing out that a tonne of imported sugar costs USD 633 (with the dollar at EGP 60 on the black market, equivalent to more than 36,000), in addition to imported sugar needing refining to remove impurities before being put on the market, which means an additional cost. He pointed out that stopping cane sugar manufacturing means stopping 22 other industries derived from it, such as alcohol, particleboard, molasses, medical petroleum jelly and perfumes exported abroad, constituting an additional burden on the state and its budget.
Hassanein Tawfik, a senator from Minya governorate, submitted a request for a general discussion in the Senate’s sessions with the Minister of Supply and the Minister of Agriculture to clarify the government’s policy on fair mechanisms for pricing agricultural crops, especially strategic ones such as sugar cane. He described the halt of the Abu Qurqas factory as a “catastrophe” that will not be the last, given the state’s lack of agricultural policies that take farmers’ interests into account first and foremost.
Zawia3 tried to obtain a response from the Abu Qurqas factory’s leadership, but they declined to comment, saying: “There are strict security instructions not to talk to the press, and the whole matter has been referred to the holding company”.
Awadi Traders and the Emirati Canal Factory
A farmer from Luxor governorate, who preferred not to be named, doubts the stated reason for the crisis and the government’s refusal to raise the supply price, believing the matter is government collusion aimed at making the sugar factories lose money in preparation for privatisation, as happened with other factories. He told us that farmers’ reluctance to grow cane will reinforce the destruction of the industry and the return of import mafias and whales to control the market and thus the price of sugar.
The prosperity of “awadi” traders has become clearly visible this year: they are middlemen who offer farmers double the price the government offered for a feddan of cane, and they resell the cane to investment companies that have entered the sugar industry in Egypt and competed with the state companies that were in full control of the market.
In 2018, the Egyptian General Authority for Rehabilitation Projects and Agricultural Development (a government body) and Canal Sugar, part of the Emirati Al Ghurair Group, signed an agreement to start an integrated investment project including land reclamation and growing the sugar beet crop.
Canal Sugar is an Egyptian company affiliated with the Emirati Al Ghurair Group, working in sugar production and manufacturing. The company was founded in 2018 in Egypt as a partnership between Emirati investors and Al Ahly Capital, owned by the National Bank of Egypt, with capital of about EGP 5.4 billion. The company’s headquarters is in Cairo and its factory is in the city of Mallawi in Minya governorate in Upper Egypt. Its factory is considered the largest sugar production factory in the world, on an area of 240 feddans, with a production capacity of 900,000 to one million tonnes of sugar a year, equivalent to 35% of Egypt’s sugar production. The Egyptian government announced last year that the company’s lines had actually started operating, and it now exports 80% of its production to Gulf countries and East Africa.
The Government Is the Main Source of the Crisis
“The Egyptian government is the controller and the monopolist, which means its policies are the main factor in the sugar crisis; the price of economic policies is paid by consumers, farmers, the workers of the Abu Qurqas factory and the factories that depend on the Abu Qurqas factory,” says economist Elhamy El-Merghani, deputy head of the Socialist Popular Alliance Party.
He added in his statement to Zawia3 that Egypt, at the heart of preparations for the October War, was achieving 118% self-sufficiency in sugar in 1972, which later turned into a gap reaching 55.4% in 1980, a major catastrophe, coinciding with the attack on sugar cane, one of Egypt’s oldest crops, in which Egypt has more than 155 years of industrial expertise and railway lines in the cane-producing governorates of Upper Egypt.
As he puts it, the conspiracy began when the government said sugar cane consumes a lot of water and stays in the ground for a long time, and that it would be preferable to stop growing it and turn to beet. El-Merghani adds that “cane is grown from entirely Egyptian seed stock, 20 complementary industries depend on it, and the sugar extraction rate from it is much higher than from beet”, and that “the problem is that beet is grown from imported seeds, meaning we depend on abroad, and it needs hard currency; even the fuel used in the extraction stages is imported from abroad, and the sugar concentration is lower”. He considers that for these reasons attempts began to dismantle the cane industry: in Minya, for example, the cane railway line built by the Khedive was dismantled, abolished and built over, and the farmer was then burdened with the cost of transport to the company at his own expense, according to the economist.
