European farm-product ban adds to Egypt’s woes

Agricultural exports join list of foreign-currency-earnings trouble spots after Egyptian fenugreek seeds were fingered as source of outbreak.

By DAVID ROSENBERG / THE MEDIA LINE
An Egyptian woman on a farm north of Cairo 311 (R) (photo credit: Amr Dalsh / Reuters)
An Egyptian woman on a farm north of Cairo 311 (R)
(photo credit: Amr Dalsh / Reuters)
Egypt’s economy, whose main exports have been battered by strikes and political uncertainty, took another blow this week after the European Union blamed a deadly outbreak of E. coli infections on Egyptian fenugreek seeds and imposed a temporary ban on some of the country’s farm exports.
The EU ban blocks more than 10 percent of Egyptian agricultural exports, and the health concerns raised by the link to E. coli could have a wider impact. Moreover, it comes at a time when Egypt is struggling to earn the foreign currency it needs to pay for imports and provide jobs.
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“If these were normal times, I wouldn’t have worried, but in the current situation this is serious,” Ahmed Ghoneim, a professor of economics at Cairo University, told The Media Line. “This definitely will have negative impact given the situation Egypt is experiencing where we’re losing a number of sources of foreign exchange earnings.”
Suez Canal workers have been on strike for the past three weeks, depriving the economy of toll fees, while over the weekend a pipeline delivering Egyptian natural gas to Israel and Jordan was blown up for the third time this year, briefly cutting off deliveries. The government estimates that tourism to Egypt will fall more than 25% this year to a value of $10 billion as unrest deters visitors.
All this has spelled trouble for Egypt, as it tries to steady itself from the disruptions that led to former president Husni Mubarak’s ouster last February and put itself on the path to more democratic rule. With the economy contracting in first the six months of the year and foreign currency reserves falling, the transition is proving difficult. Now comes the blow to farming, which makes up 15% of Egypt’s gross domestic product and employs more than one third of the labor force.
The EU banned imports of all Egyptian seeds and beans for sprouting until October 31. In addition, all fenugreek seeds imported from one unnamed Egyptian exporter between 2009 and 2011 were ordered withdrawn from the market and are to be sampled and destroyed. The ban came hours after an official probe concluded that a shipment of fenugreek seeds used to grow sprouts imported from Egypt by a German company was the “most likely common link” to the outbreak of E. coli.
“The Commission will continue to monitor the situation very closely and will take additional measures if necessary,” EU Health and Consumer Commissioner John Dalli said in a statement.
More than 4,100 people in Europe and in North America have been infected in two outbreaks of E. coli infection -- one centered in northern Germany and one focused around the French city of Bordeaux. The infection-- the deadliest on record -- has killed 48 people in Germany and one person in Sweden so far.
Ironically, the E. coli outbreak caused the United Arab Emirates, Qatar and Kuwait to temporarily ban the import and sale of cucumbers from Germany, Spain, Denmark and the Netherlands during the height of the E. coli scare in May and June on the assumption the problem originated on that continent.
Until the EU decision this week, Egypt had been successfully working to develop Europe into a major market for its farm products. Since 2009, the government has been working to upgrade standards and packaging to bring Egyptian products up to European standards. Just over a year ago, a bilateral agreement eliminating customs on nearly all Egyptian agricultural products went into effect.
As a result, exports have been growing since 2007 to reach almost $720 million last year, according to Egypt’s Trade and Industry Ministry. A month ago, before the E. coli outbreak was laid at Egypt’s doorstep, Egypt’s Agriculture Export Council said it was expecting a major increase in vegetable exports to the EU as European consumers shunned what they thought were tainted local products.
The EU ban will cause a big dent in exports. In 2010, the EU says it imported from Egypt about 49,000 tons of the types of seeds affected by Tuesday's decision valued at over 56 million euros ($80 million). That’s about 11% of Egypt’s total. The impact, however, may be considerably bigger as European importers, distributors and shoppers shun Egyptian products not covered by the ban.
Ghoneim of Cairo University estimated that 90% of Egyptian farmers grew crops for the domestic market only, employing little or no modern technology or adhering to high standards of hygiene. Growers often divert untreated sewage water to irrigate because their traditional source – the Nile River – can’t supply the country’s rapidly growing population.
A 2009 study of the waterways and canals in the Nile Delta by the Ministry of Environmental Affairs found concentrations of harmful materials exceeded permissible limits. Among them, the E. coli bacterial count exceeded the safe limit set by the World Health Organization of 1,000 cells per 100 millimeters.
The other 10% of the agricultural sector is comprised of modern farms that meet European requirements, Ghoneim said. But it is quite possible that tainted fenugreek seeds were grown on traditional farms, whose harvests were bought and consolidated by an exporter.
“Those farmers are probably illiterate and lack knowledge and awareness about how bad it is what they are doing,” Ghoneim said. “If you were selling to domestic markets and it was accepted you continued to do it. But if [the EU ban] is going to affect their earnings, they will have an incentive to change.”