Grain Storage and Food Safety in Egypt: Blumberg Grain

Interview with Peter H. Blumberg, VP Project Management at Blumberg Grain

What is the current situation or overview of storage needs in Egypt?

Egypt is the world’s largest importer of wheat, at around 10 million tons per year. Unfortunately, due to the lack of sufficient or proper storage conservative numbers by the government estimate around 30% of crops are wasted (either rot in the field or spoiled), but other estimates put it around 50%. The 93 shouna sites (open-air storage pits) that we’re currently working on will help to modernize the food safety and security infrastructure in the country, and implement our Blumberg grain food security systems. A lot of the time, farmers will come and just throw their grain either in bags or leave it loose in these pits. This leaves the grain vulnerable to the environment, pests, and theft. Fortunately the new government, in particular President el-Sisi and Minister of Supply and Interior Trade Dr. Hanafy, are very intent on improving agricultural value chains and helping Egyptian farmers. And they are putting their vision into action through this project.

What do you propose as a solution to the Egyptian government?

The solution is making sure that grain and other products have proper storage. We believe that the company’s food safety and security systems will bring down post-harvest loss to as little as 5%. Taking that conservative number of 30% or 50% down to 5% would be tremendous for Egypt, economically and for the country in general. This project in Egypt is expected to save approximately US $200 million per year.

What is the size of the project?

The scope of the shouna development project covers 93 locations throughout Egypt, and has the potential to expand to 294 locations.

How long will it take to complete? What are the benefits?

In terms of implementing the project, we think it will take six months; some of the buildings are being constructed and some are already completed. Within the next couple of weeks, we will be installing the first systems in Egypt. The rest will arrive in a phased-in process: after a ramp-up period, every week thereafter, nine systems will come online. The benefits create value chains, and now these farmers will be able to track their product and see what they have. The command center that is being constructed in Cairo will act as the Hub for the information that is collected from all of these sites; it is a linked network of shouna locations. While there are 93 sites throughout the country, they all act as one integrated system. From that system, you’ll be able to see how much wheat (and other grains) is stored in each shouna location, the value of that product, its age and other properties down to the 100kg bag level.

How do you stand out from the competition? Why was your system chosen for this project?

One of the primary reasons might be that most people view the shouna as individual locations, and they don’t think of it as a larger, interconnected system. The way that the system is set up and run is different from other systems; it’s not just food storage, but also processing and technology. It’s cleaning, drying, bagging, grading, and then inputting all that information into our proprietary inventory management system, which can be accessed from a centralized and interactive command center. In general, the industry has remained stagnant in terms of technological innovations so Blumberg Grain brought its knowledge and innovative thinking to look at an existing industry and see how to improve it. The main advantages of our system is that it is modular and prefabricated, so it’s easy to erect and capable of rapid expansion. Additionally, we have other systems (like our cold storage unit) that are not being implemented in the shouna sites, which use cold atmosphere technology and can extend the shelf life of perishable products in storage. The company’s technology removes oxygen from the storage room and replaces is with nitrogen, placing the products in ‘suspended animation.’ The benefit of using nitrogen is that most of what we breathe is nitrogen, so it is not lethal, and we’re not spraying with pesticides or fumigants to extend the shelf life. We can take a tomato’s shelf life from a few days to 3-4 months with the technology that our company implements in these cold storage units. This safe technology is safe for use on all perishables, from grain to fruit to even meat. For the shouna projects, so we’re focusing on a linked command center to see how all the product throughout the country is being handled and managed. But we have also discussed with the Ministry of Supply about the need for implementing Blumberg Grain cold chain, and feel it could be a major advantage to Egypt.

What are the major challenges that you are facing with this project?

Whenever you do international work in a country for the first time, it’s a learning experience. Sometimes the bureaucratic process is not the most efficient, and sometimes it takes a little longer than we’re used to in the private sector. That is the main issue.

President el-Sisi has done a tremendous effort promoting investment in the country. When my father met with him last year, they discussed projects and the President’s vision, along with the Minister of Supply. They both really care about Egypt, are putting the people first, and looking out for the country’s best interests. Yesterday, we met with the Deputy of the Chief of Staff, who said that Egypt was going through a period of change and was trying to break systems that have been in place for decades.

Can you talk to us about the Hub itself?

Blumberg Grain is looking to select a country, which Egypt is one of the top candidates, to build its manufacturing Hub for food safety and security in the Middle East and North Africa region. The Hub would employ about 1,000 workers, making it the largest food security manufacturing center in the world, capable of producing 1,200 warehouses per year. A KPMG study predicts that the economic impact of such a Hub would be $1 billion dollars within the first year and $7 billion within five years. One of the benefits of building here is that you’re producing Egyptian-made products for export throughout the region. This Hub would make Egypt the food security and manufacturing center of the Middle East and North Africa. It would also include processing and packaging plants (ultimately a $250 million investment on our part). Ideally, we’d like to see some form of commitment from the country that we select and that they have put our systems to work and want to continue to work with us. Egypt has several major projects going on in Damietta and Suez Canal region that we view as attractive locations for a potential Hub. We were also looking at Nigeria, Democratic Republic of the Congo, Uganda, Oman, and the UAE.

Is this your only investment?

The money for the Hub would come from our capital, and we could make it part of an investment fund with international investors, but I see it as a now, it will solely be a Blumberg Partners (Blumberg Grain’s parent company) investment. The company will focus on investments in processing and packaging plants, and have begun to evaluate peanut processing plants.  Blumberg Partners is also exploring investments in high yield farming.

If you had a magic stick for the next 2-3 years, what would be your vision or dream?

After we complete these 93 sites for the shouna development project, we would like to expand them to the full 294 sites. Within Egypt there are a few more immediate projects that could use our systems. Minister Hanafy has laid out plans for a cold chain development across every Governorate that would incorporate the use of Blumberg Grain Arctic Vaults for the storage of fresh fruits and vegetables. Another project involves coordination with the farmer cooperatives throughout the country in order to create storage facilities for the farmers as well as places of assembly for the cooperatives. Significant progress on any one of these three projects would position us to build a manufacturing plant and export Hub in Egypt.

Blumberg Grain’s presence in Egypt would help position the country as the center of agricultural trade in the Region.  Blumberg Grain has one of the only commodities exchange friendly systems in the world. We would hope providing our systems would allow Egypt to establish an exchange of its own in conjunction with CME (large in the world) giving Egyptian farmers access to the efficiency and pricing advantage of a commodities exchange. Our system is designed to provide virtual com exchange in country, trading directly from our warehouses. Internationally, we are active in India and a number of countries in sub Saharan Africa as well as MENA. The primary projects there are our cold storage projects, and we are always looking to expand in Africa and South America.