Dubai: A decline in food prices is expected this year due to improved supplies, but global prices remain high and volatile, Sam Meer, a UK-based exporter, told Gulf News at the recent Gulf Food show.
The director of Commodities Exchange Ltd, a company that exports conventional and organic products, including peas and lentils, to various countries including the UAE, explained that there has been a decline in food prices in the last quarter of 2011.
"We saw a decline of some 5-8 per cent due to the improved supply conditions and in some cases bumper crops. This price decrease is across food commodities such as wheat, maize, and rice.
"However, due to consistent increases from 2010 to 2011, global prices still remain high. This previous increase has been attributed to various factors including extreme weather conditions, an increasing world population as well as [lack of] incentives to grow bio-fuels," he said.
He believes there are major concerns in the UAE regarding the increase in commodity prices.
He said: "We have various factors … with Europe's debt crisis, more is being invested in the UAE. The increased tensions in Syria as well as the Arab Spring have seen further rises in the cost of crude oil."
"With the trade restrictions in Iran, we are seeing more demand of re-exports from the UAE. This will add to the demand in the UAE as it already imports at least 80 per cent of its food products. All these factors are likely to see prices increasing in the UAE unless there are more controls," he said.
When asked which commodities worldwide have been affected by a price increase in the past year, he said there has been an increase of about 5 per cent in Thai rice due to floods.
"This increase has been counter balanced by Pakistan and India's [rice] price reduction. Further, despite better stock levels of maize, production is lowest since 1974.
"Again a major factor is the extreme weather conditions, affecting prices of maize and soya in South America. Wheat prices increased by 36 per cent in Belarus, after the collapse of the ruble and the triple-digit inflation rates seen in Q4. Again prices of commodities vary from country to country as wheat prices decreased by 15 per cent in South Africa and Ethiopia."