Middle East / North Africa
The MENA region is home to 380 million people or 6 percent of the global population. The regional GDP is 4.5 percent of the world’s GDP with wide geographic swings. The countries of Egypt, Tunisia, Morocco, Saudi Arabia and Israel import over 150,000 metric tons of U.S. Soy and the region represents 4 percent of total U.S. Soy exports.
Egypt is the most important market for the U.S. Soy industry in the region as it approaches 1 million tons of imported U.S. Soy. The Egyptian crush industry continues to show strong growth with several local crush plants expanding and in some cases doubling their production. The Egyptian poultry industry remains strong along with the aquaculture industry, which now produces over 1 MMT annually with tilapia as the primary species. Soy extrusion and full-fat soymeal production is increasing throughout the region and Saudi Arabia’s poultry and dairy industry is very strong.
The North Africa countries of Egypt, Tunisia, Morocco, and Algeria were the fastest growing feed industry in the world by percentage last year despite ongoing challenges in the region.
USSEC and the U.S. Soy industry have faced some operational interruptions in this region due to ongoing conflicts in several countries. The region also faces some challenges with poultry disease issues, specifically in Egypt and Tunisia. Yet investments in animal agriculture and infrastructure are ongoing with significant investments in soy crushing/extrusion, soy oil refining and port infrastructure in Egypt and other countries. Investments in poultry, dairy, aquaculture and feed production are also occurring throughout the region even as government/social transitions continue. Regional markets for soybeans, soy oil and soybean meal are all considered as growing by USSEC.
Middle East / North Africa Directory
Middle East / North Africa News
Discussions focused on the quality, consistency and sustainability of U.S. Soy during the 5th U.S. Soy Global Trade Exchange for Europe – Middle East/North Africa (EU/MENA) during the recent conference in Lisbon, Portugal. More than 180 customers and 15 USSEC members from 32 countries gathered to discuss the global soy market situation and expectations for the feed and food industry for Europe and the Middle East. USSEC’s two-day conference is one of the few events combining the soy industry throughout those regions and leading soy crushers, feed companies, and poultry and livestock producers were in attendance.
Conference presenters highlighted the importance of the Europe and Middle East market with data showing that EU-28 and Russia represented the top three countries in poultry and pork production growth since 2010, behind only the U.S. Additionally, 13 of the top 30 global feed-producing countries are in Europe and MENA and were represented at the USSEC conference. With one-third of the global gross domestic product (GDP), this region continues to increase its soy consumption and remains highly competitive in poultry and pork production.
USSEC and United Soybean Board (USB) director Todd Gibson, American Soybean Association (ASA) director Bill Wykes, and USB director Andy Fabin highlighted the sustainability of U.S. Soy in their presentations. Each emphasized the sustainability practices of his farm and his production expectations for the upcoming growing season.
Regional customers noted their appreciation in hearing about soy production straight from the producers. USSEC Regional Director – EU/MENA Brent Babb stressed the importance of the U.S. Soy Sustainability Assurance Protocol (SSAP) and the positive environmental indicators of U.S. Soy production. Nick Major, representing FEFAC, the European Feed Association, discussed the importance of sustainability to consumers and retailers in the Europe market. The SSAP meets the benchmark of FEFAC’s soy sourcing guidelines and is a welcome source of sustainable soy supply for the European market. The EU is one of the major users of the SSAP certification system, which now totals over 6.7 million tons in export shipments this marketing year, over 10 percent of U.S. Soy exports.
USSEC recently hosted a seminar in Egypt to introduce the principles of quality analysis in soybeans to the country’s aquafeed industry. A total of 60 participants attended the event, representing the top aquaculture feed mill and aqua produces.
Ronald Verdonk, Minster-Counselor, Foreign Agricultural Services (FAS) Cairo inaugurated the seminar. In his opening speech, Mr. Verdonk stressed the importance of the agriculture and trade relationships between Egypt and the United States and the role that FAS plays in promoting U.S agriculture exports. He also applauded the developments that the Egyptian aquaculture industry has witnessed in the last decade, citing the rapid and continuous development of the sector.
USSEC consultant Dr. Jan van Eys, the keynote speaker at the event, commented, “It is a delight to come back to Egypt and see the progress being made in aqua production and the feed industry in general. Many challenges remain but there is a clear and discernable progress in the understanding of the key areas that contribute to efficient aqua and livestock production. This is very clear where it concerns the feed industry and the utilization of ingredients such as soy products. Control of ingredient quality and formulation have clearly become key components of improved feed production and thus of the livestock productivity of as a whole and aqua production in particular. USSEC has greatly contributed to this positive development and logically sees its efforts rewarded in a continuous increase in the use of U.S.-originated soy products.”
During the seminar, Professor Mohamed Fathy Osman delivered a presentation on fish nutrition and highlighted the difference between crude protein, digestible protein, and amino acid profile when formulating a least-cost diet. Professor Fathy also stressed the importance of cooking raw materials and extrusion technology as a method of improving digestibility and feed efficacy.
Guest speaker Dr. Alaa Badr, product manager at Skretting Nutreco, concluded the seminar by delivering a presentation on the importance of quality control in feed production. He stressed the impact of high quality raw material in the manufacturing process to guarantee high quality feed.
