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
  • SAR tenders design review consultancy for GCC rail link

    18 September 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia Railways (SAR) has issued a request for proposals (RFP) for a design management and review consultant to oversee engineering works on the GCC railway network, the latest step in advancing the long-delayed regional rail link.

    The RFP was issued on 9 September, with a submission deadline of 18 October.

    The tender seeks a consultant to manage, audit and verify deliverables produced by SAR's separately appointed design services consultant, rather than carry out the design itself. The tendering for the design services consultancy is currently in progress.

    Construction will be tendered separately through competitive bidding once designs are approved.

    The GCC railway will run for about 672 kilometres (km) inside Saudi Arabia, linking the kingdom's existing network to Kuwait, Qatar, the UAE and Bahrain, with four sections of about 141km, 200km, 151km and 21km, respectively.

    The line is planned as a single-track, non-electrified corridor for mixed freight and passenger traffic, with a maximum axle load of 32.4 tonnes and passing loops for bidirectional working.

    The appointed consultant will develop a design management and review plan covering governance, interdisciplinary coordination and stage-gate approvals, and will issue formal review and audit reports against SAR's requirements and international standards.

    The scope also covers stakeholder engagement, interface management and oversight of land acquisition activity tied to the design consultant's land acquisition plan.

    Key design stages are expected to take about 16 months: four months for concept design, six for preliminary design and six for issued-for-construction design, each with four weeks of contingency.

    SAR has asked bidders to mobilise a core team from day one. These must include a project director, engineering and design manager, stakeholder manager and lead document controller, all based at SAR's offices, with minimum experience thresholds ranging from three years for junior operators up to 25 years, including 15 in rail, for the project director role.

    GCC railway line

    Under the overall plan, the railway will run from Kuwait, pass through Dammam in Saudi Arabia, reach Bahrain via a planned causeway, and continue from Dammam to Qatar, the UAE and, ultimately, Muscat via Sohar in Oman. The railway is reported to cover about 2,186km in total.

    The route length within each member state is as follows:

    • UAE – 684km
    • Saudi Arabia – 672km
    • Oman – 306km
    • Qatar – 283km
    • Kuwait – 145km
    • Bahrain – 36km

    The railway is designed for passenger trains travelling at 220 kilometres an hour (km/h) and freight trains operating at 80km/h–120km/h.

    With high levels of project activity, governments in spending mode and renewed cooperation under the Al-Ula Declaration, the latest efforts to restart the GCC railway project may make more progress than previous attempts. If completed, the railway could prove transformational for a region that is globally connected but still divided by national borders.

    READ THE SEPTEMBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19783331/main.gif
    Yasir Iqbal
  • Tender issued for Libyan gas project

    17 September 2026

    An invitation to bid has been issued for a contract to conduct environmental assessments for the project to expand the Mellitah oil and gas complex in Libya.

    The bid submission deadline is 2pm today (17 September) Libyan time.

    The scope of the project includes provision of:

    • An environmental baseline study (EBS)
    • An environmental impact assessment (EIA)
    • An environmental management plan (EMP)

    The client is Mellitah Oil & Gas (MOG), which is a joint venture of Italy’s Eni and Libya’s National Oil Corporation (NOC).

    MOG is based in Tripoli and operates both onshore and offshore oil and gas facilities.

    The joint venture owns and operates six major oil and gas fields across the North African country.

    According to the tender documents, the company that is awarded the contract will need to prepare environmental management measures in compliance with:

    • Libyan environmental legislation
    • Ministry of Environment requirements
    • NOC environmental guidelines
    • Applicable international environmental standards and best practices

    The expansion of the Mellitah oil and gas complex is part of a project estimated to be worth $8bn.

    The wider project is known as the Mellitah Complex Expansion & CO2 Management Integrated Development Project.

    It has six main packages:

    • Onshore package
    • Offshore Structure A
    • Offshore Structure E
    • Subsea pipeline package
    • Site preparation work
    • Carbon capture and storage facility

    Security issues and political instability have been a major problem for Libya’s oil and gas sector since the country’s civil war started in 2011.

    Earlier this month, the Mellitah oil and gas complex was forced to shut down temporarily due to a protest over deteriorating public services.

    The existing onshore complex includes housing, processing units, storage facilities and export facilities.

    It also serves as the launch point for the Greenstream pipeline, which delivers Libyan gas directly to Italy.

