http://www.projectguru.

in/publications/dairy-industry-in-uae/ Dairy Industry in UAE Article by Priya Chetty on November 27, 2011 Discuss now (0)Go to comments United Arab Emirates population in 2007 was an estimated 4.3 million with one of the worlds best per capital GDPs, at an average of USD49,500[1]. The absence of favorable production conditions generates limited output in the agricultural sector, just above a m illion tons of food crop. Major proportion of this output is occupied by dates. This limited agricultural production compels UAE to import 85-90 percent of the food requirements. Apart from the oil and gas sector, the good processing industry attracted the highest investments among all industries under the processing sector in 2005, accounting for almost half the total investments at $19 billion1. Industries such as textiles, chemicals, metals and equipments are included in this category. In the span of three year starting 2002, the number of establishments in this category went up from 225 to 3001. The value of processed food imports continues to surpass the value of raw materials nevertheless, by a significant margin. Processors depend wholly on imports for raw material requirements, which U.S. suppliers have viewed as an opportunity for export of high quality intermediate and bulk food products in the wake of stunted agricultural production. In the absence of the exact trade statistics, it becomes difficult to map the value of food ingredients imported into UAE. In the Dairy sector, the local production is concentrated on the largest segments - Milk, Yoghurt and Laban. For these products, there is minimal reliance on imports as compared to other food products. 24%[2] of the liquid milk market is contributed by imports, 13% in case of yoghurt and 11% for laban. On the other hand, exports in these segments are quite healthy. Almarais entrance in the Saudi Arabian market has boosted production in recent years m ainly because of their decision to have certain SKUs contract-packed locally rather than being imported from neighboring Saudi Arabia. Other dairy products like ghee, butter, labneh, canned concentrated milk, cream are produced to a less extent.

1. Liquid Milk The production of milk in the UAE has been almost steady at 8% since 2001, reaching 140 million liters in 2007. Rapidly expanding population at approximately 6% annually has driven the industry to the recent growth level. Domestic consumption of milk has also increased by a firm 9.7% p.a. since 2001. Increase in local milk production is: (Production figures in million liters)

Year 2001 2002 2003 2004 2005 2006 2007

Local Consumption 81.7 91.2 99.6 108.4 118.4 129.9 143.4

Imports 18.9 16.2 16.1 20.3 30.4 37.8 40.2

Exports 22.3 24.2 24.2 27.5 28.0 30.1 32.0

Local production 85.1 99.2 108.3 115.6 116.0 122.2 135.2 Source: IMES Consulting

The major local producers of liquid milk in UAE are as follows:

Manufacturer NFPC Al Ain Dairy Al Rawabi Dairy Dubai Dairy Company Marmum Dairy United Kaipara (UNIKAI) Total

% Share 33% 28% 26% 6% 5% 2% 100%

Source: IMES estimates NFPCs advantageous share of domestic production is due to the fact that Almarai has significant portions of its product contract-packed by Milko Dairy, Abur Dhabi, a subsidiary of NFPC. Without this packing contract, NFPCs position would fall down to the third place, after AL Ain and Al Rawabi. In addition to satisfying the local demand for liquid milk, these laocal producers also export milk mostly to neighboring countries of Oman, Saudi Arabia, etc. Al Rawabi, UNIKAI and NFPC are the leading exporters of milk.

2. Laban and Diluted Laban The production of Laban and Diluted Laban has reached to 78 million liters in 2007, growing at an average annual rate of 6.5%+ since 2001. Again, the increase in the population (more than 6%) and the growing popularity of UAE as a tourist destination has driven the growth. The large influx from the Indian sub continent of manual workers has also led to increased consumption

of diluted products, since laban drinks are the most popular of standard items attending to the typical labor camp packed lunch. (Figures in tons)

Year 2001 2002 2003 2004 2005 2006 2007

Local Consumption 39.3 41.1 44 48.4 53.4 58.7 63.6

Imports 10 10.5 11.5 11 10.5 10 10.6

Exports 4.3 4.3 5 5.5 5.1 5.4 5.9

Local production 45.0 47.0 50.5 54.1 55.0 54.14 58.9

Source: IMES Consulting Dubai Dairy Company is the leading producer of laban products with a 45% market share in the year 2007. United Kaipara Dairies (UNIKAI), Al Rawabi and Milco (National Food Products Company) are other main local players with a 33% cumulative market share. On the export front, however, United Kaipara Dairies (UNIKAI) and Al Rawabi are the biggest exporters to other Gulf countries, most notably to Qatar and Oman. Diluted laban accounts for 87% of UAEs market share in 2008 (up from the 83% in 2004), hence producers in the UAE do not face a threat from Saudi Dairies as they do for milk. The irony is that Saudi Dairies are fully active in manufacture of fresh laban but not so is diluted laban. This has cut down on imports of diluted Laban.

3. Yoghurt and Labneh The production of yoghurt in the UAE has increased by an average annual rate of a little more than 9.3% year on year basis since 2001. On the contrary, its production has remained more or less stagnant over these years. Local production of labneh and yoghurt is estimated to have progressed as follows: (Production in tones)

Year 2001

Local Consumption 34480

Imports 6050

Exports 5990

Local production 34740

2002 2003 2004 2005 2006 2007

37610 41250 46300 49120 54378 59887

6048 6051 6051 7210 7300 7456

6128 6481 6251 6460 6513 6634

37530 40820 46100 49870 53591 60709

Source: IMES Consulting Milco (National Food Products Company), Dubai Dairy Company, Marmum, United Kaipara Dairies (UNIKAI) and Al Ain are the most significant producers of yoghurt in the UAE. In the labneh category, Lebanese daory company and Dubai Dairy Company are the leading producers. Besides producing the products for the local markets, some of these companies are also playing a role in exports, mainly to GCC countries of Oman and Qatar, among others. In case of companies exporting yogurt, Al Rawabi and United Kaipara Dairies (UNIKAI) are reportedly the leaders.