Dutch-Egyptian Diamond Opportunities for Agrologistics Business Unusual
Although the COP27 negotiation outcomes have left many disappointed, global recognition of food and agriculture as both a climate culprit and a solution has made COP27 a breakthrough moment food systems. Building on the momentum for climate action in food systems created by COP27, LAN Cairo organised the Agrologistics Forum, bringing together Egyptian and Dutch stakeholders to explore investment opportunities in sustainable cold chain technologies in Egypt. Moving from commitment to action, the Agrologistics Forum discussed practical solutions contributing to more resilient and sustainable food systems.
Improving access to the cold value chain is a priority for Egypt's food security and food systems sustainability. It can contribute effectively to diminishing post-harvest losses and hence decrease waste, help meet Egypt’s food gap, and preserve scarce water and energy resources used in food production. An improved cold value chain would also mean increased income for farmers due to decreased losses and maximisation of crop value. Finally, without effective cold chain, the export potential cannot be maximised. With this in mind, LAN Cairo organised the Agrologistics Forum in collaboration with Chemonics Egypt and Wageningen University and Research at the Food Africa Conference in Cairo. Dutch stakeholders that joined the Agrologistics Forum included Omnivent; Flying Swans; Allround, represented by Go&Grow; and NL Works.
Opportunities in cold chain technology
Recognising the increased demand for cold chain technology, Chemonics Egypt is developing an investment map of cold value chain opportunities in Egypt. Ahead of the report’s publication in January, Chemonics presented their preliminary findings at the Agrologistics Forum. The study looked at new technologies as well as technologies to make existing cold chains more efficient, both applicable to the current situation in Egypt. There are business opportunities for a variety of service providers and business models, including direct technology investments for large farms, cooling-as-service, and cooling for shared profit. Importantly, investments are mainly available for sustainable cold chain technologies, making this the area with most opportunities.
The increased demand for cold chain technology, and especially sustainable cold chain technology, offers many opportunities for Egyptian-Dutch collaboration. Flying Swans, a Dutch consortium for agrologistics project development, elaborated on the increased interest of the Netherlands as food trade hub in Africa. However, the current lack of (sustainable) cold chains often forms a barrier. This is where Flying Swans, in collaboration with local partners, can offer solutions, especially for reefer containers by rail, to the benefit of both Egypt and the Netherlands.
Financial institutions are also expressing interest in financing cold chain projects. During the Agrologistics Forum, different representatives from the financial sectors discussed the requirements for investing in cold chain technologies and how to mitigate risks. The importance of a financeable project with a good business case that is demand-driven is key for investors. In addition, having a diversity of products; having climate insurance for farmers; executing feasibility studies; and working with a local partner who is better aware of the risks in the specific context are all measures to mitigate risks for finance in agriculture.
Lessons learned
Despite growing interest in cold chain technology, not all cold chain projects are effective. Wageningen Food and Biobased Research presented lessons learned from an analysis of international agrologistics interventions. They found that out of 50 analysed cold chain investments, 30 did not succeed. Their 3 key findings are the following:
- Most strikingly, a cold chain assessment in Rwanda pointed out that only the cold chain investments with the private sector in the lead succeeded. As soon as the project involved public investments, the cold chain did not run, usually due to the lack of an effective business model. Based on this finding, the most important recommendation is that the private sector should lead on cold chain investments, while the public sector fulfils a vital role in ensuring the right enabling environment.
- Another crucial finding is that investors often compare cooling systems across sectors, which confuses cooling for a goal in itself (as is the case in for example the construction and health sectors) rather than a means (as is the case for agriculture).
- Finally, it is crucial that the adoption of cold chain technology is demand driven, while currently it is too often supply driven, resulting in failing investments. This means that cold chains need to be suitable for the market, the product, and the context. This also means that alternatives to cold chains, such as ambient chains, seasonal products, and irrigation, need to be considered as well.
Going forward
Egypt already has promising examples of businesses working with cold chain technologies. One example is FreshSource Global, an agri-supply platform that brings products from farms directly to the customer. FreshSource has managed to reduce food loss to 5%, compared to the Egyptian national average of 45% with the efficient use of cold chain technology, while improving the lives of the farmers connected to their platform. However, a visit to their storage facility showed that there is still room for improvement, providing opportunities for Dutch partners to support the transition towards a more sustainable and more energy-efficient cold chain. Going forward, there are many opportunities for Dutch-Egyptian partnerships on sustainable agrologistics, helping both Egypt and the Netherlands to turn global commitments into action and impact on the ground.
LAN-Cairo will support Flying Swans and other opportunities to unlock opportunities in Egypt. For more information please contact KAI-LNV@minbuza.nl