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
  • Saudi Arabia battery storage awards provide fresh lift

    24 August 2026

    Commentary
    Mark Dowdall
    Power & water editor

    The latest battery storage awards provide a welcome injection of investment into Saudi Arabia’s power market, which has seen a sharp slowdown in contract awards this year.

    Saudi Power Procurement Company’s four Group 1 storage service agreements, announced last week, are worth more than $1.16bn and cover 2,000MW of capacity.

    That is significant against the wider market. According to regional project tracker MEED Projects, Saudi Arabia recorded $19.7bn in power sector contract awards in the first seven months of 2025, compared with just $2.5bn in new awards in the same period this year.

    The battery energy storage system (bess) awards therefore account for a sizeable share of the activity recorded so far this year and provide a much-needed source of new contracting activity.

    Importantly, this is not a one-off. SPPC issued the request for proposal (RFP) for its second group of bess projects in July, covering six projects with a combined capacity of 3,000MW and 12,000MWh.

    With the Group 1 tender taking around 18 months from RFP to contract award, it is reasonable to expect Group 2 contracts to be signed in 2027.

    At the same time, the awards for six independent renewable plants under Round 7 of Saudi Arabia’s National Renewable Energy Programme (NREP), with a combined capacity of 5,300MW, are also likely to move into next year, with the latest bid deadlines now extending into September.

    Although a substantial pipeline remains in procurement, it is only once these projects move from tender to award and into construction that this pipeline translates into market activity.

    It is important that these tenders continue to progress at the pace established by the early rounds of Saudi Arabia’s renewable energy programme and now also SPPC’s independent storage provider bess scheme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18962923/main.jpg
    Mark Dowdall
  • Qatar receives bids for major power grid expansion

    24 August 2026

     

    Qatar General Electricity & Water Corporation (Kahramaa) has received bids for several packages under a major power transmission expansion project tendered in April.

    The project covers new substations at multiple voltage levels, as well as the supply and installation of 400kV extra-high-voltage power cables. The overall scheme is estimated to cost $650m.

    It is being tendered as part of Kahramaa’s 2026 procurement plan, which includes 198 tenders with a total estimated value of QR21.4bn ($5.9bn).

    According to sources, bids were submitted for the following packages on 20 August:

    • Substation packages S1 and S2, covering new 132/11kV substations (estimated cost: $200m)
    • Package S3, covering new 66/11kV substations ($50m)
    • Package S4, including a new 400/220/132kV substation, as well as upgrades and modifications to existing 400kV and 220kV substations ($200m)
    • Package S5, covering new 132/11kV substations and upgrades to existing 132kV and 66kV substations ($100m)
    • Cable packages C1 and C2, covering 400kV cables ($100m)

    Kahramaa previously stated that foreign companies not registered in Qatar would be allowed to participate in the bidding, subject to meeting specified conditions, including registration and certification requirements.

    In June, the electricity and water utility awarded contracts worth more than QR2.2bn ($604m) to expand the electricity transmission network in the country’s western region.

    The engineering, procurement and construction (EPC) works will support the integration of the 2GW Dukhan solar power project into Qatar’s national electricity grid. The scope includes new and upgraded substations, as well as the installation of underground cables and overhead transmission lines.

    Kahramaa said contracts were awarded to local firm Voltage Engineering, Turkiye’s Best & Betas Consortium, India’s Larsen & Toubro and South Korea’s LS Cable.

    Of Kahramaa’s 2026 procurement plan, electricity transmission projects account for QR8.9bn ($2.4bn) and include the construction of new 400/132kV substations in Al-Wukair and Al-Mashaf, as well as the expansion of 400kV substations at Ras Laffan.

    These also cover the installation of 132kV underground cables between Al-Sailiya and Al-Rayyan over a 24-kilometre route, as well as upgrades to the 400kV and 220kV networks.

    Additionally, there are 64 planned electricity distribution projects managed by the Electricity Distribution Department that cover the medium-voltage and low-voltage networks throughout Doha and the regional municipalities. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18962223/main.jpg
    Mark Dowdall
  • Maaden closes $1bn term loan and credit facility

    24 August 2026

    Saudi Arabian Mining Company (Maaden) has announced the closing of its inaugural international syndicated term loan and revolving credit facilities, worth a total of $1bn.

    The $500m international term loan facility will support Maaden’s growth agenda and general corporate purposes, including funding growth projects across its portfolio.

