A devaluation of the Egyptian pound is making the country's olive oil exports more competitive in international markets.
In an effort to stimulate its economy and entice foreign investors, Egypt dropped its currency peg of 8.8 Pounds to the U.S. Dollar on November 3rd of last year. This caused the pound to shed half its value, offering olive oil producers in Egypt an export opportunity.
The Egyptian olive oil industry has seen considerable growth in recent years. Production increased 10-fold between 2005 and 2015, rising from 2,500 to 25,000 tons. Exports of olive oil also grew during this period from 500 to 5,000 tons.
Allowing the Egyptian pound to float on international markets is part of an overall effort by the government to reset the country’s economy after years of political turmoil that included the ouster of Hosni Mubarak in 2011 and a military coup that toppled his successor, Mohammed Morsi. The flotation enabled Egypt to secure a three-year, $12 billion loan from the International Monetary Fund, the largest of its type on record in the Middle East.
The currency floatation, coupled with decreasing global supply and increasing demand, have also helped boost some of Egypt’s largest producers of olive oil. Wadi Food, a subsidiary of the Wadi Group, reported a sales increase of 40 percent in 2016, driven primarily by olive exports. Similar growth figures were released by the Olivee company, which saw olive oil exports increase 65 percent to $19.5 million in 2016.
Despite the increasing optimism in olive oil sales, the overall Egyptian economy is still contracting. The recently released Emirates NBD Purchasing Manager?s Index (PMI) for Egypt reached 46.7 in February, up from 43.3 in January. While growth in these figures indicates the fastest acceleration in Egyptian economic activity since 2014, the PMI must surpass 50 to indicate the start of an economic expansion.
Egyptian olive oil and other commodity exports are not the only sectors that stand to benefit from the country’s currency floatation. Tourism is expected to pick up as the offerings become more affordable to foreigners. The industry suffered a sharp contraction over the past few years due to political turmoil, plane crashes, and security concerns, dropping from a high of 14 million visitors in 2010 to 9.4 million visitors in 2016. However, high-profile tourism visits to Egypt, including the recent arrival of American actor Will Smith, help to encourage new visitors.
Perceptions of Egypt as a destination for travel and investment, and as a source of Mediterranean agricultural commodities, is also set to be influenced in the months ahead following the government’s hiring of two Washington-based public relations firms. A positive boost to American perceptions of Egypt and a devalued currency may cause an increase of Egyptian olive oil imports into the United States.
More articles on: Egypt, import/export
Aug. 14, 2023
Tunisia Has a Plan to Boost Its Olive Oil Industry
The strategy aims to increase annual production of extra virgin olive oil while growing packaged exports and domestic consumption.
Nov. 6, 2023
Olive Oil Production in Europe Expected to Reach 1.5M Tons in 2023/24
Yields are expected to rebound after last year's historic lows. However, rising prices will hamper exports and consumption.
Sep. 20, 2023
Award-Winning Importer Recounts America's Evolving Olive Oil Culture
MillPress Imports co-founder Tim Balshi says quality is key in the competitive U.S. olive oil import market.
Nov. 1, 2023
Turkish Olive Oil Exports Can Make Up for Europe's Deficit Once Ban Is Lifted, Official Says
Turkey has reserves of 180,000 tons and is slated to produce another 180,000 in the current harvest that could meet European demand for bulk olive oil.
May. 16, 2023
Europe Pressures U.S. to Drop Trump-Era Tariffs
As the E.U. attempts to compel American compliance at the World Trade Organization, Spanish table olive producers prepare to take on the Commerce Department in court.
Jun. 15, 2023
Research-Focused Conference in Pakistan Showcases the Potential of Olive Cultivation
The PakOlive conference focused on olive oil as a strategic crop in the face of climate change and the need to focus on quality and exports.
Jun. 12, 2023
Tracking the Rise of Olive Oil in Japan
The rising quantity and quality of olive oil production in Japan presents opportunities for local farmers as well as European exporters.
Apr. 11, 2024
Turkish Producers Pray Export Ban Ends with Ramadan
While the prohibition on bulk exports has helped control domestic prices, producers worry it has hurt their credibility with international partners.