meed-logo

line1 line2 line3
SIGN IN / REGISTER

UAE food producers struggle with global challenges

29 November 2022

Local food and beverage (F&B) producers in the UAE say the sector is being severely constrained by rising input costs and unprecedented challenges caused by the Russia-Ukraine conflict.

The impact of the war, which began in February this year, has reverberated across the globe, creating uncertainty and insecurity in global food supply chains. 

The food industry is among the vital focus industrial sectors of the UAE’s Ministry of Industry & Advanced Technology’s (MoIAT) Operation 300bn plan, not only to enhance its contribution to GDP but also to support long-term food security and self-sufficiency by facilitating local production.

Food security strategy

For industry stakeholders gathered at the MEED-Mashreq Manufacturing Business Leaders Forum, the Covid-19 crisis and conflict in Ukraine have only further underlined the importance of pursuing a food security strategy.

“The UAE F&B industry has more than 550 manufacturing units and employs more than 80,000 workers with a value of production of over AED35bn and exports of more than AED15bn,” said Ahmed Bayoumi, CEO of Global Food Industries (GFI) and board member of the UAE Food & Beverage Manufacturers Group.

“The Ministry of Climate Change and the Ministry of Industry are jointly spearheading efforts to increase the domestic supply of food products and to make the UAE one of the most food-secure countries in the world,” explained Bayoumi. 

“The two strategies, food security and Operation 300bn, both have many programmes to support the industry. We also really appreciate the new free trade agreements and the building of new trade routes with India, Indonesia and Israel.”

Import dependence

The UAE and other Gulf nations – considered food-secure due to their economic and political stability – have not faced food shortages since the pandemic outbreak. But food security and limiting vulnerability to import disruptions remains a key strategic long-term goal for the UAE government, as it lacks control over its sources.

GCC countries, including the UAE, typically import nearly 85 per cent of their food.

Compounding the situation is the harsh climate, with the expansion of local food production limited due to the scarcity of natural resources such as water and arable land.

According to the World Resources Institute, the Middle East and North Africa is the most water-stressed region globally, with the World Bank forecasting that the region will experience the highest economic losses from climate-related water scarcity compared with other global regions, at about six to 14 per cent of their GDP by 2050.

Conflict stress

Closed-off access to the lower-priced Black Sea grain since the outbreak of the war has induced commodity shortages and exacerbated inflationary pressures for purchasers already struggling with still fragile pandemic-disrupted supply chains, high import costs and spikes in energy costs.

“Because of the Ukraine war, sunflower oil and flour prices are up by almost 60 per cent,” a local food manufacturer said during the forum.

“Additionally, the Indian government has banned wheat exports from India. This has created an increase in commodity prices in the local market. It directly impacts me because almost all my products use wheat. Wheat flour is 60 per cent of my raw material.” 

The challenge, he said, is further compounded because commodity suppliers have been demanding advance payments as they capitalise on the shortages. 

But in the credit-driven UAE market, manufacturers are still bound by 90 to 120-day payment cycles.

“At the same time, I am restricted from increasing my prices,” the manufacturer said. “It is not healthy for the industry. There must be some intervention from the ministry to address this.”

Almost 99 per cent of food products in the UAE are no longer regulated in terms of pricing. This is due to the dialogue between the Ministry of Economy and the industry – credit where credit is due

Ahmed Bayoumi, Global Food Industries

Countering inflation

Inflation has risen to historic levels in many markets worldwide, significantly impacting consumers and businesses. 

In the UAE, the IMF forecasted that inflation will be at 5.2 per cent this year.

One local manufacturer at the forum said businesses have “no other way” to protect their finances and margins than to raise the prices of their goods.

“The government does not like to disturb consumers with price increases, but this is a very big challenge for manufacturers,” he said. “If manufacturers don’t increase prices, they will lose money.”

A 2022 Grant Thornton survey of 5,000 mid-market businesses across 28 countries, including the UAE, revealed that 87 per cent of businesses in the UAE have opted to pass the cost of surging inflation to consumers in a bid to protect their margins by increasing their prices, “at the same level or above our cost increases”.

According to the study, businesses have seen increases of 18 per cent in their energy and utility bills, 17 per cent in raw materials costs and 14 per cent in salaries or staff compensation. Businesses also saw a 16 per cent increase in outgoings related to equipment, as well as bank, interest and taxes.

The UAE government typically caps prices of staple food items to keep inflation in check and ensure shopping remains affordable for families. In April 2022, however, the Ministry of Economy said it was monitoring 300 frequently bought essential food items to identify products whose prices could be raised in line with rising import costs, subject to approvals.

