UAE’s F&B manufacturers need space and flexibility to grow: Saleh Lootah

The UAE has set an ambitious roadmap to promote national food security, underpinned by a focus on strengthening the F&B manufacturing ecosystem. With a strategic approach to generate over Dh22 billion of economic returns from the sector, the nation also aims to be in the Top 10 in the Global Food Security Index ranking.

The F&B ecosystem is a strong contributor to the nation not only in terms of its share in the GDP, but also in supporting the creation of jobs and boosting the SME sector - the backbone of the economy. It is in this context that the Food Forum 2021 being held at the Dubai Exhibition Centre at Expo 2020 Dubai on October 19 and 20 gains significance.

The forum not only highlights evolving trends but also the challenges and opportunities, while putting the spotlight on three core themes – sustainability, innovation, and digitalisation – that will define the future of the F&B manufacturing ecosystem. By building a technology-enabled food supply chain and leveraging the advances in digital, the industry can achieve transformational growth and contribute even more value to the economy and secure national food security.

In dire need of tech-led advances

Innovation and new product development is a key focus area to ensure that food exports from the UAE are competitive globally. It is essential to build capacity within the sector in terms of people, resources and knowledge along with the ability to try out new things to keep the sector on the path of sustained growth.

However, there are challenges that the industry must address without delay. One is the rising input cost of food manufacturing. According to estimates, raw material prices have increased by 40-50 per cent while freight and logistics charges have gone up by 175-200 per cent.

Price inflation across the board

Packaging costs have spiked by an average 45 per cent and the cost of labour by about 30 per cent. These are not going to reduce in the foreseeable future, which means, the industry needs urgent cost rationalisation support, without which the UAE manufacturers could see their products becoming less competitive. This can, in the long run, impact their market share.

How can we address these pressing challenges? With many manufacturers, especially in the small and medium enterprises sector, facing liquidity challenges due to the rising cost of raw materials, incentives to further digitalise their processes are important. By embracing digital technology, they can help achieve higher cost efficiencies and enhance their productivity levels.

This will further need support from the banking and finance sector too, as digitalisation is capital-intensive and easy financing is important for SMEs to be up-to-speed and future-ready.

Cost control

Specific to F&B manufacturing, other players tend to pass their cost to the manufacturers, which in turn impact long-term viability of operations. While food manufacturers operate in a regulated price environment, retailers have greater flexibility in pricing, with the result that even discounts and marketing costs are passed on to the manufacturers.

This is unhealthy in the long-term and unhealthy profiteering by retailers will need to be evaluated.

Another area that needs support is in ensuring that foreign products that enter the market conform to the same quality standards that local F&B manufacturers deliver. In the absence of this, foreign manufacturers benefit from a price advantage that too is not tenable for the industry.

Innovation and new product development is another focus area to ensure that food exports from the UAE are competitive. It is essential to build capacity within the sector in terms of people, resources and knowledge, along with the ability to try out new things to keep the sector on the path of sustained growth…