Investments Opportunities

Fruit and vegetable drying facility

Opportunity Description: This opportunity aims to add value to local crops by producing dehydrated fruits and vegetables suitable for both export and local consumption as either snacks or cooking ingredients. Dehydrated foods have a longer shelf-life and maintain nutritional value. The crops in focus are tomato, banana, grapes and mango because of their local abundance and compatible seasonality.
Food dehydration is a vast field that involves diverse technologies, each with its own advantages and disadvantages that vary according to the feedstock and final product specifications. Therefore, it was important to select a technology that can accommodate as many different fruits and vegetables as possible throughout the year. The selected technology uses a process called swell-drying, which can dehydrate most fruits and vegetables, as well as medicinal and aromatic plants.
PRODUCT: Product A: Dried tomato slices
Product B: Dried banana chips
Product C: Dried mango chips
Sector: Sustainable Agriculture and Food Processing
Market: Consumer Markets, Local and Export
Initial Investment Required: EGP 32m
Details Available: Pre-feasibility Study
Market Potential: The target markets could be Europe and the Gulf, as the dried foods market is considered largely untapped from Egypt’s perspective which can easily multiply in the next ten years.
Target market size is expected to be a minimum of USD 13m.
Year 1 revenues for this facility are expected be around USD 2 million, with a net margin of 15%, at 50% operational capacity. This improves by Year 5 to USD 4 million, with a net margin of 20%, at 91% operational capacity.
Supply: If the facility is operating at 100% capacity, it will consume the following amounts of crop per year, based on their respective yields (final vs initial moisture content):
• 900 tons of fresh tomato, yield of 24.6%, producing 221 tons of product.
• 1,200 tons of freshly cut bananas (ex. stems, skins, etc.), yield of 39.3%, producing 492 tons of product.
• 900 tons of mangoes, yield of 33.6%, producing 258 tons of product.
Process: The technology selected for the process of food dehydration is called DIC, which uses instant controlled pressure drop treatment to improve the drying process of organic materials. It is considered a relatively new technology in the field of food dehydration, but has been successfully commercialized and considered a decent economical alternative to more traditional and expensive methods. In this study, it is combined with industry standard batch convectional hot-air dryers, that can be locally manufactured. The DIC reactor can be imported from ABCAR-DIC Process in France.
The production process consists mainly of the following steps:
1. Receiving raw material
2. Washing
3. Sorting
4. Blanching/ Soaking/ Lye dipping
5. Cutting/ Slicing
6. Pre-drying
7. DIC texturing/ sterilization
8. Final drying
9. Packaging
Human Resources: Position # of Staff
Production - Permanent
Plant Manager 1
Quality Control 1
Hall Supervisors 1
Engineering 1
Workers 2
Production – Seasonal
5 workers x 3 seasons 15
Sales, General and Administration
Procurement 2
Sales Manager 1
Sales 2
Marketing 2
Finance & Accounting 2
HR Manager 1
Maintenance 4
Security 2
Total 37
Financial: Capital Expenditure Requirements EGP 26m
Working Capital Requirements for 3 months EGP 6m
Minimum Investment Required EGP 32m
Internal Rate of Return 40%
Simple Payback 4.1 yrs
Profitability Index 2.72
Risk: DIC reactor can be complicated to maintain for local workforce and could require some capacity building to ensure full technology transfer. Egypt is not known for manufacturing of reactors so there may be a skills gap that needs to be filled.
IMPACT: Economic - Value added to local crops such as tomato and mango is quite significant. Based on this study’s assumptions, before deducting other COGS (cost of gooods sold) and overheads:
• 4 kg of fresh tomatoes cost EGP 20 to produce 1 kg of dried tomatoes selling at EGP 40 – that is 50% value added to the crop.
• 2.5kg of fresh bananas cost EGP 30 to produce 1kg of dried banana chips selling at EGP 60 – that is 50% value added to the crop.
• 3.5kg of fresh mangoes cost EGP 70 to produce 1kg of dried mango chips selling at EGP 140 – that is 50% value added to the crop.
Social - Direct jobs created by this facility will include 22 permanent plant staff plus another 15-20 seasonal workers. Indirect jobs created will be mainly in logistics, marketing and distribution, and increased dedicated farming to supply the plant over time.
Environmental – Decreased losses post-harvest, demand for raw materials for dehydration can reduce oversupply. Dehydrated foods are more easily transported and stored due to decreased weight, increased shelf-life, which curbs overall carbon emissions.