If the figures are anything to go by, the UAE poultry sector possibly has a lot to crow about in coming years. Puns aside, figures released by global market analysis and research portal Statista confirm revenues for the UAE eggs and dairy sector projected to reach $25.43m in 2023.
Revenue is expected to show a CAGR of 25 per cent in the period 2023-2027, resulting in a projected market volume of $62.09 million by 2027. And while reports by the global press last year mentioned sustained increase in demand for poultry in the UAE but local production being hindered due to increase in feed grain prices and the set price ceiling on fresh chicken in retail stores, local producers would disagree, confirming production in fact to being on the rise.
A healthy push towards organic, locally produced fare by UAE consumers is also helping local poultry brands look at vertical integration as a means to sustain and grow production.
Hassan Safi, CEO, Al Ain Farms, says, “Vertical integration is expected to aid in the expansion of the sector because it allows us to maintain a high-quality production chain with fewer variables impacting processes.” Established in 1979, Al Ain Farms is among the largest local producers of chicken and eggs in the UAE, providing 9 million broilers and around 160 million eggs annually.
Elaborating on the brand’s vertical integration strategy, Safi says, “We are now securing hatching eggs from our own breeders, producing feed from our own feed mill, increasing hatchery capacities, and contracting small production farms in order to further contribute to food security and self-sufficiency of the UAE.” Another UAE poultry brand equally buoyant about the benefits of vertically integrating production is the Emirates National Food Company (ENF).
“ENF is very advanced in the field of vertical integration,” says Jeanette Kristensen, General Manager, ENF Company, adding, “We have basically our own parent stock, which produces our own hatching eggs. We have our own broiler farm, slaughterhouse, processing plant and feed mill, plus our own distribution network. Our breeder project in Liwa is testament to this. The Liwa farm is now expanding both this year and expansion phase 3 is set for 2024 and 2025, which will make Salwa farm one of the biggest breeder farms in the UAE.
Even as UAE poultry producers ensure supply continues unabated to meet the rise in demand, it is not that they are not cognizant of sectoral challenges. A spokesperson for Al Jazira Poultry Farms, one of the largest poultry producers in the UAE, highlights increasing raw material costs and the strong import competition for both fresh and frozen chicken products as two key factors here.
“The global geopolitical situation and effects of unpredictable weather changes have made it impossible to procure grains for poultry fodder at affordable prices,”says the spokesperson in an email interview with GN Focus. “This has steeply pushed up cost of production to unsustainable levels. Only prudent procurement management in absence of increasing selling prices of products is helping the sector to a small extent to reduce losses.”
The fourth dimension
The recent bird flu outbreak in the US and warnings of the disease rebounding in the EU this spring as reported by Bloomberg earlier last week, are also cause for concern. Dr Suheel Ahmed, CEO — Holding, Arabian Farms, says, “Man, machine and methods are generally the three dimensions of manufacturing, but in our case livestock is the fourth dimension, which requires 24/7/365 tender loving care. Managing emerging diseases is among the challenges we anticipate in the near future.” High input costs and price controls have also opened the UAE poultry market to significant competition, even as demand for chicken is expected to increase.
“Actually, price controls have offered unintended favour to cheaper, non-fresh imported poultry products,” says the AJPF spokesperson. “The imported products, which earlier used to be sold at half the price of the local fresh products now sell at equal price, hence giving unintentional windfall gain to them. This in fact has taken away the advantage to end users of low-priced imported products.
“At AJPF, we are sparing no efforts to have prudent procurement to keep costs low and to reduce steep loses being incurred. We have suspended all expansion and developments to conserve resources in order to sustain production. We are in close cooperation with our customers and other stakeholders to help us in this tough situation.
Obstacles or opportunity?
Kristensen, from ENF is confident that the brand’s focus on quality will continue to build customer loyalty and demand growth for its products. “For our main brand, Al Rawdah, for fresh chicken, we have always focused on quality. Yes there are many competitors in UAE, but we have always seen that our brand come up on top because we focused on the quality and we don’t compromise on anything, whether it’s feed or hatching eggs or even the slaughtering process. We are meticulous in the way we work, and I think this is what going to carry us through.”
For Dr Ahmed from Arabian Farms, fair and healthy competition is always good for business. “It keeps you on your toes and helps continual improvement. Challenges will be there, the trick is to convert them into opportunities, and at Arabian Farms we have managed the art of doing just that. We have always stayed ahead by innovating and doing things out of the box to steer clear of challenges.
For Safi from Al Ain Farms, perceived challenges have only prompted the brand to push harder for growth. “Our operational capacity has significantly increased in the last couple of years. A lot of effort has been placed in branding and communication to emphasise the fresh, natural, and healthy taste of our locally-farmed products.”
He also lays importance on raising consumer awareness on the source of their consumables. Besides building a healthy product portfolio, it also raises customer loyalty. “We see the increase in consumer trust towards the local fresh production as everyone is very keen to know where their food comes from, and we expect the trend of consuming natural and fresh, locally made chicken and eggs will boost the sector further,” says Safi.
“Besides, one of the key success factors against imported products is to continue offering a wider range of products and greater services to consumers. In 2022, we launched a range of organic and free-range eggs, and completely changed the way we do our chicken portions, making them fresh for longer, by applying a new technology that allows the food to stay fresh without any chemical preservatives.
“We will also soon be launching a value-added range in whole chicken that will make everyone’s cooking more convenient.” After all, it is customer satisfaction that lends brands wings.