Special Features
Ensuring food security of the UAE
Because of its arid climate and paucity of arable land, the UAE relies heavily on imports for its basic commodities and other food. According to a report by Alpen Capital, contribution of agriculture was only 0.9 per cent of the UAE’s GDP. "In the UK, 24 per cent of the land is available for agriculture while in the UAE it is only 1 per cent. Even where land is available, the GCC countries face severe water shortages,†said Dr Ashraf Mahate, head of export market intelligence at Dubai Exports.In recent years, the UAE has seen a steady rise in food imports. Food consumption in the UAE has been growing at the rate of 12 per cent per year and, within this, the demand for food staples has increased by 30 per cent, according to the Ministry of Economy.
One of the main reasons for the increasing demand is the UAE’s steadily growing population. According to Alpen Capital’s June 2011 GCC food sector report, the food retail industry in the UAE expanded at the rate of 20.6 per cent between 2005 and 2009 and was valued at US$6.1 billion (Dh22.38 billion) in 2009. Within the food retail sub-sector, hypermarkets, supermarkets and discount stores accounted for 82.9 per cent of the sales according to Datamonitor.
Retail food outlet sales are made up of 75 to 80 per cent of imported consumer-ready products and only 20 to 25 per cent of locally processed foods, according to the Ras Al Khaimah Investment Authority (RAKIA).
Tourism industry
Another reason for the growth in demand is the growing tourism industry. In 2010, the UAE was visited by approximately 11.6 million tourists. And growing flight networks and local airlines have also boosted the demand coming from the in-flight catering industry. Currently, more than 120 airlines operate to and from Dubai. Officials reported Dubai International Airport handled 46.3 million passengers during 2010, Alpen Capital said in its report.
Another factor driving growth is the UAE’s prominent position as a re-export hub. The UAE re-exports nearly 50 per cent of imported food products to other GCC countries as well as Russia, India, Pakistan and East Africa.
As the demand increases, so will import volumes. According to the Economist Intelligence Unit, in 2010, the UAE’s imports totalled US$3.6 billion. This figure is estimated to rise to US$5.5 billion in 2015 and US$8.4 billion in 2020.
While soaring food prices and supply shortages are not as high or severe as they were in February 2008, it still remains an area of concern for the UAE. The World Bank Food price index shows that there has been a 25 per cent increase in prices between last September and this year. According to the FAO’s Food Price Index, prices of all commodity groups rose in January 2012. Oils increased the most at 3 per cent, followed closely by cereals up 2.3 per cent and sugar 2.3 per cent.
"The issue of the global climate change as a result of an increase in carbon dioxide and other greenhouse gases have a direct impact on food production through extreme weather while in other cases an indirect impact from floods, severity of pests and diseases, infections and so on,†Dr Mahate said.
