One of Egypt’s food industries had shut one its sweet factory for three days after the Egyptian authorities seized its sugar, which raises questions among investors over the way Egypt is handling the shortage in sugar supply.
Edita Food Industries, Egypt’s maker of Twinkies, said its sweet factory in Beni Suef had been shut for three days after authorities seized its sugar as reported by Aswat Masriya.
In fact, shortage in sugar has reached its peak as it all vanished from supermarkets nationwide, prompting media talk of a crisis and pushing the state to rapidly increase imports despite an acute dollar shortage and soaring global prices of the sweetener.
In this context, “the government has accused factories and traders of hoarding stocks to push up prices, an allegation that they deny,” said Aswat Masriya.
The Egyptian authorities began raids on factories last week and escalated confiscations which have hit thousands of wholesalers and packers in recent weeks, according to one sugar supplier.
A supply ministry official claimed that 2,000 tonnes of sugar were confiscated after Edita was unable to show original invoices for sugar stocks held at Beni Suef.
On the other hand, Edita said that it had produced all required documents and denied hoarding.
Menna Shams El Din, Investor Relations and Business Development Manager at Edita said, “We provided all the original documents and invoices to the ministry for the sugar. The factory is now stopped because of the seizure of the sugar – 2,000 tonnes, which is three weeks of sugar for the company. This is a normal amount.”
She added, “There is no doubt this sugar was obtained on the private sector and not from subsidized sugar.”
As a result, Edita’s shares plunged at 6.7 % in early trade. It closed up 4.7 % but at its lowest ever closing price of 7.95 Egyptian pounds.
The company said in a statement the closure was temporary and the plant would reopen once its sugar had been released.
Edita has four factories in Egypt including its Beni Suef plant, which makes hard and soft candy. It said sweet production accounted for only 4 % of its total revenues.
Analysts said the closure would not have a major impact on Edita’s profits “but would send a negative signal to foreign investors, which Egypt needs to redress the dollar shortage at the heart of its sugar supply problems.”
In fact, Egypt consumes around 3 million tonnes of sugar annually but produces just over 2 million tonnes, with the gap filled by imports. But traders said high sugar prices and a rising black market rate for dollars has made it too expensive and risky for many importers to obtain sugar in recent months.
An executive at one food producer, who preferred to remain anonymous, said, “Getting sugar has really turned into a challenge.”