x Abu Dhabi, UAEWednesday 24 January 2018

Farmers struggle to adapt in competitive market

While UAE farms are seen as vital to securing the food supply, many farmers say their incentives are as squeezed as their margins.

Salem Muthaib at his farm in Liwa in Abu Dhabi.
Salem Muthaib at his farm in Liwa in Abu Dhabi.

This growing season, many farmers were dismayed as their cucumbers lay rotting in the fields. Unable to get a decent price in an oversupplied market, one farmer, Salem Mutib al Muhairbi, says he would rather throw them away.

In an era of volatile global food prices, the government has increasingly looked to local farmers to help secure the country's food supply. But those farmers say there is little incentive to keep growing costly produce for very little profit.

Hreif Rashed Hreif gets around Dh3 for a 16kg carton of his tomatoes. They are then sold onwards, by traders, for Dh3 a kilo.

Mr al Muhairbi's crop barely covers the salaries of his eight workers, let alone his water and electricity bill.

A sizeable portion of low-cost vegetables are imported from surrounding countries, such as Syria, Jordan and Oman. Overall, around 1.6 million tonnes of fruits and vegetables were imported into Dubai last year.

Imported food has an important advantage over locally grown crops - year-round availability. With the UAE's hot, arid climate, crops only survive in greenhouses, which can be costly to install. Cooling the greenhouses also uses more water than is saved by not planting in open fields. But production and yield is higher, and growing seasons longer.

According to Abdullah al Amimi, a farmer in Liwa, dealers favour greenhouse growers because their produce more closely resembles the European crops preferred by consumers.

But a study released last week by the Farmer's Services Centre (FSC), a independent body charged with modernising farms in Abu Dhabi, challenged that perception. It found that 78 per cent of respondents felt local vegetables were of good quality, in terms of freshness and grading standards, and 65 per cent believed they were safe to eat, in terms of chemical and pesticide use.

But farmers are still struggling for acceptance.

To boost profits, Mr al Amimi says unscrupulous dealers have tried to package his produce in "Product of Holland" boxes. Tomatoes from the Netherlands sell at around Dh18 a kilo, while local ones sell at Dh3.25.

"My farmer can't read and he won't understand when there's a [European Union] Schengen stamp on the box," said Mr Amimi, adding that although the dealer promised to change the packaging once the produce reached storage, Mr Amimi had refused the order.

Shokri Hassan Ali, a Dubai-based trader, said some high-end hotels and restaurants refuse to accept local produce.

"I never use EU packaging [on local produce] but it's true that sometimes hotels don't accept UAE or Middle East produce because they think European products are better," he said. He said it was rare for farms to label their packages "Made in the UAE".

Industry experts say farmers have been coddled by previous subsidy programmes. Now, as the government tries to turn agriculture into a competitive market, they are struggling to adapt.

Launched last summer, the FSC is meant to give small farms a competitive edge by offering them expertise, technology, and access to marketing channels through their collection centre.

Last winter, it began spot-buying and contract farming with up to 300 Al Gharbia farms, buying about 22 tonnes a day of fresh produce, from tomatoes and cucumbers to broccoli, beetroot, gourds and oranges.

Administrative problems have plagued the project. The centre sets its prices on a weekly basis, and each collection office is meant to post the price publicly, as well as write it on all receipts.

Christopher Hirst, the FSC's chief operating officer, accepts that that has not always been happening.

"The receipt stays with the farmer, and goes to the pack house, where some of it may be rejected for grade, and that would be communicated to the farmer," he said. "Some of our staff weren't writing the price on the document. We're trying to correct it."

According to the FSC, farmers have earned more by selling through it, rather than directly to traders. In February and March, they earned 20 per cent more for cucumbers, and 28 per cent more for aubergines, according to its figures.

The damage may already have been done. Several farmers have dropped out, preferring to go it alone.

Still, the programme is a step in the right direction, says Nicholas Lodge, an agricultural expert at Clarity in Abu Dhabi.

The role of government, he says, should be to create a genuine and dynamic free market environment, ensuring there are enforced standards and that farmers are accredited and paid for good produce.

But for growers to get the price they deserve, says Ali Bukkarood, a hydroponic contract farmer in Al Awir, they need to start calculating their costs better, and planning when to plant crops to protect their prices on the market.

"If you don't have an order, why produce and sell it in the open market?" he asks. "Most of the time it's sold at a loss because [buyers] don't have an understanding of what it costs to grow it, versus market prices."

There is limited protection for local farmers, admits Mr Lodge. "But at the same time, do you want to create barriers to encourage inefficient or uneconomic farming systems to continue? It's a balancing act."

Hydroponics, where plants are fertilised with mineral nutrient solutions and the irrigation water is recycled, is more environmentally friendly. Greenhouses are more efficient.

Some farmers struggle to walk that tightrope.

Next year, Mr al Muhairbi plans to sell his crops on the open market, but fears the FSC scheme will push market prices down.

"It's better for me to keep it empty, send one worker back home and keep one on staff," he said.

If next year reaps the same losses as this year, he says he will convert his fields to date palms.

"It takes three to four years to get dates from the small trees, but it'll be better than this."