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
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
-
-
-
Axens signs Egypt refining deal8 July 2026
-
Gulftainer commits to $2bn expansion plan8 July 2026
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Firms submit King Salman airport project prequalifications
8 July 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s King Salman International Airport Development Company (KSIADC) received prequalification statements on 1 July from contractors for two new packages at King Salman International airport (KSIA) in Riyadh.
These include the construction of a permanent East-West corridor and landside access roads serving the North and South terminals.
The scope covers the construction of roads, bridges and tunnels.
The client is expected to float the tenders soon.
The latest development follows KSIADC's selection of three groups to deliver the Terminal 6 apron, taxiways and other airfield infrastructure at KSIA.
KSIADC, which is backed by Saudi sovereign wealth vehicle the Public Investment Fund, will initially deliver the project on an early contractor involvement basis.
In March, MEED exclusively reported that KSIADC had selected three groups for the construction of Terminal 6.
In November last year, MEED reported that KSIADC was targeting mid-2026 to award the contract for the construction of Terminal 6.
MEED reported in May 2025 that US firm Bechtel Corporation had been appointed as the delivery partner for the terminals at KSIA.
According to local media reports, KSIADC’s acting CEO, Marco Mejia, said the project developer has completed the project’s masterplan.
The reports added that Terminal 6 will boost the airport’s capacity by 40 million passengers.
The project is expected to be delivered before the start of Expo 2030 Riyadh.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17588533/main.jpg -
WEBINAR: Saudi Giga Projects: Market Update for Q3 2026
8 July 2026
Webinar: Saudi Giga Projects: Market Update for Q3 2026
Tuesday 21 July 2026 | 11:00 AM GST | Register now
Agenda:
- Saudi projects market outlook and giga projects update
- 2026 contract awards, project activity and market performance
- Giga project reprioritisation, funding allocation and delivery progress
- Key project announcements, milestones and market developments to watch
- Major contracts awarded across construction, infrastructure and utilities
- Upcoming tenders and contract award opportunities over the next 6–12 months
- Geopolitical risks and their impact on project execution and investment
- Progress across NEOM, The Red Sea, Diriyah, Qiddiya and New Murabba
- Major non-giga project opportunities and growth sectors across Saudi Arabia
- Short-, medium- and long-term outlook for the Saudi projects market
- Audience Q&A
Hosted by: Yasir Iqbal, MEED's construction editor
https://image.digitalinsightresearch.in/uploads/NewsArticle/17588750/main.jpg -
Genel Energy buys Egypt-focused oil company for $360m
8 July 2026
Register for MEED’s 14-day trial access
UK-listed Genel Energy has agreed to acquire Egypt-focused Capricorn Energy in a $360m all-cash deal.
Genel said the acquisition will combine its Kurdistan production base with Capricorn’s portfolio of Egyptian oil and gas assets.
The company also said the deal will allow it to obtain production in a country with a “well-established regulatory regime, stable contracts and attractive fiscal terms”.
Several approvals are still required before the acquisition can be finalised.
In a statement, Genel said: “Genel’s strategy is to build a business with resilient diversified cash flows that deliver sustainable value to shareholders.
“The Genel board and Genel management are resolute in their belief that this can best be achieved through strategic acquisitions, which add substantial high-quality producing assets to its existing portfolio.”
Genel’s existing oil and gas assets include its 25% non-operated working interest in the Tawke PSC in the Kurdistan Region of Iraq.
The company said this asset generated working interest production averaging 17,520 barrels a day (b/d) of oil in 2025 and had operating costs of around $4 a barrel.
The combined group is expected to hold reserves of 117 million barrels of oil equivalent and production of 41,003 b/d.
Capricorn is headquartered in Edinburgh and has been listed on the London Stock Exchange for more than 30 years.
Its core operations are in Egypt’s Western Desert region, where it holds onshore development and production assets.
In May 2025, Capricorn agreed with Egyptian General Petroleum Corporation to consolidate eight of its 50:50 jointly owned concessions into a single integrated licence with enhanced commercial terms. Capricorn announced in March 2026 that it had received formal parliamentary ratification of the agreement.
The deal has been announced at a time when Genel is seeing frequent disruption to operations at its assets in Iraqi Kurdistan.
Production was temporarily suspended at the Tawke field in February after the US and Israel attacked Iran, increasing security concerns in the wider region.
While the security situation is understood to have improved in the Iraqi Kurdistan region and many oil companies have resumed operations, there are now concerns that the Iraq-Turkiye Pipeline could be shut due to an agreement between the two countries expiring later this month.
