Trade Logistics Of Food Imports Into UAE (Dubai)

1.0 Introduction

When we observe the Arab zone as a whole and the forecast given by the Council of the Arab Common Marketplace in 2007, there is a wide gap rising between food stuff demand and what is available for use by the populace. By the year2010, the gap broadens to 61million tones and this comprises the demand for 28 million tones of flour, 7 million tones of sugar, 5 million tones of consumable oils, 15 million tones of beef, and 7 million tones of milk and dairy products. The gap will because of increase growth in population and also the increase in per-capita income in the region. The UAE is well positioned in terms of transportation system and skills needed to service the demand required to gather for these pressing demand (Arvis et al, 2007).

The Gulf Cooperation Council (GCC) members which is made up of

Bahrain, Saudi Arabia, Oman, Kuwait, Qatar and the UAE are usually doing well in terms of wealth owing to oil production and businesses. As a result of these, the Middle East, generally, is in a position to meet approximately 90% of its foodstuff requirements that are imported. When we observe at the cost of food imported in a year by GCC is in the range of US$9 billion. The UAE region requires 60% out of the whole imports. This is because of the large number of immigrants that raises the Dubai population high and as a result food demand as well (Basher et al, 2012).

One main strategy that Dubai enjoys and that is promoting development is the strategic position in the UAE. In relation to food products and agriculture, this is a reality that will remain and thrive in distributions from all over the region and the entire Middle East and extending beyond other markets outside the Middle East. This is accelerated by the state of the art development that is growing rapidly. This is giving Dubai and the entire UAE and advantage as an export destination point (Gillespie, Jeannet, & Hennessey, 2010).

In brief, Dubai is depending in more than one an export target. Pakistani agri-food exports to the UAE now have opportunity of investment. The export level by July 2008 was ahead as compared with exports for the year 2007. The scope of opportunities is board starting excellent hotels, businesses and to the visitors which have doubled up. All these are accelerated by massive employers, and sustained development in Dubai. As a result of the swelling population and the economic growth, the food industry is experiencing a thriving hotel business. This has attracted a number of diverse corporations (Golawala, & McKechnie, 2007).

As a result of this, the Dubai experiences foodstuff demand which has doubled in growth this year. According to Grant, Golawala, & McKechnie (2007), the demand is owing to 7% increase in immigrants, tourists, and growing economic development. The UAE Gross Domestic Product increased by 23.5% in the year 2006, whereas the population reached approximately more than 10 million this year. Based on this approximation Grant, Golawala, and McKechnie (2007) postulate that the population might reach 20 million by 2015. These sociological changes are not only increasing the foodstuff demands in the region, but also alter the behavior of the people in terms of food preferences (Grant, Golawala, & McKechnie, 2007).

In the hotel industry, a number of Supermarket companies with strong forces is in full force competing the ordinary small scale people in this business. Two companies from France (Carrefour and Geant) specializing in cuisine foodstuffs is competing with a local corporation-Spinneys corporation. The large number of immigrants has created a great opportunity giving rise to a number of restaurants where there is a need of different types of foodstuffs in restaurants as per varied cultures. This in itself creates a huge demand in food product which in real sense is not adequate in Dubai (Hufbauer, & Wong, 2005).

According to Lanchovichina, Loening, and Wood (2012), approximately 75% of the UAE’s population comprises of single men. This is a segment responsible for increased food in Dubai. The market opportunity that is prevailing in the region is attracting the international foodstuff producers who are have come and set up stores in the GCC to get the best in Dubai booming business. The Nestle Company established a plant in Dubai with the objective of taking the advantage of the opportunity. The factory manufactures cheese and pulverized beverages to sell to the people all over the locality. Other international corporations have followed suit and established themselves in Dubai for the same business (Lanchovichina, Loening, & Wood, 2012).

The United Arab Emirates food product and beverage industry continue to show signs of a fast growing business. Several trends that have had a global impact such as environmental concerns are seen to find entry in Dubai. This comes as a way of keeping and observing the environment according to the environmental standard. Dubai is a destination for all people from diverse backgrounds. This is the reason for the growing food demands. The agri-food industry is not able to meet these demands. Owing to this fact, food product imports from other countries is an option that is followed. This is not a surprise because the same is observed in a number of Middle East countries since the land is not fit for agricultural productions. However, irrigation is carried out in a number of parts but this cannot fully supplement the production of enough food products that can meet the large population that is growing every year (Hufbauer, & Wong, 2005).

