Intense Competition and High Prices Expected in Egypt's 2023/24 Garlic Season

Value Added Garlic
Published Apr 11, 2024
The Egyptian garlic market for 2023/24 is experiencing intense competition and high prices, driven by factors such as reduced garlic supply, increased demand, and challenges in traditional export markets. Despite these, the market shows resilience and potential for growth. As many farmers switch to growing onions, the reduced availability of Egyptian garlic has led to higher garlic prices. Unlike in previous years, prices are expected to remain high this year, with fresh garlic prices rising by 45% at the beginning of the season, from USD 1.1/kg to USD 1.6/kg. Prices for dry garlic are anticipated to increase further later in the season due to weight loss during drying.

Egypt's garlic market is bracing for a season of intense competition and high prices in 2023/24. Several elements come together to form a perfect storm that has the potential to change the trade dynamics and market drivers of this crucial commodity.

The availability of Egyptian garlic has dropped considerably since many growers have turned to producing onions. Due to this reduced garlic supply, the current price of Egyptian garlic is high, and unlike in previous years, prices are not projected to fall. According to Tridge data, fresh garlic prices increased by 45% at the start of the season, from USD 1.1 per kilogram (kg) to USD 1.6/kg. Dry garlic prices are expected to be significantly higher later in the season due to weight loss while drying.

Figure 1: Tridge Price Indices and Forecasts

Tridge Price Indices

Source: Tridge

Egypt faces competition in exporting fresh garlic to Europe, primarily from Argentina, China, and Spain. Despite the rivalry, Egyptian garlic remains competitive in cost. The price of Egyptian garlic is under USD 2/kg, compared to higher rates from Spain, Argentina, and China. The price of packaged Chinese garlic is above USD 3.22/kg, and the price of loose is just under USD 3.22/kg, while Spanish prices range from USD 3.38 to USD 5.73/kg.

Egyptian garlic is in high demand in nations such as Canada, the United States (US), Australia, and Brazil. However, demand from Taiwan has decreased due to high prices. The Egyptian pound's strengthening against the US dollar has also increased international customers' prices. Despite the hurdles, demand in alternate markets in the Middle East and Wes (EU)t is projected to remain firm.

Trade Disruption in the Red Sea and Market Response

The ongoing situation in the Red Sea could potentially disrupt regional trade, particularly affecting shipments to the Far East. While the garlic sector has remained resilient thus far, if the issue persists, it could lead to increased transportation costs and potentially fewer quantities being sent to key markets such as Taiwan and Australia.

As trade dynamics shift, the high prices have led to a decrease in demand from traditional importers like Taiwan. This shift necessitates that Egyptian exporters proactively explore new markets and establish fresh business connections. The challenge lies in balancing between expanding market reach and maintaining profitability in the face of rising costs.

Market drivers are also influencing the competitive landscape. The global export of garlic is becoming more contested, with countries like Spain and China vying for market share. There might be a window of opportunity for Egyptian exporters since the Spanish garlic sector faces with decreasing acreage and limited availability of pesticides used for crop protection.

Despite the challenges, the Egyptian garlic industry is teeming with opportunities for growth. The government's robust efforts to support agricultural exports, coupled with private sector initiatives to enhance supply chain efficiencies, could potentially alleviate some of the cost pressures and pave the way for a thriving garlic industry.

In conclusion, Egypt's 2023/24 garlic season promises resilience and growth. Characterized by intense competition and high prices, the market is being met with strategic responses from both the government and private sector. Higher prices could pave the way for a thriving garlic industry, instilling optimism among stakeholders. As a result, Tridge expects that the Egyptian garlic export season will improve compared to previous years.

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