Research: Algeria, Egypt, Morocco Ripest North African Markets for U.S. Dairy

Demand for dairy is surging but competition from the EU and New Zealand is keen.

By the United Nations’ definition, seven countries comprise North Africa. By USDEC research conclusions, three offer the best opportunities for U.S. dairy suppliers.

Algeria, Egypt and Morocco have a combined population of nearly 160 million—about half the size of the United States. With limited arable land but a growing population increasingly interested in dairy, demand exceeds domestic milk production capacity and is rising.

Each of the three countries presents different opportunities for U.S. dairy suppliers. According to a recent USDEC research study on North Africa, which you can request here.

Algeria already imports the most dairy products of the three nations. It is the No. 3 whole milk powder (WMP) importer and No. 4 skim milk powder (SMP) buyer in the world, and is projected to import 78 percent more WMP and 31 percent more SMP in 2020 than it did in 2014.

Egypt, which has the largest population of the three nations, is building a reputation as a regional supplier of processed cheese and other foods that utilize dairy ingredients. It is conservatively projected to import 112 percent more WMP and 33 percent more SMP in 2020 than it did in 2014, along with a 68 percent increase of whey products and more than double as much milk protein concentrate (MPC).

Morocco has the fastest-growing economy of the three nations. It is a growing importer of cheese, butter and MPC to manufacture processed cheese, yogurt and other products, and is projected to import almost twice as much cheese, 20 percent more butter and 147 percent more milk protein concentrate in 2020 than it did in 2014.

“The fast-growing import volumes demonstrate that this is indeed a growth market. Rising dairy consumption in the North Africa region is driven by high population growth, including a high youth base, rising disposable incomes and a growing middle class,” says Merle Snyman, director of market research and analysis at USDEC.

Two major challenges stand in the way of U.S. dairy suppliers tapping those opportunities: 1) The European Union enjoys a geographic advantage that permits far shorter delivery times; and 2) New Zealand is not only aggressively pricing product to regional buyers, it is aggressively servicing the market.

You cannot alter the geographic reality of the market, but U.S. suppliers can do much to improve their service and, consequently, their standing in the minds of North African end-users. Many North African buyers perceive a general lack of commitment from the United States, due to an overall weak physical presence from U.S. suppliers and what they see as insufficient attention to product specifications.

Algerian buyers say U.S. milk powder is unavailable on a consistent basis. Moroccan buyers say U.S. companies rarely visit their country. Buyers in each country claim to prefer the color, moisture content and flavor profile of EU and New Zealand cheese to U.S. cheese.

Furthermore, Egypt applies a 10 percent tariff on cheese shipped in less-than-20 kg. packages, but a 2 percent tariff on products in packages greater than 20 kg. Because U.S. product tends to be packaged as 40-lb. blocks (about 18 kg.), customers buying U.S.-origin products face unnecessary additional costs that make them less interested.

On the other hand, U.S. suppliers also enjoy some unique advantages. The United States has become the leading dairy supplier to Morocco due in large part to the U.S.-Morocco free trade agreement, which gives U.S. suppliers preferential access.

We have made inroads on cheese and SMP in Algeria. In Egypt, where we are seen as an appreciated alternative to New Zealand, the U.S. share of dairy imports rose from 8 percent to 20 percent over the past five years.

The USDEC research study concluded that further gains will revolve around U.S. supplier capability to exhibit patience and take a long-term approach, including:

• Adapting product/packaging to the local market.

• Building a better knowledge base of market requirements and peculiarities.

• Establishing stronger relationships with key customers and buyers.

“A local presence is critical—either alone or by finding a local or regional partner. Meeting end-user specifications and improving knowledge of local products and technical issues involved in producing them would go a long way to improving the U.S. dairy position in North Africa,” Snyman says.

The U.S. Dairy Export Council is primarily supported by Dairy Management Inc. through the dairy farmer checkoff that builds on collaborative industry partnerships with processors, trading companies and others to build global demand for U.S. dairy products.  

Image copyright: 123RF Stock Photo