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Egypt Gives U.S. Apples a Closer Look
By Hassan F. Ahmed
In an ancient biblical love
poem the writer complains, "Comfort me with apples, for I am
sick with love." But until recently, if love-stricken
Egyptians consoled themselves with imported apples, it usually
meant they were wealthy.
U.S. apple exporters pining for an Egyptian market can take comfort; consumers there increasingly regard imported apples as a treat they can afford. But like any relationship, building trade in Egypt involves challenge.
Egypt is one of the top twenty markets for U.S. agricultural products. A rise in per capita income for large segments of Egypt’s middle class means more people are willing to pay for imported apples.
As a result of this prosperity, Egypt imported about 39,000 metric tons of fresh apples in 1998, a 34-percent increase over the previous year. This represents a total market value of $21 million, up $3 million from the year before.
Sizing up the Competition
In 1998, Syria was the main exporter of apples to Egypt at 15,000 tons. What’s surprising is that the United States came in second at 9,000 tons, even though its apples are the most expensive. U.S. apples, at $600 per ton, are far more costly than top-exporter Syria’s, priced at $450 per ton.
Part of this differential is due to higher shipping costs. Most U.S. apples come from the Pacific Northwest and arrive in Egypt at Alexandria or Port Said. This transportation costs $240 per ton, the most expensive rate of all exporters, compared to Turkey at $170 to 200 per ton. Syria’s transportation costs by trucks are a mere $85 per ton.
Despite those higher shipping costs, U.S. apples also outrank those regional suppliers such as Turkey and Lebanon in total quantity of apples sold. Turkey exported 6,000 tons and Lebanon, 5,000.
There are other minor exporters– France, Chile and Iran–but together, they make up only about 4,000 tons.
What works in the U.S. exporter’s favor is a reputation for quality. And the number of Egyptian importers willing to do business with the United States is on the rise.
Getting Into the Egyptian Market
As with most commodities, exporters will have to factor in extra shipping costs and time to clear shipments through Egypt’s phytosanitary controls. The good news is, the winning reputation of U.S. apples means Egyptian importers are willing to help U.S. exporters successfully implement the quarantine protocols.
The protocol for apples, developed by Egypt’s Ministry of
Agriculture and USDA’s Animal and Plant Health Inspection
Service, is relatively simple. After harvesting, grading and
packing, the apple shipments are subjected to a period of
low-temperature storage. If inspectors find pest remains,
shipments will be blocked. 
The primary import season in Egypt starts in October and ends in April. To speed the quarantine process, some Egyptian importers sponsor plant protection quarantine inspectors’ travel to the United States, so they can supervise packing and loading of the fruit going to their country. This is not mandatory, but many importers feel it is an important step in avoiding delays in clearing their shipments.
A New Challenge–or an Opportunity?
There are some changes happening this year in Egypt that apple exporters need to understand.
In November 1998, the Government of Egypt banned transhipments from third countries beginning in 1999. This means each import shipment must be shipped directly from the United States. In addition, the shipment must be accompanied by a certificate of origin.
Some larger importers in Egypt welcome this change as a means to increase direct shipments of U.S. apple exports. But a large segment of apple imports from the United States have always come via transshipment from Dubai, mostly brought in by small-scale importers. The ban has all but eliminated shipping through this route.
In spite of this challenge, marketing experts still see potential for U.S. apples and a growing market.
Second, a recent shortage in foreign currency and negative trade balances have caused Egypt’s central bank to instruct all commercial banks not to open letters of credit to import consumer goods unless they have 100-percent cash coverage at opening. This requirement is not expected to be changed until at least November 1999.
The effect of this regulation
on the importation of U.S. apples has not been significant,
however, because many of the major Egyptian apple importers have
sufficient financial liquidity to open letters of credit.
Egyptian importers note that Syria, Lebanon and Turkey all provide credit facilities of up to four months.
U.S. apple exporters are eligible to participate in the GSM-102 program. GSM programs provide a credit guarantee to foreign banks to enhance export opportunities for U.S. agriculture. For exporters to Egypt, this credit can extend up to a year. To date, no apple exporters have used this program. By May, 1999, the USDA provided $22.9 million worth of registrations under the GSM-102 program for wheat, protein meal and feed grains. To get more information about the program interested exporters can call the FAS’ Program Development Division at (202) 720-4221.
Another major concern is the free trade agreement between Lebanon and Egypt signed in late 1998, which will reduce tariffs on Lebanon’s apples to zero. Although this agreement was planned to begin on Jan. 1, 1999; it has yet to be implemented.
Currently, imported apples are all subject to 50-percent custom tariffs, 3-percent administrative changes and a 1- percent tax.
There is some good news, however. Shipments larger than 500 tons are granted a 7-percent reduction in custom tariffs.
_____________________________
Hassan F. Ahmed is an attaché with the FAS Office of
Agricultural Affairs, and Sherif I. Sherif is a senior
agricultural specialist at the American Embassy in Cairo, Egypt.
Tel.: (202) 355-7371, ext. 2388/9; Fax: (202) 356-3989; E-mail: USDAFAS@idsc.gov.eg
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