Business | Markets
Why food prices have not come down in UAE
There are huge differences between shelf prices and import costs of foodstuffs, according to the Federal Customs Authority (FCA), and a top official described the situation as "unjustifiable".
- By Amal Ibrahim, Special to Gulf News
- Published: 00:02 May 26, 2008
Abu Dhabi: There are huge differences between shelf prices and import costs of foodstuffs, according to the Federal Customs Authority (FCA), and a top official described the situation as "unjustifiable".
Most foodstuffs are exempt from customs duties, and tariffs on other imports do not exceed five per cent, according to the unified system applied by all GCC states.
"Nevertheless, prices of food items on the shelves are much higher compared to import costs, as well as to the prevailing prices in other GCC countries such as Saudi Arabia, Kuwait and Bahrain," said Saeed Bin Khalifa Al Merri, Federal Customs Authority deputy director.
He called the price increases in the UAE "unjustifiable" and wondered why merchants are reluctant to reduce prices of dollar-based imports in view of the dollar's steady depreciation.
"What is needed at this stage is a comprehensive assessment to combat the continuous increase in prices, including a comparative study of import and selling prices, as well as shelf prices relative to those of other GCC countries, where conditions resemble those in the UAE," he added.
Al Merri proposed that a committee be established by the Gulf's general secretariat to study the six markets.
The Ministry of Economy has reached agreements with some retailers to hold prices of certain essential items at 2007 levels, and urged cooperative societies and other major retailers to import directly, thus eliminating middlemen's fees.
It has also cancelled the import agencies for some basic items.
Although some retailers import directly, the majority of importers rely on the same suppliers.
New proposals would allow foreign suppliers to directly access the UAE market by opening outlets here. This would reduce retail prices, according to a source at the ministry.
Meanwhile, the government insists it will not provide subsidies and instead allow free market principles to operate. It aims only to accumulate strategic food reserves.
"The government does not have any plans to subsidise food or to import it directly as a quick fix for the problem, yet we encourage cooperatives to break food monopolies by seeking new markets," said Mohammad Abdul Aziz Al Shehhi, the undersecretary at the ministry.
- Amal Ibrahim is a UAE-based journalist.
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