Cashing in On the Halal Food Industry

Posted By Eva Fernandes, Kipp Report

On April 13, 2011

So, here’s the latest in the world of Halal food: just this week [1] Thomson Reuters and Ideals ratings announced the launch of the world’s first halal food indices, called SAMI (Socially Acceptably Market Investments) Halal Food Index and SAMI Halal Participation Index in Malaysia.

Rushdi Siddiqui, Global Head Islamic Finance Thomson Reuters US, said “both the indices help provide a platform for investors seeking Shar’iah-compliant ethical investment opportunities.”

Currently, the SAMI Halal Food Index comprises 200 companies listed in Muslim-majority countries with a total market capitalisation of over $100 billion.

A closer look at the index does reveal a certain bias. Out of the 200 companies listed on the index, 95 are Malaysian with the remaining belonging to Saudi Arabia, Turkey, Indonesia and Nigeria–which of course, begs the question asked time and time again: why isn’t the GCC, and the UAE in particular, cashing in on the billion-dollar halal industry?

Some, like Darhim Hashim, CEO of IHIA [2] (International Halal Integrity Alliance), say the root cause is ignorance: “Arab and GCC countries need to first realise that there is a halal industry in the first place (…) from my own experience in the MENA region, halal seems to be taken for granted and there seems to be a mindset barrier that any business can be made out of halal. Being resource-scarce, it would make sense for these countries to focus on value-added processing and re-exporting.”

Thank you ever the ray-of-sunshine Hashim. But while Hashim claims ignorance, others claim logistics problems.

“One of the main reasons Arab and GCC countries can’t meet their own demand is that feed and grain is fairly expensive for them to buy. Also, they lack the infrastructure for going into mass meat production. For example, their cold chains are very fragmented.” says Emily Woon, Head of Fresh Food Research at Euromonitor.

That may very well have been the case but recent reports show that there are at least 150 food processing plants in the UAE. The UAE government has also been heavily promoting food investments, themselves investing a total of $1.4 billion in investments.

With greater investment from the government and the establishment of a halal food index, will the UAE finally be cashing in on an industry that, according to the latest research by the World Halal Forum, is worth about $632 billion?

Cashing in on a booming market will prove to not only be profitable, but will cater to their large Muslim population. Currently the Brazil, Canada, Australia, New Zealand and France are the biggest halal suppliers in the West, with Thailand, Malaysia, Indonesia, Singapore are the leading halal products suppliers in the East. When will the GCC join the list?