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Dubai: UAE-based shoppers will likely see a further drop in their food bills through a combination of dips in shipping costs and the strength of the dollar-dirham peg. The subsequent decline in foodstuff – especially on commodities like rice, wheat, etc. – available at your nearest supermarket or grocery store could be in the range of 15-20 per cent.
But these drops will depend a lot on where the products are coming from. Food imports from the Subcontinent and the Far East will climb down, but processed food from Europe could yet see a spike by December/January.
The price of processed foods and confectionary from Europe and Turkey remains high and expected to go further up due to the ongoing energy crisis in Europe. “There has already been a 20 per cent increase in prices,” said Lal Arakulath, CEO at Kreol Group. (That could mean UAE consumers will have to spend more on chocolates and any other sweet indulgences they might be planning on by Christmas…)
The higher cost of gas and electricity paid by European farmers is gradually being reflected in commodities such as cocoa and other key imports from the EU. “We expect it to go further in 2023 unless the EU provides farm subsidies,” said Arakulath.
Gulfood 2022 opens its doors
The latest in the Gulfood series is opening Tuesday (November 8) in Dubai, and with around 1,600 exhibitors from over 60 countries participating. It will also be one of the biggest trade events in Dubai, as the region’s food and allied sectors line up for what could be a year of rapid growth in 2023.
Shipping costs drop a relief
But UAE food importers looking to the East can only sight a price relief, more so after the container rate spike in 2020-21 and more recently after staples such as wheat and corn prices soared after the launch of the Russia-Ukraine conflict.
Due to a shortage of containers worldwide, freight rates had shot up to $1,150 a TEU, causing severe disruption to food supplies.
Freight rates have come back to $180 from $475 per 20-foot container, reducing transportation costs. Fuel prices have also stabilised.
– Dhananjay Datar, Chairman and Managing Director of Al Adil Group
“Moreover, the Indian rupee is also depreciating against the dollar. These factors are causing the price of imported food from major hubs to decrease.”
Datar expects food import prices to decrease further as freight costs could fall further, and more suppliers enter the market.
To avoid supply chain disruptions, Lulu Group launched sourcing offices in the US, UK, Turkey, and other countries. This ensured uninterrupted supply, avoided the hassle of dealing with middlemen, and, most importantly, kept prices low and competitive at the UAE stores
– V. Nandakumar, CCO at LuLu Group
Continuing safe supplies
Moreover, the Black Sea Initiative – a safe corridor for shipping agreement signed by Ukraine and Russia – has also alleviated the scarcity of products such as sunflower oil, maize, barley and wheat. (Up until October 28, more than 9.3 million tonnes of food had been exported through the Black Sea.)
The analysis from UAE retailers lines up with the UN Food and Agriculture Organisation’s (FAO) monthly price index, which edged slightly lower in October, the seventh consecutive monthly fall and some 14.9 per cent down from its all-time high recorded in March/April.
Nidal Haddad, founder and CEO of Al Bayader International, said improving domestic manufacturing capabilities was also helping the industry.
“This has helped reduce dependence on imports, in line with the nation’s focus on promoting national food security. F&B providers can source raw materials, as well as packaging materials locally that help make the supply chain more cost-competitive, said Haddad.
United Arab Emirates Dirham Exchange Rate