“Almost 99 per cent of food products in the UAE are no longer regulated in terms of pricing,” said GFI’s Bayoumi. “This is due to the dialogue between the Ministry of Economy and the industry – credit where credit is due.

“There are only some basic staples that are regulated, and this was a major breakthrough after almost 20 years of everything being regulated.”

Achieving self-sufficiency

The long-term vision of the UAE’s food security strategy is to achieve self-sufficiency, creating an optimum balance between domestic production and securing food production channels overseas.

Ongoing challenges, however, are impacting the speed with which this vision can be achieved. 

“Producers who perhaps enjoy more subsidies or, due to currency fluctuations, can access the UAE market at low cost. This tends to come at the cost of demand for local manufacturers,” said Bayoumi.

The strong dollar, meanwhile, has been a “double-edged sword”.

“On the one side, it helps you with your imports from everywhere in the world. So, imports are cheaper in terms of raw materials or equipment. But, on the other hand, in terms of exports, nations using the Euro, for example, are screaming that they can’t buy our product anymore because they have appreciated by 20 per cent.”

“I think the UAE has to think to have some kind of ownership of lands abroad,” a manufacturer at the forum said. “This might open a big door for the UAE. That will secure our raw materials in terms of availability and prices.”

The UAE is already taking steps in this area, with efforts spearheaded by its investment vehicles. 

In 2020, Abu Dhabi’s International Holdings Company (IHC) said it would invest over $225m to develop and cultivate over 100,000 acres of farmland in Sudan to help secure high-quality agricultural output. 

Earlier this year, Abu Dhabi holding company ADQ bought a majority stake in Cyprus-headquartered agriculture company Unifrutti. The firm produces, trades and distributes more than 100 varieties of fresh produce, and sells 560,000 tonnes of fresh fruit a year. It has 14,000 hectares of farms across four continents and customers in 50 countries.

ADQ previously acquired a 45 per cent stake in French firm Louis Dreyfus, and has stakes in local companies, including fresh produce and agri-tech group Silal; forage and agribusiness group Al-Dhahra Holding; and food and beverage group Agthia.

Equal opportunities

Bayoumi noted that overall, demand within the UAE is recovering “very strongly” after the pandemic.

“Especially with visitor numbers growing, we see market demand growing, and we anticipate that this growth will continue going forward,” he said. 

“But also, competition is intensifying. More players are seeing the Gulf as one of the most attractive markets globally over the next three to five years, more players are coming into the market, and more players are vying for a piece of the cake.”

Medium-sized enterprises are at a further disadvantage when compared to regional giants.

“One of the things being discussed and under study is how medium-sized enterprises can be provided with access to centres of excellence that would pool resources in areas such as research and technology, which an individual entity might not be able to afford otherwise. That would make them more competitive over the long term versus the big players,” he said.

“The concentration of retail power also needs to be addressed. In the past, there were thousands of places to sell your product and hardly pay anything. Now two or three major retailers have 50 to 60 per cent of the market. They impose demands and if you do not comply, you could end up delisted or chucked off shelves.”

By Megha Merani

https://image.digitalinsightresearch.in/uploads/NewsArticle/10391937/main.gif
MEED Editorial

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Aramco Stadium races towards completion

    12 November 2025

     

    The Aramco Stadium in Khobar is moving forward at an impressive pace as the fast-track project races towards completion in 2026

    The 47,000-seat stadium will be the new home for the Aramco-owned Al-Qadsiah Club and a key venue for the 2027 AFC Asian Cup and the 2034 Fifa World Cup. 

    The project’s progress stems from detailed planning and an accelerated delivery strategy. The project was conceived in May 2023, with the design process, managed by Aramco, commencing shortly thereafter. 

    “We completed the design within six months,” said Mohammed Subhi, the Aramco Stadium’s project manager.


    The project advanced quickly due to thorough planning and a fast-track delivery approach. Initiated in May 2023, the design phase—overseen by Aramco—was completed within six months

    An early engagement approach with the main contractor – a joint venture of Besix and Al-Bawani – was instrumental in maintaining momentum. This partnership began early in 2024, allowing for collaborative input on critical construction elements. 

    This upfront collaboration minimised pre-construction time, ensuring a rapid transition to site work.

    Engineering challenges

    The stadium’s architectural design, inspired by the natural whirlpools of the Gulf and featuring interwoven transparent sails, presents significant engineering challenges, particularly in the structural steel and façade work. For spectator comfort, the stadium is equipped with full cooling systems and designed to the highest international standards.

