Egyptian food companies are facing significant challenges due to the rising costs of raw materials, according to Mohamed El-Damati, Deputy Head of the Food Industries Chamber at the Egyptian Federation of Industries. If the current situation persists, El-Damati warned that new price increases are likely. He emphasized that companies cannot continue operating at a loss, as this would lead to a depletion of their capital within a few months.
El-Damati noted that the price increases that occurred until October 1st were already announced, and a reassessment of prices will take place within the next 15 days. He expressed hope that the conflict would subside or that conditions would improve slightly, allowing for a reevaluation of prices. However, due to the significant fluctuations in prices, El-Damati stated that it is difficult to determine the extent of any future increases.
The current situation is characterized by high levels of uncertainty, or "turbulence," which El-Damati described as unprecedented. He noted that the conflict was initially expected to last for two or three weeks but has instead persisted for six or seven months. El-Damati emphasized that the situation is not easy and that everyone is part of a global circumstance, citing Europe's struggles with high gasoline prices.
The food industry is facing growing pressure due to the rise in prices of various raw materials and production inputs, El-Damati said. He stressed that the crisis is not limited to a specific product but affects a wide range of materials used in food industries. This situation puts pressure on food companies, and El-Damati asserted that they cannot continue operating at a loss.
El-Damati explained that even if sales volumes increase, it does not necessarily mean that net profits will rise, especially with increasing production costs. He pointed to the significant fluctuations in the markets, which make it challenging to accurately determine the extent of future price increases, particularly with the rapid changes in oil and raw material prices.
The ongoing global crises have contributed to the uncertainty in the markets, El-Damati said. He highlighted that the price of a barrel of oil can fluctuate significantly, from $106 or $107 to $90, and that market sentiments can change rapidly. El-Damati expressed concern that the current situation may lead to further price hikes, which could impact consumers.
In conclusion, Egyptian food companies are navigating a complex and challenging environment, with rising raw material costs and uncertainty in the markets. El-Damati emphasized that the industry is doing its best to cope with these challenges, but the situation remains difficult to predict.
Key points
- Egyptian food companies face challenges due to rising raw material costs.
- New price increases are likely if the current situation persists.
- The food industry is experiencing unprecedented uncertainty due to the ongoing conflict.
