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Bid to increase amount of food made locally

| 16/06/2008 | Reply

The UAE could save billions of dollars and curb soaring food prices by manufacturing more products at home, experts say.

The
nation imports up to 96 per cent of its food, spending billions on
shipping in goods and paying prices dictated by other countries.

Now
a campaign has been launched to increase the amount of food produced
locally in a bid to slash manufacturing and transport costs, combat
escalating costs of basic necessities and reduce the nation’s carbon
footprint – while developing world-class products to put the country on
the global food map.

Food companies will try to persuade the rest
of the world of the quality of their products at the first Ingredients
Middle East trade fair, which opens in Dubai today.

Joanne Cook,
an organiser, said: “The UAE imports at least 90 per cent of its food
products from across the world, but possibly as much as 95 or 96 per
cent.

“It is an extremely high figure as agriculture is not a
strength of the Middle East and we tend to outsource. There are certain
products you cannot grow here but in terms of processing and
manufacturing, there is nothing to stop companies.”

Mrs Cook said
countries such as the UAE and Saudi Arabia should supply more food to
the region and become less reliant on imports.

“Food is a
massive commodity and knocking one or two per cent off that 96 per cent
equates to billions of dollars in business revenue. We would be
retaining that within the UAE and GCC instead of losing it to outside
countries,” she said.

“We need to start producing more and
supplying the rest of the world rather than buying it in. That is why
we are inviting existing manufacturers to see what they can source and
to consolidate their goods into world-class products.”

She said local manufacturing was limited to nuts, dates, fruit, vegetables and dairy produce.

“Chocolate,
cocoa, ice creams and frozen foods are also huge commodities consumed
across the board, which could see an expansion in production. This
region has not been productive in setting up factories, but I expect
local food manufacturing and production to increase by at least 500 per
cent in the next 10 years.”

Food imports by GCC countries – and
the UAE is one of the region’s biggest consumers – topped Dh55 billion
(US$15bn) last year, up from about Dh33bn in 2006.

The UAE imported food-related items worth Dh29.6bn, but exported just Dh8.8bn while re-exporting goods worth Dh5.8bn.

Since
about 85 per cent of the UAE’s 4.1 million residents are expatriates,
there has been a surging demand in imported foods to suit western
palates.

Coupled with food prices at an all-time high thanks to
poor harvests, record-breaking fuel costs, commodity speculation and
farmers switching to production of biofuel crops, the UAE is undergoing
something of a food crisis.

The enormous cost involved in
producing desalinated water means the Government is moving away from
the idea of growing fruit and vegetables at home. Instead, the Abu
Dhabi Fund for Development is proposing to develop more than 28,328
hectares of land in Sudan as part of an initiative to secure food
supplies.

Supermarkets in the UAE such as Carrefour, Lulu and the
Union Co-operative Society have capped prices this year for 16 basic
food items, including cooking oil, sugar and eggs.

But this only
came after prices of products such as flour, milk and rice rose as much
as 58 per cent, according to the Dubai Chamber of Commerce and Industry.

Eckart
Woertz, an economist at the Dubai-based Gulf Research Centre, said in a
report: “The GCC countries and the UAE and Qatar in particular have
witnessed accelerated inflation rates for three years now. About
one-third of GCC inflation is imported. The inflation rate of food
prices in the UAE was between 27 and 30 per cent in 2007, according to
the Emirates Consumer Protection Society.

“Food thus constitutes
a considerable part of imported inflation. The GCC countries are a
prize taker for agricultural imports and heavily exposed to global
price hikes in food items,” the report said.

It said the future
was stark for the Emirates because of climate and a lack of
agricultural opportunity. “The GCC countries have low levels of
self-sufficiency in food production and are not very well suited for
agriculture given the arid climate and paucity of arable land.

“Larger
countries like Saudi Arabia and the UAE have developed subsidised
agricultural schemes, which are economically doubtful and ecologically
unsustainable because of an increasing water shortage.