    Logistics management is another crucial facet of the project, which is located in central Khobar. With thousands of workers on site, the movement of materials is tightly controlled to minimise community disruption. 

    “We control how many trucks can enter the site and at what time. For example, we cannot cast concrete during the day. It has to be after 6pm, up until the early morning,” said Subhi.

    A key priority on site is health and safety, an area where the organisation’s legacy from its oil and gas operations is clearly visible. Subhi explains that the principle of health and safety is part of the company’s DNA and is embodied in the deployment of advanced technology and rigorous standards, which have collectively resulted in over 10 million safe working hours to date.

    The project employs a sophisticated Smart Safety Command Centre (SCC), which utilises artificial intelligence-based monitoring and 24/7 surveillance. One key feature of the centre is the crane collision prevention system – a key technological advancement in heavy machinery coordination and a first for the region. 

    “We have tower cranes and crawler cranes talking to each other. The anti-collision system means cranes talk to each other without human interference, and they automatically shut down when they are too close to each other,” said Subhi.


    A key technological advancement is the crane collision prevention system, which means the cranes talk to each other and shut down if they become too close

    In addition to ground operations, the project is leveraging aerial technology to mitigate risk in high-altitude work.

    “We have used drones for the inspection of the cranes and inspection of the steel structure itself to minimise the risk of working at height,” said Subhi.


    Drones have been adopted on-site to mitigate the risk of working at height

    Worker welfare

    The project’s commitment extends beyond mere regulatory compliance to comprehensive worker welfare, establishing a high standard for construction sites in the region. 

    With current staffing reaching approximately 11,000 direct and indirect workers, welfare provisions are a core priority, linking directly back to Aramco’s corporate standards.

    In a region where extreme heat is a constant challenge, the project has implemented advanced heat stress management protocols. This includes the installation of heat sensors with alarm systems, mandatory work stoppage during peak heat hours and regular briefings on heat exhaustion symptoms. Fully air-conditioned rest areas are provided for breaks and meals.

    Aramco is also committed to developing national talent. A significant proportion of the staff are young, and about 20% of the team are women.

    The relationship with the joint-venture contractor is defined by collaboration rather than traditional client-contractor hierarchy. “We are one team, working together,” said Subhi. This approach has fostered a cooperative environment that is accelerating the on-site progress towards the 2026 completion goal. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15073939/main.gif
    Colin Foreman
  • Oman signs PPA for 125MW Dhofar 2 wind project

    12 November 2025

    Singapore's Sembcorp Utilities and local firm OQ Alternative Energy (OQAE) have won a contract to develop the 125MW Dhofar 2 wind independent power project in Oman.

    The contract was awarded by state offtaker Nama Power & Water Procurement Company (Nama PWP) under a 20-year power purchase agreement (PPA).

    Under the PPA, Sembcorp and OQAE will form a joint venture to build, own and operate the wind farm, which will supply power to Nama PWP once operational.

    The equity split will give Sembcorp 75% and OQAE 25%, a source close to the project told MEED.

    Nama PWP said that it will allocate a portion of contracted works for the Dhofar 2 project to Omani small and medium-sized enterprises under its in-country value programme.

    The project is expected to begin commercial operations in the third quarter of 2027.

    The facility, valued at about OR43m ($112m), will be located on a 12-square-kilometre site in Dhofar Governorate.

    The project comprises 20 Windey WD200 turbines, each with a 6.25MW capacity. Each turbine stands 215 metres tall and will be connected to the national grid via a 400kV substation.

    The development will provide clean electricity to more than 18,000 homes and will cut carbon dioxide emissions by about 158,000 tonnes a year.

    It is also expected to generate about 396,754 megawatt-hours and free up around 76 million cubic metres of natural gas annually.

    Sembcorp has over 1.1GW of energy assets in Oman. In September, the firm signed a new 10-year power and water purchase agreement with Nama PWP for its Salalah independent water and power plant.

    According to Nama PWP, the offtaker has contracted 26 water and desalination plants, exceeding $11bn in investment, over the past 15 years.

    Chief energy transition officer at Nama PWP, Abdullah Bin Rashid Al-Sawafi, said the company "plans to attract a further $5bn over the next five years, mainly in renewable energy and storage technologies".

    This includes an extra 9GW of renewable energy capacity by 2030, representing 60% of total contracted capacity.

    Oman aims to have 30% of its electricity generation from renewable sources by the same year.

    READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

    Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15073043/main.jpg
    Mark Dowdall
  • Hitachi wins Alexandria Raml tram systems deal

    12 November 2025

    Register for MEED’s 14-day trial access 

    Hitachi Rail has announced that it has won a contract related to the modernisation and upgrade of the Alexandria Raml tram network in Egypt.

    Hitachi Rail said it will deliver advanced signalling and communications systems, an operational control centre and supervisory control and data acquisition, security systems with CCTV cameras and access control, passenger information and on-board equipment.

    The contract was awarded by a joint venture of Hassan Allam and Arab Contractors.

    The project scope includes rehabilitating a 13.2-kilometre tram line, constructing a maintenance depot, developing elevated viaducts and upgrading 24 stations.

    The project will reduce journey times from 60 to 35 minutes by increasing the operational speed on the line from 11 kilometres an hour (km/h) to 21km/h. The project will also increase the hourly capacity from 4,700 to 13,800 passengers in each direction. 

    UK analytics firm GlobalData expects the Egyptian construction industry to grow by 6.5% in real terms in 2025, supported by investments in oil and gas, industrial and housing construction projects. According to the Central Bank of Egypt, the country’s average construction production index grew by 5.8% year-on-year in the first 10 months of 2024.

    GlobalData says the construction industry's output is expected to register an annual average growth rate of 8% in 2026-29, supported by investments in commercial, renewable energy and transport infrastructure projects, coupled with the government’s target of developing 10GW of renewable energy projects by 2028 under the Nexus of Water, Food and Energy Programme.

    The infrastructure construction sector is expected to expand by 4.4% in real terms in 2025 and record an annual average growth rate of 7% in 2026-29, supported by government plans to continue its spending on transport infrastructure, ports and terminals.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15073050/main.jpg
    Yasir Iqbal
  • Contract award nears for Al-Ula tram works

    12 November 2025

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Royal Commission for Al-Ula (RCU) is preparing to award the contract to build infrastructure for the tramway at the Al-Ula development.

    MEED understands that bid evaluation has reached advanced stages and the contract award is imminent.

    Contractors submitted revised bids for the scheme in August, as MEED reported.

    It is understood that consortiums were asked to propose self-funded financing arrangements for the project.

    The first phase of the tram scheme is a 22.4-kilometre-long line with 17 stations, operated by 20 trams. It will link Al-Ula International airport to five of the area’s historical regions.

    The scope of work includes the design and construction of a tram depot, tram tracks, technical buildings, station buildings and other associated infrastructure.

    In June, MEED exclusively reported that the RCU had asked firms to submit their final offers for a contract to build tramway infrastructure at the Al-Ula development.

    The RCU issued a request for proposals in June last year and received commercial bids for the project on 10 November.

    France’s Systra is the consultant.

    In October 2023, the RCU announced that France’s Alstom will supply rolling stock and systems for the Al-Ula tram scheme.

    The RCU unveiled an investment plan worth SR57bn ($15bn) to regenerate Al-Ula in April 2021. About $3.2bn has been allocated for infrastructure development, including the tram and renewable power generation.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15072614/main.jpg
    Yasir Iqbal
  • Contractors submit bids for $1.4bn Kuwait oil pipeline

    12 November 2025

    Register for MEED’s 14-day trial access 

    A low bid of KD419m ($1.4bn) has been submitted on an oil pipeline project in Kuwait, according to figures published by the country’s Central Agency for Public Tenders (Capt).

    The bid was submitted by local contractor Alghanim International General Trading & Contracting.

    The contract was tendered by state-owned upstream operator Kuwait Oil Company (KOC) and covers the construction of crude oil pipelines and associated works.

    The full list of bidders and prices is:

    • Alghanim International General Trading & Contracting – KD419m ($1.4bn)
    • Mechanical Engineering & Construction Company – KD422.5m
    • Al-Dar Engineering & Construction Company – KD425.7m
    • Combined Group Contracting Company – KD502m
    • Heisco – KD506.1m
    • Sayed Hameed Behbehani & Sons – KD674m

    Kuwait is trying to boost project activity in its upstream sector.

    The country’s national oil company, Kuwait Petroleum Corporation, is aiming to increase oil production capacity to 4 million barrels a day (b/d) by 2035.

    In August, Kuwait announced that it was producing 3.2 million b/d.

    Earlier this month, KOC said it was planning to spend KD1.2bn ($3.92bn) on its exploration drilling programme through 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15072150/main.jpg
    Wil Crisp