PAKISTAN NEEDS TO CASH IN ON THE GROWING FOOD CONSUMPTION

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

Mar 12 - 18, 20
12

Pakistan has a tremendous potential in agriculture and food-processing sectors-if explored appropriately-that can cash in on the growing food consumption in the United Arab Emirates (UAE) and gulf cooperation council (GCC) as a whole.

At present, Pakistan exports around one billion dollars of food products to GCC almost half of which ($450 million) are destined to UAE. Compared with the total annual food import bill of the region, this is negligible. Alone food import bill of UAE stood at somewhere around $3.6 billion in 2010. According to a research, the bill will scale up by 133 per cent to $8.4 billion by 2020 given the increasing food consumption in the emirates, which is projected to increase 5.4 per cent from 7.8 million tonnes in 2011 to 9.7 million tonnes in 2015. UAE meets three fourth (75 per cent) of its local demand of poultry and red meats through importation. Notably, its agriculture sector accounts for paltry 0.9 per cent of the country's gross domestic product (GDP).

Similarly, food imports of GCC amounted $26 billion in 2010 and are expected to rise 105 per cent to $53 billion by 2020. The food consumption in the region-comprising of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman-is forecasted to grow at a rate of 4.6 per cent annually during 2011-15 to reach 51.5 million tonnes.

"With its population growing at three times the global average, the GCC region is increasingly depending on imports to meet food requirements," Mohamed Jalal Al Reyaysa, chairman of the higher organising committee for SIAL Middle East and the spokesperson of Abu Dhabi Food Control Authority, told Khaleej Times.

"Adding to the challenge is the fact that GCC countries are some of the most water scarce in the world, with only 1.4 per cent of land suitable for agriculture. Food security therefore is of prime concern and major challenge for the regional governments," he said.

The SIAL Middle East 2011, a mega food industry's exhibition held on 21-23 November 2011 in Abu Dhabi, received good response from nearly 10,000 visitors from 71 countries.

Exhibitors from Pakistan also participated in the event and seven of them at the Pakistan pavilion received more than $272,000 orders and 100 strong leads, according to Bilal Khan Pasha, Commercial Counsellor at the Pakistan Embassy in UAE. The success of the exhibition can be gauged from the fact that many participants were said to have booked enclosures for the third edition to be held end of this year.

While increasing importation is posing a serious challenge to the Middle Eastern countries, this presents huge opportunities to companies belonging to the food and agriculture sector from around the world including food processors and suppliers, restaurateurs, etc.

UAE government has acquired farmlands in Pakistan to start mechanized farming to cut its food imports. Due to unavailability of required acreage at one place, some investors backed out from the projects of corporate farming, it was learnt.

Indian and Chinese cuisines are making fast inroads into the trendy food market of Dubai-one of the most bustling emirates in the UAE dwelled and visited by people with diversified gastronomic preferences from around the world.

Restaurants such as Royal Kebab featuring multiple cuisines and specialized eateries like Golden Dragon Restaurant and Zheng Hi are popular amongst foodies. UAE boasts of around $3.5 billion food market. Notably, Dubai is the springboard of most of the businesses in the emirates.

The cosmopolitan city is unique for its population concentration more than 80 per cent of which is formed by immigrants. According to an estimate, most of them are from India, which has a surprisingly large multiethnic population reflecting in its assortments of cuisines. Chinese or people from south East Asia have visible presence in the region.

Eateries feature a variety of Indian and Chinese culinary favourites. Interestingly, not only Indians but people of different origin also love to take juicy Mughlai tikka coming straight from imperial Mughal kitchen or mouth watering Bihari Kebab in the chic contemporary peaceful dining atmosphere. Similarly, interest in ma po tofu, chicken Manchurian, sweet and sour chicken, etc. is also picking up. According to a study, residents in Dubai like innovative foods and experimental dining and therefore exotic gastronomic treats are hot selling items.

Price is becoming an important consideration for buyers in the city. Therefore, retail formats e.g. daily deals are gaining dramatic reputation. Within nearly two years, numbers of group buying websites have increased to 20. Dubai daily deals provide buyers with good discounts on a wide range of meals, outdoor and recreational activities, etc.

Overweight and obesity are the serious issues facing the food-loving persons increasing the significance of safe and healthy intakes. According to the screening results by Health Authority Abu Dhabi, 70 per cent of UAE's residents are obese and overweight that lead to diabetes and cardiac problems.

On the contrary, it is interesting to note, findings of another study revealed that people would consider themselves physically normal and fit. Philips Healthcare polled 750 people in the emirates and three-fourth of them said they were fit.

Globally, daily deal industry is exploding. In U.S., which is the motherland of online group buying, the industry's revenue peaked at two billion dollars with numbers of websites that deal in dealing out discounts on goods and services expected to grow 175 per cent per annum to 632 over the five years to 2012, according to IBIS World's recent report on daily deal industry in U.S.

Capitalizing on thrifty shopping behaviour of shoppers, the industry emerged from the womb of economic recession that ate into disposable income. Eagerness of retailers to increase customer traffic also led to the fast development of group buying websites.

Dubai that has a major share in non-oil international trade transactions in UAE badly suffered from debt crisis in 2009 that eroded 60 per cent value of its economy. Consumer buying power has not perhaps contracted to the extent that raises alarm bell. Nonetheless, price competition is intensifying day by day, which should be considered at the time of making of marketing strategies and price determination by new ventures from Pakistan.