He continued that when we get to the company, we find several policies that repel farmers: first, the supply price per tonne was EGP 1,100 and rose in 2024 to EGP 1,500, so the return from growing cane does not cover the cost of cultivation, if we add that while the company buys cane from the farmer at about EGP 50,000 per feddan, he can sell it at double the price to the presses and black honey factories; at the same time, some company employees manipulate the determination of the sugar content in production in a way that lowers the price per tonne. This makes farmers reluctant to grow cane and replace it with a crop that brings them double its return, and there is also a decline in productivity in both cane and beet. The food gap has reached more than 70%; therefore, saving sugar cultivation and manufacturing requires a fair price for the crop that covers cultivation costs and gives the farmer an appropriate profit margin, in addition to the need for the Sugar Crops Research Institute and faculties of agriculture to study the problems of growing cane and beet, increase their productivity and develop Egyptian beet seeds away from the control of international monopolies, according to El-Merghani.
Gas and Water
“Our sugar needs have exceeded our production for a long time, but now production has become lower than in previous years and is threatened with further decline in the coming years because of the water crisis and the irrigation method, which requires gas-powered generators,” says economic analyst Mohamed Shirin. He adds in a statement to Zawia3: “Sugar cane fields are irrigated using pumps, and the gas crisis caused by the government’s wrong policies has negatively affected the operation of the pumps and water pumping, which has also affected production, so the government will turn to imports”. He believes that “the crises in basic goods that appear from time to time are the result of the state’s wrong policy and strategy and its insistence on following the same approach, which results in the continuation of the crisis, not its resolution”.
Mohamed Abu Gabal, a farmer from Luxor governorate, agrees with the economic analyst, saying: “The impact of the gas crisis is not only on irrigation machines but also on the stage of transporting the cane crop, the hardest stage of its cultivation, because of high fuel prices and the dilapidation of the cane train lines leading to the sugar factories, known as the ‘Decauville lines’, which raises transport and daily labour costs, and farmers resort to renting cranes and trucks to transport it from the farmland to the sugar factories, which are about 40 kilometres away”.
In addition to the gas crisis, Egypt also suffers from a water shortage as a result of the construction of the Renaissance Dam, which has negatively affected Egypt’s share of the Nile waters and has led the government to plan to double the cultivation of sugar beet instead of cane, because it does not need the huge quantities of water that sugar cane needs.
During the latest negotiations with Addis Ababa, Cairo sought to extend the filling of the Renaissance Dam reservoir until 2026, but the Ethiopian government refused, which will have negative consequences for a number of crops, foremost among them sugar cane, in the coming years, according to experts.
The State Deliberately Reduced the Crop
Saeed Soliman, professor of genetics at the Faculty of Agriculture, Zagazig University, said the state deliberately reduced the cane crop, introducing sugar beet as an alternative on the pretext that cane consumes a lot of water.
He told Zawia3 that Egypt is among the countries with the highest sugar cane productivity and the purest quality, and so “killing” sugar cane is required by a state orientation: “We used to grow half a million of cane and now grow only 300,000 feddans, most of which is bought by molasses and black honey makers, because of the ministry’s intransigence over supply prices”, which pushed farmers to sell their production to molasses makers, who buy the crop at double the government’s price. He added that the state introduced sugar production from beet instead of cane, even though beet is affected by 32 diseases and insects, and last year the beet crop was affected by some of them, resulting in lower productivity, in addition to the deliberate reduction of cane productivity, which caused the sugar crisis. According to the genetics professor, the government’s water pretext is “false”, as the Agricultural Research Center has varieties that consume half the amount of water, 6,000 cubic metres instead of 11,000, and the centre and the ministry refrain from distributing them to farmers without reason, which means there is a deliberate orientation to reduce production and create a crisis.
The genetics professor explained that beet seeds are imported every year for millions of pounds because they are triploid and do not flower in Egypt, describing it as “a wrong agricultural policy”.
Sugar, rice and wheat are among the indispensable basic goods, and the Egyptian market has seen a big rise in their prices recently, prompting MPs to demand the dismissal of Supply Minister Ali El-Moselhy, but the crisis continues and the citizen suffers.
