Blumberg Grain Provides Solutions to Egypt’s Grain Spoiling Problem

Business Today Egypt (PDF)

David Blumberg, CEO of Blumberg Grain – West Africa, introduces the Shonna Development Project

Business Today Egypt interviewed David Blumberg, Chief Executive Officer of Blumberg Grain – West Africa. In that capacity, Blumberg is responsible for marketing, operations and financial performance for Blumberg Grain projects and manufacturing hubs in the West Africa, Sahel markets, and oversees projects in North Africa.

Blumberg Grain is a leading global food security company, providing harvest protection systems and technology. Blumberg Grain’s fully integrated crop and food security systems can reduce post-harvest losses of grain, produce and other perishables to five per cent or less. Blumberg Grain works with private companies and countries to modernize agricultural value chains, increase the quality and marketable output of their harvests, enable efficient market timing and significantly boost exports of agriculture products.

Blumberg Grain is a subsidiary of the Blumberg Partners group of companies, chaired by, Philip F. Blumberg, who founded the parent company in 1979. Blumberg Grain entered the market in Egypt in 2012, the company was evaluating markets in the Middle East and North Africa including Egypt. After spending time in Egypt, the company was impressed with the opportunities, but concerned about the government in place at that time. When President Al-Sisi was elected to office, Chairman Philip F. Blumberg announced to his company that they would be expanding operations into Egypt, starting with food security, then, if possible, a Manufacturing Plant and Export Hub and processing plants for Egyptian agricultural products.

The first step in the Blumberg Grain program involves the development of a new local wheat storage infrastructure, replacing what are called Shouna, on behalf of the government, With the Shouna Development Project in Egypt, Blumberg Grain is creating the Middle East’s largest and most sophisticated integrated food security system for grain storage.

Egypt has a major issue with grain spoiling. Some 40% of grain spoils every year, why?
Egypt regularly faces post-harvest wheat losses of approximately 40% due to spoilage occurring in the traditional, open-air storage facilities currently being used, commonly known as Shouna. This loss is due to depletion by pests, pilferage, rot and inclement weather.

What is the solution that Blumberg Grain provide to this problem? And how much can it reduce the percentage of spoiled grain?
The Shouna Development Project is a unique collaboration between the Ministry of Supply, Ministry of Defense and Blumberg Grain. The first phase of the project will revamp 93 Shouna (of 164 total planned) located across the country with modernized food security warehouses, known as Blumberg Grain Aggregation Centers.

This first phase of the project will enable primary processing of 3. 7 million metric tons of wheat per year across a platform of 3.6 million square feet of storage space.

The project will create one of the world’s largest and most sophisticated integrated food security systems for grain storage.

The Blumberg Grain Aggregation Centers, when properly implemented, can reduce postharvest losses down to 5% or less. The system will support the government in recovering crops lost to post harvest losses, saving Egypt up to an estimated USD 200 million annually.

What technology do your centers employ to prevent spoilage?
The Blumberg Grain Aggregation Centers for Egypt will include equipment for drying, screening, cleaning, grading and bagging. The Blumberg Grain System will also include security cameras, alarms, sensors, scales, barcode printers and scanners, as well as other hardware to track any bag of grain stored in the facilities.

But the physical infrastructure is only one part of the equation. In order to maximize gains, Blumberg Grain provides a proprietary network management system that helps form the backbone of a country or company’s food supply and crop management program.

For the Shouna Development Project, Blumberg Grain has established a military-grade Command Center in Cairo to centralize monitoring of security, environmental controls and inventory management. Through this command center problems can be identified and addressed remotely to ensure the harvest is protected at all times.

Is the project environment friendly? How much does the project require in terms of energy?
We are a company that focuses on environmental and sustainability issues, so the design of our projects take that very seriously.

Our systems are designed to be energy efficient and run on minimum power requirements. For example, our ventilation and aeration system is designed to work with the natural environment, adjusting to outside temperatures and therefore minimal mechanical cooling is used, reducing energy consumption significantly. In fact, our dry storage facilities can run 100% on solar power affixed to the warehouse rooftop, if desired by the client.

How did you enter talks with the government? How will the revenue be shared between Blumberg and the Egyptian government?
The project would not have been possible without the support of the Egyptian Government, President Al-Sisi, Dr. Khaled Hanafy, Minister of Supply and Internal Trade and Sedqi Sobhi Minister of Defense, and to that we are grateful.

