How Russia's Increasing Potato Demand Has Driven Egyptian Exports

Published 2023년 1월 22일

The consequences of Russia's involvement in the Ukraine conflict have been far-reaching, placing the country's agricultural industry on a knife edge. As the incomes of Russian consumers decline, the demand for food items such as potatoes continues to rise. As the conflict intensified in 2022, the North African country ramped up its exports to Russia, exporting 300K mt during the first nine months of the year, 66% of Russia's total imports. By the end of 2022, Egypt had supplied 350K mt of potatoes to Russia, 22% more than in 2021, and a 166% increase over the past three years. The dominance of Egyptian exports to the Russian market is expected to continue in 2023, as leading competitors such as Pakistan, Belarus, and Iran could suffer production setbacks.

The consequences of Russia's involvement in the Ukraine conflict have been far-reaching, placing the country's agricultural industry on a knife edge. As the incomes of Russian consumers decline, the demand for food items such as potatoes continues to rise. In 2022, Real disposable incomes, after taxes, interest instalments, and other payments, were down by close to 3.5 % YoY, while in the government sector wages were down by 6% in Q3 2022. Additionally, the food requirements of the large military contingent contribute to the growing demand.

Egypt has taken full advantage of this situation, increasing potato shipments to Russia significantly from 131.6K mt in 2019 to 285.9K mt in 2021, a 117% increase. As the conflict intensified in 2022, the North African country ramped up its exports to Russia, exporting 300K mt during the first nine months of the year, 66% of Russia's total imports. By the end of 2022, Egypt had supplied 350K mt of potatoes to Russia, 22% more than in 2021, and a 166% increase over the past three years. Egyptian exporters' revenue from the shipment of potatoes to Russia in 2022 reached USD 138 million, growing considerably by 60% (USD 52 million) compared to 2021. According to Tridge’s projections, Egyptian exports to Russia could rise to between 435K mt and 472K mt in 2023.

Source: Egyptian Ministry of Agriculture and Land Reclamation, Tridge

The dominance of Egyptian exports to the Russian market is expected to continue in 2023, as leading competitors such as Pakistan, Belarus, and Iran could suffer production setbacks. During Q1 2022, Egypt delivered Russia with about 33% of its annual supply of over 700K mt, three times more than its competitors, Pakistan and Belarus. Given the damaging effect of the flood in 2022 on Pakistan's crop, production is set to reduce in 2023 from 7.74 million tons, leaving Belarus as Egypt's main competitor during Q1 2023. However, Belarus is also facing international sanctions due to its participation in the Russia/Ukraine conflict, causing the country's economy to remain in turmoil, impeding potato production.

In Q2 2023, Egypt's biggest competitor could be Iran, supplying Russia directly and through Azerbaijan. However, the quantity of Egyptian potatoes is double that of Irans during this period. As a result, Egypt is expected to remain the leading potato supplier to the Russian market in 2023, with limited risks to Egyptian exporters owing to the high demand for potatoes in this market.