Dr. Badr also highlighted the importance of traceability of ingredients as well as the final product. Quality standards for different raw materials and the importance of controlling the inflow of raw material by using near infrared (NIR) as a method for accurate formulation and controlling the quality of received raw materials and final product, while minimizing the risk of mycotoxins by using rapid analysis method when receiving raw materials. This is a standard procedure conducted before manufacturing to protect the quality of the final product.
In the days following the seminar, the USSEC team conducted three one-on-one industry visits with aquafeed mills to provide the necessary support for the adoption of soy quality parameters in feed manufacturing.
Brazilian meat company BRF has signed an agreement to acquire USSEC customer and Turkish poultry producer Banvit to expand its international presence. Turkey is a bridge between Europe and Middle Eastern countries and BRF plans to use this advantage to produce poultry in Turkey and export to these countries due to the price advantage and Halal certification of Turkish companies.
The enterprise value of Banvit is estimated at $470 million. The transaction will be carried out through a joint venture between BRF and Qatar Investment Authority (QIA), the sovereign fund of Qatar. While BRF will hold a 60 percent stake in the joint venture, QIA will own 40 percent. Banvit, a fully integrated producer, has facilities ranging from feed control to final food processing. It has five feed plants, four hatcheries, and five production plants.
The first phase of the transaction involves the purchase of a 79.5 percent stake in Banvit, followed later by a tender offer for the remaining minority interest of 20.5 percent.
Banvit is a loyal USSEC customer, consuming around 150,000 tons of soybean meal and full fat soy for its poultry production. Banvit representatives have been regular participants in USSEC’s activities in the poultry nutrition, risk management, dairy nutrition, and feed formulation fields since USSEC began its activities in Turkey. This acquisition will drive the growth of Banvit as well as the poultry industry in the next couple of years in Turkey, as well as helping the Turkish poultry industry to export its production to other countries.
In 2015, Egypt’s aquaculture industry produced 1.3 million metric tons (MMT) of fish, consuming approximately 1 million tons of soybean meal. As the industry grows, the Egyptian economy faces new challenges.
In November 2016, the Egyptian pound, which was traditionally pegged to the U.S. dollar, was floated; that move has reduced the value of the pound by almost 50 percent, impacting the price of ingredients for the aqua industry and, consequently, the price of aqua feed.
To assist the Egyptian aqua industry, USSEC consultant Tim O’Keefe of Aqua-Food Technologies, traveled to Egypt to meet with top aquafeed producers to provide insights on least cost formulations as a means to control the soaring prices of feed.
USSEC Aquaculture Contractor – Egypt Salah Taher accompanied Mr. O’Keefe during his visit. The two met with representatives from Skretting, Aller Aqua, Cairo Poultry Group, and Koudjis Kapo.
Through these meetings, the team learned that the prices of fish have increased to meet the increasing cost production. The Egyptian aquaculture market is expected to continue growing at 8 to 10 percent each year as Egyptians continue to favor the consumption of fish over poultry and beef.
The Egyptian per capita consumption of fish in 2015 accounted for 21 kilograms (kg) per capita higher than the world average, which is approximately 19 kg per capita.
A second visit is scheduled in May 2017 to deliver training on least cost formulations for aqua feeds.
Sutas, a USSEC customer and Turkey’s largest dairy producer, opened its third integrated dairy facility in Izmir, Turkey on December 23 with an investment of $80 million.
Sutas processes 2,200 tons of milk daily and produces 360,000 tons of dairy feed yearly. The company enjoys a 15 percent market share for milk in Turkey with gross sales in 2015 of 2.3 billion Turkish lira (TL) and 2.6 billion TL in 2016.
The investment in Sutas’ new facilities is about $80 million U.S. dollars (USD) and they will process 1000 tons of milk and produce 600 tons per day of feed, along with 6.4 megawatts of electricity and 100 tons of organic fertilizer. Sutas is already collecting 2,200 tons of milk with 8 percent of this amount is coming from their owned dairy farms and the rest collected from 28,000 farmers in different parts of Turkey.
The president, prime minister, minister of agriculture and many other government ministers attended the opening of the new facilities. Sutas executives present included Mr. Yilmaz, president; Mr. Tezel, vice president; and Mrs. Serpil Veral, CEO.
One of Sutas’ main goals in this investment is to export its products to Russia. Russia was importing €5 billion worth of dairy products before the embargo from EU countries, but is now importing these products from Argentina and Brazil. Turkey is producing a large amount of dairy products that they currently export to Russia and Japan, but they will now be producing different types of dairy products giving them a greater opportunity in these markets.
Sutas also acquired dairy companies in Romania and Macedonia and invested $20 million USD in those companies to supply dairy products to the EU. Turkey is currently not allowed to export dairy products to the EU.
Sutas has been in the dairy business for three generations and celebrates its 41st year in the business this year. Their integrated business model is “from the grass to the table” and they opened their first facility in Karacabey /Bursa in 2004 using this model. Since that time, they have invested $620 million USD in this business with 3 facilities. With the new facility, they are estimated to grow 50 percent in 2016.
Sutas is a very good partner to USSEC who regularly participates in USSEC’s events in Turkey and events in other countries, such as the U.S. Soy Global Trade Exchange in the U.S. While many companies are holding their investments in Turkey at this time, Sutas’ investment in Izmir is noteworthy. USSEC congratulates SUTAS for its new investment and trust in the dairy business and the consumption of dairy products.