    The planned expansion of the complex will involve:

    • Construction of a new fourth gas processing train
    • Construction of a third condensate train
    • Construction of a third natural gas liquids fractionation train
    • Construction of a fourth sulphur recovery unit train
    • Installation of a hydrogen sulphide enrichment unit
    • Installation of a sulphur recovery unit
    • Construction of other associated facilities

    The Mellitah complex is located about 100 kilometres west of Tripoli and is a key energy facility in the west of the country.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19748920/main.png
    Wil Crisp
  • Nakheel awards $218m Dubai Islands buildings deal

    17 September 2026

    Register for MEED’s 14-day trial access 

    Dubai-based developer Nakheel, now part of Dubai Holding, has awarded a main construction contract worth more than AED800m ($218m) for phases one and three of Bay Grove Residences at Dubai Islands.

    The contract was awarded to the local firm Metac General Contracting Company.

    It covers the construction of 537 apartments, comprising one- to four-bedroom units, across seven residential buildings.

    Phase one includes 296 units in four buildings, while phase three comprises 241 units across three buildings.

    The works are scheduled for completion in late 2028.

    Bay Grove Residences will ultimately comprise 1,154 homes across 15 buildings. Planning is under way for the remaining 617 homes in phases two and four, with further contract awards expected.

    In August last year, Nakheel awarded a AED2.6bn ($708m) contract to Abu Dhabi-based Fibrex Contracting to build the Bay Villas project at Dubai Islands. The contract includes constructing 636 villas.

    In April this year, another AED527m ($143m) contract was awarded to local firm Al-Nasr Contracting Company to construct the primary infrastructure and utilities works on Island B at the development.

    The Dubai Islands development consists of five islands spanning 18.6 square kilometres. It features more than 59 kilometres (km) of waterfront and 20km of beaches, as well as parks, golf courses, promenades and cycling paths.

    The offshore island project gained renewed momentum in 2022, when Nakheel unveiled a new masterplan and rebranded it as Dubai Islands.

    The reclaimed islands were originally part of the Palm Deira project, which was partially completed before being put on hold in 2008.

    READ THE SEPTEMBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19748850/main.jpg
    Yasir Iqbal
  • Aldar and Mubadala acquire Masdar City Square

    17 September 2026

    Abu Dhabi-based sovereign wealth fund Mubadala Investment Company and local developer Aldar have completed the acquisition of Masdar City Square at Masdar City, in a transaction valued at AED918m ($250m).

    The deal was executed through their joint venture established in 2024.

    Masdar City Square comprises more than 47,000 square metres (sq m) of net leasable area across seven office buildings.

    Completed in Q1 2026, the development is 99% occupied. Tenants include Taqa, the Department of Energy, Emirates College and the Mohamed Bin Zayed University of Artificial Intelligence.

    The transaction expands the joint venture’s real estate portfolio in Masdar City, which is now valued at AED4.7bn ($1.3bn).

    Masdar City is one of the region’s leading hubs for clean energy, artificial intelligence, advanced research and sustainable urban development.

    The joint venture acquired The Link project at Masdar City for AED654m ($178m) in April.

    Comprising about 32,000 sq m of net leasable area across five buildings, The Link is fully leased to a portfolio of major tenants, including Abu Dhabi Future Energy Company (Masdar) and the Mohamed Bin Zayed University of Artificial Intelligence.

    The asset includes Grade A, Leed Platinum office space, a net-zero-energy headquarters building, a multi-use hall and residential accommodation, supporting its position as a high-performing, integrated component of Masdar City.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19748241/main5814.png
    Yasir Iqbal
  • Neom tenders Oxagon highway contract

    17 September 2026

     

    Saudi Arabia’s Neom has tendered a design-and-build contract covering permanent upgrade works on Highway 55 in the kingdom’s Oxagon region.

    The first phase of the project includes constructing 14 kilometres of road, with two lanes in each direction. It also covers one bridge and three interchanges.

    The project duration is 22 months.

    Contractors have been given until 21 September to submit their proposals.

    Highway 55 connects the Red Sea coast with the mainland in northwestern Saudi Arabia. It is currently the only road providing north-south connectivity between Duba and the Neom region.

    MEED exclusively reported in August 2025 that contractors had submitted responses to the expressions of interest notice that Neom had issued earlier that month.

    The project is expected to support the movement of cargo vehicles from Duba Port to other parts of the country and the wider region.

    Neom tested a pilot initiative last year by handling a shipment that travelled from Cairo via the Port of Safaga, across the Red Sea to the Port of Neom, and then inland to Erbil, Iraq.

    In a statement, Neom said: “The shipment travelled through an intermodal corridor spanning over 900 kilometres, marking a significant milestone in the kingdom’s transformation into a regional and global logistics hub.”

    The Port of Neom is located on the Red Sea near the Arar border, a key entry point into Iraq.

    READ THE SEPTEMBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19746896/main.gif
    Yasir Iqbal