Economic Modelling and Forecasting of Sugar Production and Consumption in Egypt

Abstract

Sugar is considered one of the strategic commodities in Egypt. The domestic production of sugar is still insufficient to meet the consumption needs, which increases the food gap of sugar. This paper analyses the main features of the production and consumption of sugar in Egypt. Descriptive and quantitative analysis are used relying on data obtained from the Ministry of Agriculture and Land Reclamation for the period (2000-2015). Results indicate that the total sugar production and consumption in Egypt are increased with an annual significant growth rate of 4.08% and 3.26%, respectively. Water productivity for sugar beet is more than sugar cane, with a net return per unit of water of 684.40 and 474.19 LE/1000M3, respectively. The average monthly profitability for sugar beet is about 0.16 which is higher than sugar cane (0.11). Nerlove's model shows that producers responsive to net return in cane production, with elasticity of response about 0.02 and to prices and one year lag of area in sugar beet production, with elasticities of response about 0.57 and 0.40, respectively. The most important factors that influence the food gap of sugar are the domestic production, per capita consumption, and population. Finally, the forecast figures base on ARIMA models show that sugar production and consumption are predicted to increase over the forthcoming decades, and in spite of these, the food gap of sugar would be about 735.43 thousand tons with self-sufficiency rate of 76.26% for the year 2025. For this reason, Egypt should exert more efforts to increase sugar production by increasing beet area, raising the delivery prices, adopting high yielding varieties of sugar crops and rationalizing per capita sugar consumption to reduce the size of sugar gap.