We are awaiting market stability
All the company’s products are exported to Europe
and we suffer from 50% export fall
50% of Faiyum factories operate with less than their production capacity
By Mahmoud Hammad
Eng. Amr Faris, Managing Director of Green Land Group for Food Industries and a member of the directors’ board of Faiyum Investors Association, stated in his interview with” MEO” that the company has stopped implementing all its investment plans, set till 2020, as a consequence of production cost increase that was caused by energy and transport price increase. The main problem that faces Faiyum investors is the sharp increase in energy and transport prices. He asserted that the government should work on unifying its control bodies of factories instead of leaving them scattered. As a result, factories are forced to bear financial and administrative burdens. A law was passed 12 years ago concerning the unification of factories’ control bodies but it has never been implemented.
What are the investment plans of Green Land Group for Food Industries?
The company has stopped its expansion and investment as a result of production cost increase and the dollar crisis. Our investment plans were supposed to last until 2020 but we stopped them till the situation gets better. Currently, the company exports all its products, including packed vegetables that are exported to Europe. We witnessed a sharp export fall in 2015/16, estimated at 50 per cent and we did not hit our expected target of revenue, $5m.
How did the pound devaluation affected the company?
The pound price fall affected us negatively; our products are much more expensive than those of competitors in the Egyptian market.
What are the main problems that face Faiyum investors?
The main problems are the sharp price increase of energy which increased production costs, in addition to labour shortage and transport cost increase.
Labour shortage arises from the small number of trained labour and the inability of factories to provide sufficient salaries, especially after the late sharp price increase.
Factories cannot give sufficient salaries because the factories’ basic requirements such as gas and water have become too expensive. A salary of EGP 1000 was attractive for labours during the past years but now it is worthless.
Can you tell me about current operating factories?
There are around 250 factories in Faiyum operating in foods, ceramic, engineering and textile industries, some of them stopped operating and others operate with less than their production capacity.
What is the effect of dollar crisis and energy price increase on factories?
The dollar crisis has boosted the black market and caused a number of factories to shut down. In addition, other factories stopped their expansion as the dollar crisis caused material and machine cost increase. As for gas and energy, their prices have sharply risen in Egypt. It is worthy to note that gas and energy prices have decreased around the world, except in Egypt. Consequently, Egyptian factories’ products will never be able to compete with other countries’ products.
What do you think of the government’s cutting the energy subsidies to solve the budget deficit?
The right way to solve budget deficit is to increase production and not to impose constraints, such as rising energy price, that prevent production. As a result, manufacturers are forced to decrease their production and rise their product price which makes some groups of investors stop buying the product. Consequently, the market which the factories offer their products in will start to shrink. The economic policy of Egypt is the reason behind the investment current situation.
What do you suggest the government should do?
The government’s control bodies have to be unified under one authority because their separate performance keeps burdening factories on both economic and administrative levels. A law was made 12 years ago concerning the unification of factories’ control bodies but it has never been implemented.
