UAE food importers successfully replace wheat supplies from India - but prices need to drop
UAE importing wheat from all possible sources and keep prices in check
Dubai: UAE food commodity importers have successfully overcome the loss of Indian wheat supplies through timely sourcing arrangements with other countries, including Australia, Canada, and through ‘Black Sea routes’ from Ukraine.
This has ensured that after an initial surge in wheat prices since early March last year, following the start of the Russia-Ukraine crisis, the UAE’s food prices remained within range, although at higher levels than in recent years. Now, the chances are that imported wheat prices could drop further.
Much will depend on how smoothly negotiations to extend the agreement to keep Black Sea routes from Ukraine open progresses. (Russia’s offer is for a 60-day extension, while Ukraine wants a repeat of the 120-day arrangement. Ukraine is one of the biggest suppliers of wheat in the world and it was the start of the conflict that led to the sudden spike in food prices, and which added to the already heavy inflationary pressures worldwide.)
Wheat prices have gone by more than 40 per cent since March 2022.
If the Black Sea deal holds and food import prices do drop further, consumers in the UAE would have some relief on their spending. Plus, it would also help F&B businesses, which have often struggled to pass on the full extent of the higher food costs they are bearing onto their consumers.
With Ramadan starting next week, it has become all the more vital that retail food staple prices remain in check. That’s exactly what UAE food importers and traders are working on.
Replacing Indian wheat
The biggest breakthrough for UAE food importers was in quickly replacing Indian wheat supplies, after the country placed a ban on all such exports.
“The ban on wheat exports from India was placed on May 13, 2022 and impacted the availability and pricing of wheat-based products in countries that rely on India as a source,” said Dhananjay Datar, Managing Director of Al Adil Trading. “As a result, we had to look for alternative sources for our supplies, which lead to us importing wheat from Australia.
“It is worth noting that the ban on wheat exports from India may not be permanent and be lifted in the future, depending on the domestic supplies there and prevailing market conditions.”
Until the ban, Indian wheat accounted for a dominant share of the UAE requirements. (After the ban, India allowed supplies of wheat to continue into the UAE for a further four months as part of a special arrangement.)
We have made our supplies as diverse as possible – from wherever we feel we can get the right price and with deliveries on time
Source from ‘where possible’
Alan Smith is CEO of the Abu Dhabi headquartered F&B heavyweight Agthia. It has through the years been sourcing from India much of its wheat needs. Now, “We have made our supplies as diverse as possible – from wherever we feel we can get the right price and with deliveries on time,” said Smith. “What we have done is source from Canada (when it comes to hard wheat), some through the Black Sea routes, and also from Romania. It has meant a shifting of gears on our part, but the process has been well worth it.”
According to Smith, wheat prices have ‘started to stabilise’, but still higher than what they were prior to March 2022. “The spike started in Q2-22, so there’s still some way to go before prices can go back to those levels. Soya prices are still elevated, so one could say the food commodity price situation is a mixed bag.”
The hope is that this would change, and consumers and F&B businesses get a break.