Sweet gains for food exporters

Nearby countries with a sweet tooth helped boost food exports from Dubai by about 6.5 per cent last year.

Among the top food exporters in Dubai is IFFO whose subsidiary produces Tiffany chocolates.

DUBAI // Nearby countries with a sweet tooth have helped boost food exports from Dubai by about 6.5 per cent last year. The increase, to an estimated Dh3.2 billion (US$871.2 million) last year, is surprising because the UAE remains a net importer of food. But the country has carved out a lucrative niche as a processor of raw ingredients and an exporter of processed foods throughout the region.

Ashraf Mahate, the head of export market intelligence at the emirate's Export Development Corporation (EDC), said that although fourth-quarter figures were still being tabulated, the agency expected Dubai's food exports expected to grow by at least 6.5 per cent last year. Such an increase would be in contrast to slower growth in overall exports, which were projected to have risen 5 per cent last year to about Dh44.7bn, down from the 57.2 per cent growth in 2008, Mr Mahate said.

"Food is a necessity and in certain markets you find necessities tend not to have substantial growth, but they tend to have interesting growth purely because population has increased, and our exporters are going to different markets." Mr Mahate added that the first quarter of last year was difficult for Dubai's food exporters but sales picked up steam as the year progressed. Food exporters are expected to at least match the growth rate achieved during 2008.

Last year was a tougher one for many retailers, as consumers slowed their spending and discretionary goods such as cars and jewellery took the biggest hits. The newfound thrift also found its way into food shopping, with many consumers opting for cheaper items. Gains by the emirate's exporters are significant given the economic climate, Mr Mahate said. "You see other countries where exports have actually fallen, and we are still in positive territory."

Among Dubai's top food exports are sugar and confectionery, which reached Dh1bn in 2008, and animal and vegetable fats and oils, which reached Dh242m in 2008, according to Dubai World statistics provided by the EDC. The biggest destination for Dubai's food exports is the GCC, followed by Africa and Asian countries, said Mr Mahate. Most of the emirate's sugar is sent to Pakistan, while much of the confectionery is exported to the GCC and Asia, he said.

The top food exporters in Dubai include Al Khaleej Sugar, the biggest single refiner of sugar in the world, and IFFCO, the subsidiaries of which include Tiffany chocolates and Al Noor Oils, Mr Mahate added. In the UAE, total food spending reached $6.78bn last year, up about 3 per cent from 2008, said Shonil Chande, the food and drink analyst at the UK-based research company Business Monitor International (BMI). That would be a shift from the roughly 9 per cent growth in 2007 and BMI predicts that food spending again will grow at a modest 2.6 per cent this year.

"That's not much better than it was last year, so that's an indication that it is still challenging compared to what it was before 2009," Mr Chande said yesterday on the sidelines of the Gulfood Conference. "When a downturn takes place, people start spending on cheaper goods." The fluctuating prices in commodities will also put pressure on UAE food producers, he said. "Import costs will likely be higher this year than last year and prices in soft [commodities] and grains are crucial to the food and drink industry."

The Middle East continues to be an attractive market for food producers as Gulfood yesterday had a record 3,500 exhibitors from 185 countries, up 20 per cent from last year. [e-mail]