Qatar, one of the Middle East countries, is unable to be self-sufficient in its food production. The country’s food scarcity is wide-open and current Fresh Chicken scarcity exposed the condition (demand-supply gap) of the country.
While the neighboring GCC Countries have overhauled their agriculture production and become net exporters of food products, Qatar is still lagging behind and depending on other nations for its local food supplies. This puts Qatar in a precarious position, with its own domestic demand growing at breakneck speed and experiences of shortages of poultry products several times in a year.
Demand for fresh chicken and eggs surges during a few months period, especially during the holy month of Ramadan and the tourist season.
Our primary sources indicates that shortage of local supplies is not only limited to fresh chicken and local eggs but several others as well. The government is encouraging the establishment of new poultry farms and the expansion of existing ones in order to attain the maximum possible meat production self-sufficiency. However, for that to be realized, Qatar is entirely depending on imported equipment, labour and feed.
Growing population is another factor responsible for increased consumption. Added to that is the affluent living conditions of the population that has led to shift in consumption patterns from a carbohydrate-based to a protein-based diet, thus increasing the demand for meat and meat products.
Urbanization and growing popularity of retail format together are enhancing the consumption of processed food, milk and meat. Though slump in oil prices in 2014, have given a shock, but only for a short period of time. The rise in crude oil prices has led to increased economic growth in the country.
Moreover, the GCC economies have been far resilient to the crude oil fluctuations. With oil prices picking up, Qatar economy is back on track. Early in Feb 2015, Qatar Government reviewed all of its projects and associated spending. After careful consideration, the Government has decided to postpone most of its projects including ‘IPO of Land’ for Poultry production. Later this month, because of increase in oil prices, the project was back on track and looking for heavy investments in the industry.
By far, no company have shown interest in the project as of date; the bidding is expected to start by year end 2015. As soon as the government makes official announcement, we will see a lot of companies herding as a potential investor in this market.
Qatar government is committed to solving the food security problem. And, in order to secure high quality, sustainable and locally produced food, it is putting in place an infrastructure that supports agriculture and local meat production.
Recently, Qatar has come up with an innovative plan to cut its meat demand-supply gap and reduce its dependency on other nations. An IPO, Initial Public Offering (IPO), is not the Stock Market IPO but rather spirits with the same meaning. Government is planning to offer 5.7 million square meter of land for poultry production through this offer.
Private players all around the world are allowed to participate in this auction, through which Qatar is dreaming of increasing its Fresh Chicken production by 45 million kilograms (99 million pounds) or 45 thousand MT per year by 2018.
Benefits to Investors:
Qatar, Bahrain and Oman are the countries which normally provide free animal feed, water, fertilizers, seeds and land to farmers and existing local companies involved in Agriculture and Meat Sector. To make the IPO appealing, Qatar Government is planning to give animal feed at a subsidized rate for the companies investing their money in this IPO.
Also, the Qatar government, keen in developing related infrastructure, has made a road-map of the region to build roads, sewage, water supply lines, transport facilities, electric lines, etc. Government have planned to spend the whole money they receive from auctions in developing this project.
Implications on Demand-Supply Gap:
Qatar produced 16.8 thousand MT of Chicken in 2013 and imported 140.55 thousand MT in 2013. With the help of this program, Qatar is trying to bring down its demand-supply gap of chicken meat by 11.78% by 2018. Total production of Chicken is expected to increase from 16.8 thousand MT in 2013 to 61.8 thousand MT per year by the end of 2018.
Consumption will grow with a CAGR of 4% from 2013 to 2018, reaching a mammoth of 177 thousand MT. Demand-Supply Gap is expected to decrease to 115 thousand MT per year in 2018 from 128.75 thousand MT in 2013. Currently Qatar is dependent on imports of Meat which is more than 5 times of its local production.
Through this IPO, Qatar is looking forward to produce 7.5 tons of chicken eggs every year for local consumption. Current egg production is low as compared to the local demand. Qatar produced 4.5 106 MT of eggs in 2013 and imported 23 106 MT during the same year.
Major countries exporting eggs to Qatar are from the Middle East as the quality and freshness of the eggs imported matters to the consumers. They prefer buying locally produced eggs as the first option, as all poultry products imported are labeled by country of origin.
At times throughout the year, Qatar supermarket have faced considerable problems sourcing eggs. The government had banned poultry products from several countries due to reports of animal infections (mainly the bird flu) over the past few years. In 2011 and for most part of 2012, poultry products from Saudi Arabia and India were banned as there was a high risk of bird flu in these countries. The demand was met by importing from the United States and Brazil.
OMAN Dream Project:
Oman is also planning to come up with same kind of project and will seek investments of US$ 100 million (OMR 259 million) in poultry market. This project will be promoted by state-owned Oman Food Investment Holding Company.
“Oman Food Investment Holding” is being established by the government, to invest in food security projects, which will focus on import substitution and rural development. The Poultry project is an initiative to achieve self-sufficiency in Meat production, which is being met by imports till now.
Oman Government have shortlisted 2-3 locations for the project and will began the auction after the final decision of the site. This is is expected to happen next month. Private companies are allowed to participate in this auction which will help the investors to create new business in the region as well as reduce Oman’s dependency on imports.
Shortage of Meat products creates an opportunity of Investors to look in to this sector in Qatar and Oman, where a single meat production company can create a difference. GCC countries are thriving for investors and bring advanced technology for production of eggs and animals for the local consumption.