    The $500m international revolving credit facility, which is expected to remain undrawn, provides additional committed funding capacity “as Maaden continues to scale its business and execute its long-term growth strategy”.

    The transaction “was met with strong support from the international banking market, attracting participation from a diverse group of leading international banks across key global financial markets”, including the US, Canada, Europe, China and Japan. The facilities were oversubscribed, Maaden said.

    ALSO READ: Maaden and Aramco sign deal to create joint venture

    “The level of demand reflects the global banking community’s confidence in Maaden’s financial strength, strategic direction and ambitious growth plans,” the Saudi state miner said in its statement.

    “The facilities mark another significant milestone in Maaden’s funding journey – further diversifying its sources of funding and broadening its access to global capital providers as the company continues to advance its long-term growth ambitions.

    “Maaden continues to make significant progress across its growth pipeline, expanding production, advancing major projects and accelerating exploration as it builds a world-class mining company at the heart of Saudi Arabia’s economic transformation.”

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18962086/main4516.jpg
    Indrajit Sen
  • Dubai inflation slows to 5.3% in July

    24 August 2026

    Dubai’s annual inflation rate slowed to 5.3% in July, down from 5.7% in June, as a decline in transport costs eased pressure on consumer prices, according to Emirates NBD.

    The bank said the slowdown supported its view that price growth peaked at mid-year, and it expects inflation to continue easing through the rest of 2026. Monthly price growth slowed to 0.1% in July, from 0.4% in June, the weakest pace since February.

    Transport was the clearest sign of the moderation. Annual price growth in the category slowed to 11.9% in July, from 18.1% in June, as transport costs fell 3.7% over the month. Fuel and lubricant inflation eased to 24.1% year on year, from 48.3%, tracking a decline in local petrol prices.

    Petrol remains the main swing factor in the emirate’s inflation. Transport contributed 1.1 percentage points to headline inflation in July, down from 1.7 percentage points in June. Emirates NBD said the relief may prove temporary, with Super 98 petrol prices climbing 5.9% in August to leave them 33.8% higher than a year earlier. The bank expects headline inflation to edge higher in the August figures before easing again later in the year.

    The UAE deregulated petrol and diesel prices in 2015 and reviews them monthly against global prices, meaning changes in global fuel costs pass through to consumers quickly. Transport, which includes fuel, accounts for 9% of Dubai’s consumer price index basket.

    Housing remained the largest contributor to inflation even as its impulse faded. Housing and utilities, which account for about two-fifths of the basket, added 2.8 percentage points to headline inflation. Annual price growth in the category slowed to 7.0%, from 7.4% in January.

    Food inflation edged up to 7.8% year on year, from 7.6% in June, which the bank attributed to lingering supply-chain disruption from the regional conflict. Inflation in restaurants and hotels accelerated to 4.5% year on year, from 1.7% in June.

    Emirates NBD forecasts inflation of 2.9% by year-end but said risks to that projection were tilted to the upside, given lingering pressures in food and housing.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18961735/main1839.jpg
    Colin Foreman
  • Libya oil project on track for 2027 completion

    24 August 2026

     

    The project to develop a workers’ camp at Libya’s Erawin oil field is on track for completion next year, according to industry sources.

    The project, estimated to be worth about $50m, is being executed by the Libyan oil services company Al-Saraya Al-Hamara, headquartered in the city of Sebha.

    The Libyan company was awarded the contract in February 2025.

    The scope of the project includes:

    • Construction of an accommodation camp
    • Construction of the camp maintenance warehouse
    • Construction of the camp office
    • Construction of a fire brigade shelter
    • Construction of a kitchen and mess hall
    • Construction of a mosque
    • Construction of a laundry room
    • Construction of a clinic
    • Construction of parking facilities
    • Installation of a fire and gas system
    • Installation of a power generator
    • Construction of associated facilities

    The client on the project is Zallaf Libya Oil & Gas Exploration & Production Company.

    Zallaf Libya Oil & Gas Exploration & Production Company was established in Libya in 2013 and is wholly owned by Libya’s state-owned National Oil Corporation.

    The Erawin field development project is located about 800 kilometres south of Tripoli and 100km southwest of the El-Sharara field.

    Libya shipped its first cargo of crude from the Erawin oil field in November 2023.

    The shipment departed from Libya’s Zawiyah port and consisted of 600,000 barrels of crude.

    Australia-based Worley Parsons was appointed as the front-end engineering and design (feed) contractor for the early production facility project in 2019.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18953632/main.jpg
    Wil Crisp