The project will see many of the country’s traditional “shouna” grain storage sites converted into modern, secure facilities capable of processing 3.7 million tonnes and storing 750,000 tonnes of wheat. This is in addition to existing plans to build 25 new grain silos with a total capacity of 1.5 million tonnes, which will primarily be used for imported grain.
US food storage and security firm Blumberg Grain, which approached the Egyptian government with the development strategy and feasibility studies, will provide the storage and processing technology under a US$28m contract. The Egyptian army will build the facilities, with 50 already under construction – and plans to open the new sites for use by April 2015, ahead of the wheat harvest.
Positive change in government
While Egypt has long recognised the need for reform of its wheat storage facilities, instability in the country, along with widespread popular anger at proposed cuts to bread subsidies, have prevented any significant initiatives from going ahead. But according to Philip Blumberg, chairman and CEO of Blumberg Grain, the new government headed by Abdel Fattah el-Sisi has demonstrated a very strong will to make significant changes.
“Though it's been a challenge previously to execute investment programs in Egypt, under President Sisi we are seeing a positive change in the attitude in government and the speed in implementing infrastructure projects to improve the Egyptian economy and create jobs,” said Blumberg
The new storage facilities will be used to hold and process Egypt’s domestic wheat harvest, which is heavily subsidised by the government to the tune of payments of up to US$400 per tonne, but plagued by inefficiency. Wheat stored in the country’s existing 4,000 shouna sites – often little more than open-air, unpaved enclosures – is subject to post-harvest losses of more than 40%, due to spoilage and pests, and the new facilities aim to cut this to less than 5%.
In addition to the reduction of wastage and increased storage space, which will save Egypt around US$140m a year, the new shouna facilities will offer additional capabilities for screening, cleaning, drying, bagging and grading of the wheat, as well as sophisticated inventory and access systems, managed from a central control centre.
“What this programme also does, because it reaches all corners of Egypt, is it will expose the youth in agriculture, the young farmers, to new technology that will hopefully reinvigorate the farming population and give them hope for a prosperous and sustainable future in agriculture, rather than seeking a quick exit and migration to the urban centres and cities, which we see all too often in Egypt and other emerging markets,” said David Blumberg, CEO of Blumberg Grain West Africa.
More projects planned
While the first phase of the project will redevelop 93 shouna sites across the country, this could rise in the future, with initial plans suggesting up to 164 sites would be revamped. Blumberg says his company’s contract allows for up to US$56m expenditure on the project, double the amount budgeted for the current sites.
Along with the shouna redevelopment programme, Blumberg Grain is also involved in plans to build new logistics centres for perishable commodities across Egypt, including a flagship facility in Damietta. Plans for these centres are still in development, with a government announcement expected next week.
Blumberg Grain is also planning to develop a factory within the MENA region, to produce its grain storage and processing systems locally. The firm has not yet committed to a location for the facility, which has a projected budget of up to US$250m, but Egypt is currently the front-runner for the project, according to David Blumberg.