Farmers' protests is starting to slowly have an impact on grain costs, trades say. Limited container availability is also adding to the concerns. Image Credit: AFP

Dubai: Shoppers in the UAE are finding rice and food grain purchases turning pricier, especially on imports from India. The ongoing farmers’ protests in India – against new laws covering the agriculture sector – has been the root cause for the price rise, traders say.

“What's happening there is going to drive the price up - because of global demand and there's no fulfillment,” said Alrik Rodrigues, Director of Dubai-based Golden Grains Foodstuff Trading.

Food traders here have begun bulk-buying commodities as hedge against future supply risks. However, this has come at a cost. “Our buying costs have increased and, unfortunately, we have to push higher prices to the customer.

“We are literally left with no choice. Suppliers will absorb the prices as much as possible - but in some cases it is completely out of control.”

As it is, stricter lockdowns in Europe and currency fluctuations are weighing on traders’ bottom-line. “The markets will be rocky until a vaccine is really available on a mass scale,” said Rodrigues.

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Not hit exports

The farmer protests in India will not have an immediate impact on exports from the country, according to market sources. “Even if farmers have gone to protest in Delhi, they still have families and people who work back at the farms,” said Gautam Aggarwal, CEO of Gautam General Trading.

“There are a lot of products in the supply chain - If you talk about rice, a lot of paddy is already there with millers. Even if it slowed down a bit, it does not really cause any issues.”

Prices unchanged until now

Interestingly, global logistical issues brought on by COVID-19 didn’t push food prices up last year. “The consumption pattern slowed down 20 per cent throughout the world, because we are not having parties at home and we are not going out as much as we did before COVID-19,” said Aggarwal.

This held true in the UAE as well, where prices remained more or less the same. But now, the protects in India are inflating some key commodities, particularly rice.

Payment snafus

The pandemic had been particularly devastating for UAE’s restaurants, and the biggest clients for food traders.  “For us as distributor, the payment cycle has slowed down - it's getting difficult for them to pay us on time,” said Aggarwal. Earlier, payments used to be sourced within 90 days, but now that’s shot up to 120 days.

The impact of the virus was fully felt by UAE’s food trade as early as March. The markets “really tanked” and players with limited cashflow were immediately put out of business, said Rodrigues. This was followed by a sudden spike in demand in July.

“Every supplier in Dubai is guaranteed to have stock issues right now,” said Rodrigues. “We benefited because there was a massive spike in demand and a simultaneous lack of credit, which means everyone was forced to pay in cash - credit was one of the viruses in our industry.”

However, the bigger issue in the market right now is to do with containers. “The transport of goods and the related logistics are slower due to COVID-19; because of that, containers are short throughout the world,” said Aggarwal.

“Another operational headache that we have is COVID - If one of our people gets COVID-19 at the warehouses in India or UAE, you have to send them for tests,” which causes further delays.