UAE needs more imports to ensure food security

The UAE relies heavily on imports for its basic commodities and other food due to the arid climate and lack of arable land. 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 $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.

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 $3.6 billion. This figure is estimated to rise to $5.5 billion in 2015 and $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 had the greatest increase at 3 per cent, followed closely by cereals up 2.3 per cent and sugar 2.3 per cent.

Source: Gulf news

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