ABU DHABI // The UAE is pushing ahead with a strategic food reserve of essential items as a hedge against commodity shortages and price increases, said Sultan al Mansouri, the Minister of Economy. A full plan for the reserve will be ready this year and the reserve itself will be in place within two years, he said during a tour of the Abu Dhabi Co-operative Society store at the Abu Dhabi Mall to check food prices during the holy month of Ramadan.
"I think the process of creating the reserve, it takes time because you have to build it up," he said. "You need to build a structure. You need to find the sources of the reserve." The UAE imports 85 per cent of foodstuffs at a cost of Dh11 billion (US$2.99bn) annually. The idea of the food reserve was conceived after inflation hit 12.3 per cent last year and global prices of commodities such as rice reached 25-year highs.
At that time, the Ministry of Economy said it planned a strategic reserve of 14 essential commodities to preclude shortages and price swings. It also signed agreements with local retailers to cap the prices of certain foods at 2007 levels. But since last June, when food prices were at their peak, costs have fallen by 29 per cent, according to the Food and Agriculture Organisation's price index.
"Annual inflation is expected to reach 3.5 per cent to 4 per cent this year," Mr al Mansouri said yesterday. Food prices in the UAE have fallen between 20 and 40 per cent this year, he added, but the ministry would continue to ensure prices were not above global levels. "Our objective is as much as possible to keep the prices stable, even though there are changes in the different commodities," Mr al Mansouri said.
Andy Barnett, a professor of economics at the American University of Sharjah, said a food reserve would help stabilise food prices in the short term, at least. * additional reporting by Tom Arnold firstname.lastname@example.org