India Emerges as a Leading Wheat Supplier to the UAE
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The Ukraine conflict and other factors contributing to high commodity prices and food security may put downward pressure on the United Arab Emirates (UAE) Wheat consumption in Marketing Year 2021/22. This mainly includes all Wheat-based commodities and animal products due to price increases in corn and fertilizers. However, the UAE’s overall economic recovery will boost consumption and imports of Wheat and feed in Marketing Year 2022/23, according to the forecast of the US Department of Agriculture (USDA).
The USDA forecasts the UAE all Wheat imports in MY 2022/23 to increase by 6 percent or 100,000 million tons to reach 1.8 million tons. Rice Imports are forecast to increase by 11 percent or 100,000 million tons to reach 1.0 million tons. More than 50 percent of UAE’s Wheat imports are from Russia, followed by Canada, Ukraine, and Australia. The Ukraine conflict may provide opportunities for other Wheat supplying countries such as the US.
As per AgFlow data, in volume, India was the largest import market of the UAE’s Wheat with 403,600 tons in 2021-2022, followed by Australia (307,000 tons), Romania (273,600 tons), Russia (131,900 tons), Canada (70,000 tons), and the US (44,000 tons).
From 2020-21, India also emerged as a key supplier, exporting 1.88 lakh tons to the Gulf federation. Exports rose further in 2021-22, before the export ban decision that came on top of the Russia-Ukraine war, which has disrupted shipments from the Black Sea ports.
The UAE-India Wheat Trade
The UAE Government ordered a suspension of exports and re-exports of Wheat and Wheat flour originating from India for a period of four months in May 2022. The ban applied to all Wheat varieties, namely, hard, ordinary, soft Wheat, and Wheat flour. It was basically an assurance that whatever it imports will be used only for domestic consumption. This will, in turn, allow India to provide an exception to its Wheat export ban and ship out some quantities to the Gulf federation.
India doesn’t want its Wheat exported to Dubai or Abu Dhabi to go out to other countries, whether as Wheat or flour. It would wish that Wheat be consumed locally, including the migrant Indian workers in UAE. According to sources, the UAE population, including expats, was 10 million in 2021. The total expat population in the UAE has now come to 8.84 million, which constitutes approximately 89% of the population.
India exported 4.71 lakh tons of Wheat valued at $136.53 million to the UAE in 2021-22. That constituted about 6.5 percent of its total 72.35 lakh tons shipments of the cereal worth $2,120.27 million in the last fiscal.
While the quantities exported may not be that big for India, they aren’t small for the UAE. The USDA estimated UAE’s annual Wheat consumption, which is entirely imported, at 15 lakh tons. The Wheat-milling capacity is higher, at 16.7 lakh tons, which is driven both by local consumption and re-export of flour sold to Saudi Arabia, Bahrain, Jordan, Ethiopia, Taiwan, and the Philippines. Such exports amount to about 1 lakh tons annually.
The UAE Ministry of Economy published the full text of the Comprehensive Economic Partnership Agreement (CEPA) signed between the Government of the United Arab Emirates and the Government of the Republic of India. The landmark agreement was signed on 18 February 2022 and officially entered into force on 1 May 2022. It seeks to cut all tariffs on each other’s goods and aims to increase its annual trade to USD 100 billion within five years.
The preparation of this article included public information such as https://indianexpress.com/
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