Officials and investors suggested implementing 10 recommendations to support the growth of the capabilities of the local dairy products industry, and to face its challenges, especially with regard to high market competitiveness and increased production costs, noting that the market share of these products in the state’s markets is estimated at about 60%.
They pointed out, during the “Emirates Today” Ramadan Council, which was recently held remotely, under the title “The future of the dairy products industry in the Emirates”, in the presence of the Undersecretary of the Ministry of Energy and Industry, Dr. Matar Al Niyadi, and the assistant undersecretary for the commercial processing sector at the Ministry of Economy, Abdullah Al Shamsi, and he conducted its session The editor-in-chief of "Emirates Today", Sami Al-Riyami, pointed out that the recommendations that include the most prominent: diversification and management of production resources, consideration of granting priority to local purchases, and the use of renewable energy and modern technologies, will support companies taking advantage of available market opportunities with the growth of consumer demand.
In turn, Al-Rawabi Dairy Company reported that it recently launched an initiative to develop the capacities of about 100 small farms in Abu Dhabi and raise their daily production.
Industry sector
In detail, Undersecretary of the Ministry of Energy and Industry, Dr. Matar Al-Niyadi said, “The industry sector occupies a great position in the state for several reasons, most notably the sector’s contribution to diversifying sources of national income, supporting attracting foreign investment, enhancing multiple opportunities for work, and providing greater products and resources.”
He added that «the sectors of food and medical supplies are receiving a lot of attention that increased in particular after the emerging crisis of the Corona virus, which was recently demonstrated by the government mandating the Ministry of Energy and Industry to form working teams at the state level to oversee the increase in the capacity of producing medical supplies».
Al-Neyadi explained that «the dairy products and their derivatives industry is an important food industry, which has a long history in the country, as the first milk and its derivatives factory was opened at (Al Ain Dairy Farm) in 1981, followed approximately 1990 by the opening of the (Al Rawabi Cows Farm). Which currently has about 17 thousand heads of cattle herd ».
He added that «the local dairy companies have several opportunities to support their growth in greater proportions, especially with the availability of quality ingredients and the advantages of geographical proximity to production plants and the speed of supply, which gives them the advantage given the characteristics of milk products that are more fresh whenever the source of production is close.
He explained that «it is also important for companies working in the milk industry, to work on developing innovative solutions to reduce the operating cost, such as: the expansion of the use of renewable energy, in addition to the importance of the transformation of innovative technical systems, diversification of products and revenues, while managing resources in a manner that supports profit margins and reduces Of the production cost, ”pointing to the" dependence of local companies on long-term contracts to provide feed stocks and veterinary medicines, which contributes to the ability of factories to continue production. "
Al-Neyadi pointed out that "the local dairy factories possess great production capabilities, but their market share is less than their production capacity with market competition, and we depend a lot on the consumer in giving priority to buying local products."
Great opportunities
In turn, the Assistant Undersecretary for the Commercial Remedies Sector at the Ministry of Economy, Abdullah Al Shamsi, said that "the dairy products industry in the country is an important sector that has a growing consumer demand", noting that "according to recent data, the value of dairy products imports increased during the first quarter of this year To one billion and 800 million dirhams, instead of imports worth one billion and 600 million dirhams during the first quarter of last year, which indicates the extent of market opportunities available in the sector ».
He added that «the market is facing the challenges of increasing competition severity due to the policies of open markets», pointing out that «there have been efforts for some time to stimulate the issuance of the Gulf competition law, which will have positive effects in the sector».
Market shares
For his part, the dairy industry expert, Abdullah Al Darmaki, said that “the market shares of local dairy products in the country are estimated at 60%, with imported products obtaining the rest of the shares due to the intensity of competition in the markets”, pointing out that «the strengths of the industry Local, whether there is an advanced infrastructure, factories with advanced technology, and farms that include a large number of dairy cows, support the growth of market shares within close periods to reach about 70%, with the possibility of a gradual growth in those shares in the future ».
He added that «one of the most prominent challenges of the sector is the severity of competitiveness, and the limited profit margin in cases of change and the high cost of production, especially from feed, and consequently the companies’ departments should organize and manage their resources to maintain profitability and competitiveness.
Dairy products
In turn, Dr. Al-Tijani, CEO of Al-Rawabi for Dairy and Juice, said that “the local dairy products sector has several advanced capabilities, which may not be present in a number of European companies, for example, the company uses artificial intelligence and robotics technologies in Factories, with the establishment of a biogas project from farm waste, pointing out that “local products face the challenges of high competition in the market, with higher production costs compared to several external products, which compete locally, and have lower price constituents for electricity, water and feed.”
He added that «among the challenges also, that the production capacity is lower compared to some countries due to the characteristics of climate humidity», calling for the need for companies to join hands, coordinate, exchange experiences and support partnerships with small farms.
He explained that his company recently presented a model for an initiative that includes developing the capabilities of about 100 small farms in Abu Dhabi, raising its daily production from about 10 liters per day to more than 25 liters, and providing it with modern technical systems that contribute to the growth of its business.
Small farms
In the same context, the expert and investor, Faisal Al-Shammari said, "The development of the dairy industry requires greater utilization of small farms, as Abu Dhabi alone includes about 36 thousand public farms, a large number of which can be directed to the industry," pointing out that "dairy industry on farms Facing the challenges of high production costs and the difficulty of transporting large factories, this necessitates the necessity of supporting partnerships with small farms and facilitating granting them agricultural licenses instead of (commercial) to reduce the electricity and water tariffs in them.
He added, "It is also important to prioritize local dairy products in supplying to government establishments, similar to the products of small projects, and to expand the use of renewable energy and discuss the classification of production factories and farms as belonging to food security, which allows them to be given a low electricity tariff."
The investor and expert, Mubarak Al Shamsi, pointed out that "supporting the growth of the dairy industry requires incentives such as the flexibility to give feed support cards to farms, and the need to take advantage of modern technologies and innovations in production."
The most important lesson
Emirates Today's editor-in-chief, Sami Al-Riyami, said that, “After the crisis of the Corona virus (or Covid 19), the issue of food security is no longer a luxury or an option, but rather it has become a mandatory course, and this may be the most important and first lesson of the spread crisis ( Corona, which is what made the wise leadership direct government agencies and ministries to work out a national strategy (after the crisis), one of its most important pillars will be food security.
He added that the "Corona" crisis will accelerate the plans to boost the local dairy industry, pointing out that "the proposal to classify dairy products projects as a food security project is one of the proposals that support the sector, which allows it to obtain a low tariff for electricity and water."
The 10 recommendations
1- Giving priority to government purchases of local products.
2- Classification of local product projects as “food security” to give them a low electricity tariff.
3- Increasing coordination and exchanging experiences between local companies.
4- Expanding product diversification and revenues.
5- Increasing the trend of renewable energy to reduce production costs.
6- The shift to artificial intelligence systems and technical innovations in production.
7- Flexibility in granting feed support cards to small farms.
8- Benefiting from the farms by converting them for productive purposes.
9- Supporting the partnership between small farms and large manufacturing companies.
10- Facilitating the granting of small projects to agricultural licenses instead of commercial ones.
1.8 billion dirhams the value of imports of dairy products during the first quarter of this year.