Ukraine is not only looking to the European Union and Far East for new export markets. It is zeroing in on the Middle East and North Africa. And the star of the region, from Ukraine's point of view, is Egypt.
Egypt, a nation of 90 million people that links Africa and the Middle East, is Ukraine’s sixth trade partner with $2.14 billion in turnover last year.
“We do not want to fool ourselves with the EU free trade zone launched on Jan. 1, because it does not automatically mean that our goods hit the markets of the EU. So, we need to conquer new markets – Africa, the Middle East, and China and so on. Very little was done for that,” independent lawmaker Hanna Hopko said after a report by Prime Minister Arseniy Yatsenyuk in parliament on Feb. 16.
During 2015, the Ukrainian government took the initiative to improve trade relations, meeting with delegates of Egypt.
“Ukraine and Egypt have great potential for cooperation both in the trade field and production cooperation,” Agriculture Minister Oleksiy Pavlenko said during a meeting with his Egyptian counterpart on Jan. 15. “First of all, we are talking about grain, livestock products, vegetable oil, confectionery and dairy goods.”
Despite these meetings, Ukraine and Egypt are not close to signing a free trade agreement.
What does Egypt purchase from Ukraine?
Egypt purchases almost exclusively raw materials from abroad, including imports of Ukraine raw materials and primary processing products, such as metal, corn grits or preserved tomatoes.
“Egypt is an attractive market in the world arena as it has purchasing power, but through their climatic conditions, they are not able to provide all the food by themselves,” Vitalii Kordysh, an advisor on agricultural markets from Agribusiness Club, said.
Despite the turmoil in Africa, terroristic attacks in resorts and decline of tourists from Russia, Egypt remains attractive, Kordysh said, because residents relatively prosperous compared to other African countries.
Egyptians consume grain, canola, soybeans, vegetable oil, tobacco, butter, powdered milk, eggs, poultry and sweets from Ukraine. One of the main products Ukraine feeds Egyptian is grain, namely wheat and corn, reaching revenue of $761 million in 2015.
In 2015, Egypt became the biggest customer of Ukrainian’s cattle, with export of livestock reaching $14.4 million.
“Hryvnia devaluation made our cattle competitively capable,” an expert from the Agribusiness Club, Alina Zharko, told to the Kyiv Post. “Egyptians were looking to buy life animals to slaughter it with accordance to all their laws.”
Egyptians are also interested in Ukrainian beef, but veterinary certificates have not yet been approved. “Yet we don’t have a permission to export beef to the EU, and the procedure is tough, so I think that these MENA countries will be mastered more quickly than we get access to the European market,” Zharko said.
Competitive market of grain
While officials plan to develop trade relations, exports to the Egyptian market dropped from $2.86 billion to $2.08 billion between 2014 and 2015.
“It is related to the situation on international markets because prices on cereals, oilseeds, and vegetable oils declined due to falling oil prices and high stocks of grain, so it means overproduction,” Kordysh said.
Moreover, Ukraine is not the sole supplier of agrarian goods to the Egyptian market. Europea and the U.S. compete in wheat and corn sales.
Ukrainian makers are forced to compete for Egypt consumption with Russia, while both of them deliver grain through Black and Azov seas. “But still our exports exceed Russian because Russia consumes more than exports,” Kordysh added.