2.0 An Overview of the UAE (Dubai) Market

United Arab Emirate is the focal point of the agri-food business in the county with the major marine ports and air traffic center for the area. It is equally a significant market and as well the main re-export market that serves the area in a wider view. Based in the estimation made, the consumable imports every year is around 35-45%. This goes far beyond the region to other parts of the continent. The imports of agricultural food product lie in the region of 60-70%. The region of EAU relies mostly on imports of foodstuffs and agricultural products. These products come from mainly Europe, USA, Germany, Pakistan and France. In percentage estimates it is depicted in the pie chart below by country (Sarkar, 2011).

Figure 1: The percentage of imports by Country

Source: ABS/DAFWA

There are great business chances existing for a variety of agricultural items, bulk, and food items that are packaged, kept at frozen conditions and ready-made foodstuffs. Pakistani rice, meat, spices, vegetables are imported. Due to foreign large population, the importers prefer dealing with brand that have established name with outstanding strategies. There is also the entry into the foodstuff business via the hotel sector which is large which another excellent stratagem is. This sector depicted some growth led by the real estate and hotel expansion targeting visitors from overseas touring the region. These create a huge need requiring high quality foodstuff. The halal food posses a high demand as this is a favorite’s food to most people in the region. This opens the road to high importation of food product from Pakistan (Shah, & Abdelgalil, 2010).

Since the region is largely dominated by Muslims, the dependence on imported foodstuff, and comparative wealth, the marketplace is extremely wide open mutually to meats that get together halal principle, additionally, worth supplementary foodstuffs (from broth to cook iced up entrees) that similarly gather halal qualifications necessities. A number of trade extravaganza dedicated purposely to halal foodstuffs now happen every twelve months in the United Arab Emirates (Laeequddin et al, 2011).

The Pakistan establishments are encouraged to invest in the local market by their presence in the market. This is because they command a sizeable portion of imports to the region. Relatively incessant visit to the market is an encouragement given to these investors from Pakistan. The art of establishing individual association, following the progress, and dedication is the main virtue of carrying out business in the region. The people and the administration opt to deal with the individual face to face and they prefer somebody they know and have trust. The contact and personal connecting with an individual is a factor held with great importance in the region than in other parts of the world (Hufbauer, & Wong, 2005).

3.0 The Import Competition in the UAE (Dubai)

The high increase in population owing to the people of UAE and the immigrants from other parts of the globe create a huge deficiency of agricultural foodstuff given that the region is good for agriculture. These deficiencies have left a gap leading to great opportunities for investment. As a result of this gap, many new entrants have streamed to the market (Lee, & Chandler, 2011).

Pakistan’s major challengers such as the United State of America and European Union (particularly the United Kingdom, Germany, France, and Italy) are privileged by controlling and having been there in the business in UAE for numerous years. They have built their acquaintances, developed brand awareness and preserved a coherent existence. Nations like New Zealand and Australia are comparatively newer competitors, and have set up and invested on their representation as high value, secure and dependable food merchants, mainly with high reverence to mutton and beef products. These are pursued by a multitude of new competitor into the food business commanded by India, China, and Brazil (Lanchovichina, Loening, & Wood, 2012).

The graph below depicts the imports of by each competitor per annum in tones. It gives imports per country including the new entrants to the market. We observe that the new entrants have contributed with a sizeable proportion of annual imports with Australia leading among them. This shows that Australia has come out strongly as explained earlier that their products especially meat are of high quality when compared to those from Pakistan. Despite the strong forces, Pakistan still is the major exporter of foodstuffs to the UAE. The United State of American is the second with an annual export of 200 million tones of foodstuff to UAE (Malik, & Awadallah, 2013).

