March 21, 2012

With the easing of trade regulations and rising demand for dairy products in the Middle East, the region presents a real opportunity for the Irish dairy sector, according to James O'Donnell, the Emerging Markets Director of Bord Bia - Irish Food Board.

Dairy is a traditional part of the Middle Eastern diet with consumption of around 1.2 million tonnes in 2011. However, due to its naturally dry climate, the Middle East is a milk-deficient region with the majority of the dairy consumption consisting of imported products. Over 70% of dairy products consumed in Saudi Arabia are imported. The UAE stands at over 80%.

Due to location and free trade agreements, the EU is a leading supplier of dairy products into the Middle East. Total Irish food and drink exports to the region in 2011 were valued at EUR250 million (US$332 million). Saudi Arabia is the largest regional market for Irish dairy exports accounting for EUR70 million (US$93 million); milk powders account for 80% of this figure. The UAE is also a prominent market and accounted for EUR20m (US$27 million) worth of Irish dairy exports in 2011.

Food prices have been rising in the Middle East in recent years due in part to monopolistic practices by the import and distribution sectors. The UAE is taking action against this by liberalising trade in 12 areas, including dairy.

It's hoped that this will stabilise food prices and strengthen the competitiveness of the UAE economy. Food consumption in UAE is projected to show further good growth between now and 2015. The loosening of regulation coupled with this projected growth represents a great opportunity for Irish dairy exporters not only in the area of ingredients but also consumer goods as a large Irish expat community reside in the area.