New government regulations to curb price hikes in the UAE markets
Food prices are expected to drop in the United Arab Emirates (UAE) with a new federal regulation that should be implemented shortly, according to traders well informed.
“I think we should see the [food] prices go down soon,” Essa Al Ghurair, vice chairman of Al Ghurair Investment, one of the leading international conglomerates in the region, told Newsweek Middle East in an interview.
He added that the government is likely to take new measures, which would set a ceiling to price hikes by producers and importers.
The country imports “over 85 percent of its food requirements and given the desert landscape, this will not change dramatically,” said Cedwyn Fernandes, associate professor of economics at Middlesex University Dubai.
Food security concerns
The UAE, as well as its Arab and Gulf counterparts, rely heavily on imported food-related commodities, and are subject to the fluctuation of their prices globally. This raises concern over food security in the Arab region in general and the Gulf Cooperation Council (GCC) in particular.
“The food gap in the Arab world is estimated at $35 billion,” said Mohamed Bin Obaid Al Mazrooei, President of the Arab Authority for Agricultural Investment and Development (AAAID).
“Most of this gap is in the GCC region because it imports between 70 to 80 percent of its food requirements. Some of the Gulf countries have tried to close this gap by diversifying their investments, mainly in the agriculture sector. However, 85 percent of the $35 billion gap comes from the heavy dependency on imported grains,” Al Mazrooei told Newsweek Middle East.
No matter how much the GCC tries to tighten that gap, countries such as Saudi Arabia constitute a large market and the consumption would be larger than the local production.
“We have to identify what the product is, and then we have to build our own food security, or buy and store in the country of origin. For instance, if I buy a land in any country and decide to produce grain (but that country is already importing it, so in case of any crisis), will this grain be exported or used in the local market there? That is a challenge,” said Al Ghurair.
The best way “is to store the product in the country of origin,” where it is abundant, he added.
The top five food commodities that pose a threat to the Arab world’s food security, according to experts, are sugar, meat, dairy products, grains and oil products. That is why Arab and GCC countries are adamant about investing in the agriculture sector.
“We are focusing on countries in South East Asia and Africa,” Al Ghurair said. “They are closer to us, which means cheaper. We do bring small quantities from South America, but it is better to import from countries closer to us, than wait for months for products to arrive from [Latin America] for example,” he added.
The major land banks of the UAE are Vietnam, Cambodia, Egypt, Pakistan, Romania, Sudan and the Americas, according to a report issued by Al Ghurair Foods Company.
“You go where it is cheaper and more competitive,” said Al Ghurair, who likened the world to a supermarket.