Source: ABS/DAFWA

Figure 2: Annual Foodstuff Imports to the UAE(Dubai)

4.0 Food Impports by product

4.1 Mutton & Beef

These are products from animal mainly pig, cattle, sheep and goats. There was noticeably numerous grounds discouraging Pakistan’s beef and mutton existence in vend coolers or freezers and on hotel price list. Nevertheless, with the UAE’s acceptance in August 2008 of beef and mutton from Pakistani, and unrelenting hard work to have added Pakistani halal certifying officers permitted, there is now Pakistani beef and mutton in this market but medium period. The market requires meat in large proportions. From the MLA- Meat livestock Australia in 2007 announced that the consumption of meat is doubling thereby increasing its demand in UAE. The import of these products has risen from 20 tones in a month to 100 tones in a month (Woertz, 2013).

The wide-ranging richness benefit from in the marketplace, over and above the rising numbers of employment of women, has predestined eating out is a speedy rising development. Additionally, a further significant and noticeable rationale is the ongoing huge building rise with a swarm of global hotel chains all presenting fine banqueting encounters, instigating the need for value beef to increase exponentially (Weerahewa, 2009). According to the Meat Livestock Australia, Australia is a leading exporter of beef and mutton to Dubai. The graphs of figure 3 elucidate the Australia’s sheep, goat, and cattle export. The inference from the graph is that goats have a high demand compared to sheep and cattle. The reason behind this is that there is a very high preference for goat meat (Weerahewa, 2009).

Figure 3: Annual Imports of animals to Dubai (A$ Millions)

Source: ABS/DAFWA

Figure 4: Annual export of Beef from Australia to Dubai (A$ Million)

Source: ABS/DAFWA

4.2 Fish

This is a product that is sufficient in the region. There is enough and no shortage thus all five star hotels are fully satisfied. There are enough fish markets congregating internationals’ needs and residents to widespread fresh fish in all the main retail outlets. In relation of a local industry, catching fish in the Dubai is performed primarily at an artisanal echelon. In the year 2006, the catch was estimated to be around 115,000 tones. This comprises migratory species, pelagic, and demurrals. In order to keep the environment around the coastal shores, big fishing boats are not permitted. The consumption of fish in terms of per capita is approximated to be 33 kilograms which is relatively high as compared to the other parts of the world where the per capita consumption is approximately 26.5 kilograms (Woertz, 2013).

The complete range of ice-covered fish foodstuffs (as well as packaged IQF shrimp in all dimension from all-around the globe) are voluntarily accessible at vending shops. The variety of further extremely sorted out harvest is as well wide-ranging, emanating from processors of European Union, Australia, Malaysia, South Africa, Oman and other dealers. Similarly, there is moreover an instituted market and customer need for smoldered salmon and preserved foodstuffs (Malik, & Awadallah, 2013).

In the year 2006, a particular segment of the Dubai fish bazaar unlocks to accommodate needs of clients looking for fresh fish. One of these outlets is the Emirates Aqua Live in the UAE, and deliver equally to persons, and also as topmost hotels. Their extraordinary resource hold all the local fish, lobster, live crabs, and others. Pakistan presently exports an assortment of fish and sea foodstuffs to this bazaar, comprising fresh and ice-covered lobster, ice-covered shrimp, crab, scallops, and preserve fish foodstuffs, and the prospect keep on rising (Lanchovichina, Loening, & Wood, 2012).

4.3 Horticultural Products

The imports of horticultural products since the year 2007/08 to 2011/12 are illustrated in the table 1 below.

Table 1: Horticultural products Imported to Dubai ( A$ Millions)

Horticulture Products 2007/08 2008/09 2009/10 2010/11 2011/12

Vegetable 14 17 19 23 25

Fruits 7 8 6 5 4

Barley 328 392 636 205 330

Wheat 297 195 185 110 439

Peas 15 20 35 30 50

Beans 10 25 46 78 90

Other 23 10 11 24 30

Source: IMF

The illustration is for a five year period. It is easily observed that the barley and wheat command a large portion of imports in terms of Australian dollar. The past five years has seen a constant increase except wheat that saw a decrease in the year 2010/11. Conversely, fruits, vegetables, peas, and beans have been rising steadily. This implies that the demand for these products in Dubai has been rising exponentially. As explained earlier, the main reasons behind this is the rise in population growth, increased tourists owing to beautiful sites, and immigrant to Dubai is each of jobs, business, and education among other things (Grant, Golawala, & McKechnie, 2007). This is also represented in the line graph as illustrated below.