If the pipeline does stop operations, it will negatively impact Genel as it is the main route through which the company’s Iraqi oil is exported.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17587599/main.jpg -
Axens signs Egypt refining deal
8 July 2026
Register for MEED’s 14-day trial access
France’s Axens has signed a long-term agreement with the Egyptian Refining Company (ERC) that covers product supply, digital transformation and refinery performance optimisation.
ERC operates Egypt’s $4.4bn Mostorod refinery, which was inaugurated in September 2020.
In a statement about the deal, Axens said that it will “leverage its comprehensive and integrated portfolio of technologies, equipment, catalysts and services to support ERC’s operational, economic and sustainability objectives”.
It added: “With its end-to-end expertise across the entire refining value chain, Axens is uniquely positioned to support ERC from early-stage project studies through engineering, unit start-up, operational optimisation and long-term technical follow-up.
“This fully integrated approach will help ensure reliability, operational excellence and environmental performance across the refinery’s life cycle.”
Quentin Debuisschert, the chief executive and chairman of Axens, said: “This long-term agreement marks an important milestone in the relationship between Axens and ERC.
“It reflects our ability to support customers beyond technology licensing by delivering a fully integrated offering that combines all process and catalyst technologies a modern refinery needs, services, digital solutions, operational expertise and training.
“We are committed to supporting ERC’s ambitions in operational excellence, digital transformation and sustainability while helping maximise the long-term value and competitiveness of its assets.
“We are proud and motivated to continue supporting ERC in ensuring the economic and operational success of its refinery."
Mohamed Saad, the president of ERC, said: “ERC values its strong partnership with Axens and the confidence this agreement brings for the future.
"This collaboration will help us continue enhancing refinery performance, maximising operational efficiency and delivering high-quality products to support Egypt’s energy needs.”
The Mostorod refinery is located 10 kilometres north of Cairo and has the capacity to produce about 4.7 million tonnes of petroleum products annually.
It sells all of its output directly to the national oil company Egyptian General Petroleum Corporation under a 25-year agreement.
When the refinery was brought online and reached full capacity, it boosted Egypt’s capacity to produce diesel by 30% and increased gasoline production by 15%.
Operations started at the refinery in November 2019.
Qatar Petroleum is a stakeholder in the project. It owns 38.1% of the Arabian Refinery Company, which in turn owns 66.6% of ERC.
The Mostorod refinery mainly produces Euro 5 refined products, including diesel and jet fuel, which are intended for consumption primarily in Cairo and surrounding areas.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17587498/main.jpg -
Gulftainer commits to $2bn expansion plan
8 July 2026
Gulftainer has unveiled a $2bn strategy to transform from a ports and terminals operator into an integrated global trade infrastructure company, a long-horizon commitment made at a port that was struck three months ago and in a region where the shipping lanes it depends on are under renewed attack.
The strategy restructures the company around four platforms: container terminals and maritime gateways, inland logistics and multimodal transport, logistics parks and industrial ecosystems, and regional maritime services connecting strategic trade corridors.
At the centre of the strategy is Khorfakkan Port, the UAE's deepwater gateway on the Gulf of Oman. Expansion works will raise annual handling capacity from 3.5 million twenty-foot equivalent units (TEUs) to 5 million TEUs, a 43% uplift, with a long-term master plan targeting more than 10 million TEUs. Planned integration with Etihad Rail will turn the port into a fully multimodal gateway linking sea, road and rail.
The commitment comes despite the port's recent exposure to the conflict in the region. On 5 April, a fire broke out at Khorfakkan after debris fell on the facility following the interception of an unidentified object. In a post on X, the Sharjah media office said the incident injured four people, one Nepalese national seriously and three Pakistani nationals with minor to moderate injuries. The strait through which Khorfakkan-bound traffic passes has come under further attack in recent days, with merchant vessels struck near the Strait of Hormuz.
Inland, Al-Dhaid Logistics Park and Sajaa Logistics Park will together provide 2.3 million TEUs of annual inland capacity, extending Gulftainer's reach.
The company positions itself as a key enabler of the India-Middle East-Europe Economic Corridor and the UAE's role in China's Belt and Road Initiative, linking ports, shipping services, inland logistics networks and digital platforms across major global trade routes. The transformation follows nearly five decades of operation and is being implemented under the New Gulftainer strategy.
Gulftainer's partnership with the Sharjah Ports, Customs & Free Zones Authority underpins the Khorfakkan expansion. The port sits within an integrated maritime network spanning both the Arabian Gulf and the Gulf of Oman, offering shippers several routing options across the two waterways.
READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDFStress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.
Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
> AIRPORTS: Dubai and Riyadh reaffirm airport ambitions> INDUSTRY REPORT: Dubai eyes tourism sector recovery> DATA CENTRES: Big Tech falls short on data centre promise> LEADERSHIP: Aramco’s citizen developers accelerate digital changeTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/17588407/main.jpg