“Together
with a rapidly growing population, this will lead to increased reliance
on food imports in the future,” the report added.

But Mrs Cook
said while basics like rice and wheat could not be grown on the UAE’s
harsh terrain, they could be imported and processed into goods such as
pasta.

Dubai already has a food processing industry worth more
than Dh11bn a year, a figure set to rise 11 per cent annually. It is
the world’s third-largest re-exporter, with 72 per cent of imports
being shipped on to Asia, Africa and Gulf countries.

Mrs Cook,
who also helps to organise the annual Gulfood event celebrating local
ingredients, said: “We do not need to worry about a particular
environment or climate because this is all about factory production.
The industrial free zones in Dubai will have food production areas
coming online in 2010. We have the infrastructure and the new port in
Jebel Ali will make that an even bigger possibility.”

She said
the UAE would always have a high carbon footprint because it was a big
re-exporter, but distribution and transport costs would come down.

“The
country plays a pivotal role in feeding the entire GCC region as well
as Africa and Asia. It is such a strategic place that it makes sense to
manufacture our own products here,” Mrs Cook said.

“The halal
industry in this region alone is worth more than Dh73bn. We want a
slice of that market ourselves rather than buying it in. When we look
at some of the manufacturing that already exists, the dairy goods we
produce, such as laban and yoghurt, can compete with the rest of the
world.”

The UAE last year imported food worth Dh1.8bn from the
United States, including grain and drinks, while food imports from
Canada totalled nearly Dh970m, the bulk of which went on rapeseed
(Dh367.7m), wheat (Dh356.8m) and pulses (Dh162.2m).

Some 90 per cent of the canola rapeseed shipped in was then processed into biofuel and redistributed in Europe.

Australia injects goods worth more than Dh512m annually into the UAE, including meat, fruit, dairy and grain.

A
spokesman for the Australian Trade Commission said food companies were
attracted by the UAE’s open trade policies and lower freight rates.

But
while edible goods have been flooding into the UAE, fewer of the
nation’s products have made a global impact. Organisers of the
three-day Ingredients Middle East event, at Dubai’s International
Convention and Exhibition Centre, hope to change that by persuading
food firms to invest in emulsifiers, probiotics and starches to develop
their manufacturing capabilities.

According to the Dubai Chamber
of Commerce and Industry, dairy goods worth more than Dh1.3bn were
imported into the city last year, but less than Dh38m were exported and
fewer than Dh188m re-exported.

Similarly, while meat products worth Dh1.6bn were imported, less than Dh155m were either exported or re-exported.

Ian
Thomson, the Canadian consul and trade commissioner based in Dubai,
said: “There is great potential for food processing to grow in the UAE.
By importing raw ingredients and processing them here, a lot of middle
men are eliminated while adding a dimension of control over price and
supply. It enhances business activity here, broadens industrial bases
and adds a more secure element.”

Razi Ansari, the chief executive
of Al Ghurair Foods, a Dubai-based firm supplying dairy, pasta, pulses
and cooking oil to more than 50 countries, said: “I think it is
extremely necessary to have the capability to feed the population. The
UAE has witnessed a tremendous growth and, to cater for that, it is
necessary to increase production locally.”

He said the main issue was getting the raw materials. Although Dubai had the industry, the UAE was not an agricultural country.

“Since
the climate does not support a number of crops, that could involve
going to other developing countries such as Sudan which are rich in
natural resources and making a deal to grow things there.

“We
definitely need to eat more local produce. We would be paying much less
for it because it costs less to transport, plus we would be helping the
industry grow and getting the freshest food available as well as
reducing our carbon footprint.”

Helen Joy, an environmental
expert from Carbon Footprint, an international carbon consultancy firm
based in the UK, said: “There is an undisputed scientific thought that
high food miles equal a high carbon footprint and so we must encourage
people to buy goods in season and sourced locally as these two factors
will help dramatically reduce your carbon footprint.”

Category: Food Manufacturing, Middle East & Africa

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