Figure 5: Line graph of Horticultural products Imported to Dubai (A$ Millions)

Source: IMF

4.4 Halal Foodstuffs in the UAE (Dubai)

According to the Muslim believes, there are foodstuffs that are prohibited. These pave way for Halal food which literally imply to the type of food permissible in Islam. These kinds of foodstuffs ought to be free from substances containing alcohol, pork and other forbidden stuffs. The products form animals must be slaughtered based on Islamic regulations. This is not comprehensible with most investors as they cannot notice the direction in which the industry is taking (Lanchovichina, Loening, & Wood, 2012).

Market analysts observe that food establishments in Dubai and UAE nations take their clients for granted. In contrast to purchasing halal foodstuff in other nations, customers in overpoweringly Muslim nations are observed as recognizing what is presented with no alarming questions. The halal shock wave has already hit other parts of the globe and is now dawning in the UAE nations. This is making customers to remain conscious of halal brand foodstuffs (Shah, & Abdelgalil, 2010).

Studies suggest that clients in Dubai opt to buy foodstuffs from other countries of non Arabs if they do not find halal certified foodstuffs in the shelves. A research based on per capita expenses position the market of halal food globally lies in the range of US$ 400 to US$ 580 billion in one year. Dubai has been noted to be the hub for imports owing to vast opportunities for agri-foodstuffs and well as other foodstuffs. This is also couple with the halal products that are not deeply entrenched into the market. This is opening more opportunities for serious importers with the intention of getting the best out of this market gap (Malik, & Awadallah, 2013).

4.5 Organics foodstuffs

The ministry under the docket of agriculture in Dubai is encouraging endeavor of farming organic food. The main reason is that this method is not harmful to the environment as compared to the present practices. This is a niche that is ripe requiring full exploitation. In retail shops these types of products are accessible but it is possible through imports. Despite a lot of critics from a small group of people, the learned, educated, and informed are supporting the idea (Woertz, 2013).

According to the United Nation’s world health organization (WHO), diabetes in Dubai adults is in the ratio of one out of four. This is a rate that is high as compared to the world standard rate. This together with children obesity goes in tandem. The Dubai youths is approximated by the WHO to be two to three times obese than the world standard. It is found that majority of people in Dubai suffer from type two diabetes which is not dependent on insulin. This requires the use of balanced diet as one of the crucial purpose of controlling levels of sugar. The connection between obesity and overweight in Dubai is not questioned (Sarkar, (2011).

This ill-fated circumstance does nevertheless grant countless of prospects for Pakistan. These is observable not only in relation to area of expertise items targeted exclusively at this specific section, but more meaningfully for foodstuffs that are not only advantageous to diabetics, but maintain good sustenance standards for the inhabitants all together (Grant, Golawala, & McKechnie, 2007).

According to studies by Lanchovichina, Loening, and Wood (2012), honey is one of the foodstuffs that can be obtained through bees farming and can act as a food supplement. When domesticated in large scale, this type of foodstuff can be produced in large quantities. Dubai has very little production of this product that can hardly meet the demands of the existing population. In relation to traditional uses, there are a broad variety of honeys accessible on the shelves indicating the type or flower of country of origin and source from Australia, Germany, News Zealand, United Kingdom, China, Oman, and Saudi Arabia. This is an important product in most regions of the planet as it contains highly nutritive values and a medicine. This product is served in Ramadan. In a nutshell, it’s a viable well-checked market, with modest precisely inhibiting Pakistani honey from taking place as a player. The patterns of consumption vary greatly among the residents. This is attributed to the affluence that is presence giving every individual the propensity to spend for consumption (Lanchovichina, Loening, & Wood, 2012).

Conclusion

Moreover, the high increase in population owing to the people of UAE and the immigrants from other parts of the globe create a huge deficiency of agricultural foodstuff given that the region is not good for agriculture. These deficiencies have left a gap leading to great opportunities for investment. As a result of this gap, many new entrants have streamed to the market.

Dubai experiences foodstuff demand which has doubled in growth this year. The demand is due to increase in immigrants, tourists, and growing economic development. These changes are not only increasing the food product demands in the region, but also alter the behavior of the people in terms of food preferences. Therefore, there is need for Dubai to still depend heavily on importation of food products from abroad.

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