It was the vision of President Al-Sisi and Minister Hanafy, who reacted to the rising costs of good quality bread, a human basic need. The President spearheaded the project, and we have worked closely with him on the design and implementation of our plans, including a four hour meeting between him and my father, Philip Blumberg. My father admires Presdient Al-Sisi, having said that he “is a voice of peace, power, and progress for Egypt.”

We also have a good working relationship with the Egyptian Holding Company for Silos and Storage and the Army Engineering Authority and Armaments Authority, which oversee project management and contracting, respectivcly.

How will this sector grow in the future in Egypt thanks to Blumberg?
As part of President Al-Sisi’s vision to position Egypt as the trade hub of the MENA region, the Blumberg Grain Shouna Development Project, and other food security projects, are considered a national priority. Ultimately, these food security systems increase output in logistics and food processing through cutting edge technology.

The Egyptian government has pledged its commitment not only to the immediate development of our systems through the Shouna Development Project, but to the growth of agriculture in the country in general.

The importance of effective grain warehousing has never been greater than it is today. With growing populations around the globe, the need for the efficient production, safe storage and delivery of food is critical.

How will increased food security help Egypt grow?
Much like other countries where we operate, food security in Egypt and national security are intertwined. Food insecurity creates political instability and directly contributes to the spread of internal instability. Food security contributes to the prosperity needed to make peace possible.

Although food security is not a new concept, its importance continues to grow as we progress further into the 21st century.

The wider food security program that President Al-Sisi has embarked upon is a model for the rest of the region to follow. Through his commitment he has highlighted the importance of agriculture across the region, and even the world.

Could Egypt eventually become a net wheat exporter thanks to your efforts?
Egypt is the largest wheat buyer in the world. One aim of our project is to reduce the country’s reliance on imported wheat.

Furthermore, with recent plans of land reclamation, there will be more acres to plough and therefore an increase in wheat supply. This, combined with a gradual reduction in the local consumption of wheat (due to programs that diversify the subsided product set, like the smart card system of Minister Hanafy’s administration), bode well for a further reduction in wheat imports, but the country is still far off from creating a net-exporting environment.

What other projects does Blumberg Grain envision for Egypt?
As you may be aware, in addition to revamping Egypt’s wheat storage system, Blumberg Grain has also been asked by the Al-Sisi administration to build logistics centers for perishable produce across Egypt that will leverage cutting-edge technology to maximize the longevity of perishable produce.

The Logistics Centers, in their first phase, are located in 10 separate governorates across Egypt. The whole project is designed to benefit the end user (the farmer and traders) to ensure losses are kept low and storage is safe and convenient. For this reason, Blumberg Grain has decided to locate them in close proximity to.the agricultural areas

In addition to the projects above, Blumberg Grain is in discussions this summer with the Egyptian Government to consider selecting Egypt for its Middle East and North Africa (MENA) Manufacturing Plant and Export Hub. The Hub will be among the largest food security production plant in the world, producing 1200 warehouses produced annually.

The Hub will be self-financed by Blumberg, and will ultimately employ 1000 Egyptians across its lines.

The Hub would create over USD I billion in economic impact to Egypt in the first year, and USD 7 billion over five years, according to KPMG.

What are Blumberg CSR programs to improve the condition of the Egyptian community?
My father, Philip F. Blumberg, has been very clear that he sees Egypt as a home country and not a host country, and in that regard we will be involved in Egyptian civic and charitable organizations.

In addition, Blumberg Grain is committed to the development of the agriculture industry in Egypt and has developed several programs, which will be implemented should Egypt be chosen for the Manufacturing Plant. Blumberg Grain will launch an Agriculture Institute that will provide training free or charge to teach farmers about proper storage techniques, as well as programs that encourage youth into the agricultural center. Blumberg Grain also offers continuous training. These programs will be sponsored by Blumberg Grain along with support from US based universities, who will provide expertise and educational resources.

Blumberg Grain will also look to collaborate with local agricultural universities and associations in Egypt that complement our vision in building a nation of experts in farming and agriculture.

What are your long-term plans for Egypt? Where do you see Blumberg in Egypt in the next five years?
We see partnership between Blumberg Grain and the Egyptian Government that will create the food security hub of the Middle East and North Africa. We look forward to investing in processing plants and high yield farms. If Egypt is selected as our Manufacturing Plant and Export Hub location for MENA, one of our first downstream investment projects will be a ground nut processing plant. We are in discussions with other Egyptian food companies concerning joint ventures in production and processing plants.

As our Chairman, Philip F. Blumberg, has said “If we can reach agreement on the MENA Manufacturing Hub in Egypt, we see a long and very productive relationship with not only the Egyptian Government, but also the Egyptian people.”

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