UAE Ministry ruling on price freeze overrules regional supplier requests

    The UAE government recently announced it had formed an agreement with major retailers to freeze food prices
    FOOD & BEVERAGE, Operators, Owners, Hotel, News

    The UAE government recently announced it had formed an agreement with major retailers to freeze food prices. The measure will certainly help consumers, but how will it affect the region’s suppliers? Caterer investigates

    As suppliers across the Middle East come to terms with the impact of the global economic downturn and fluctuating prices in food commodities, the UAE Ministry of Economy has announced a deal to freeze food prices with major retailers.

    The fourth meeting of the Supreme Committee for Consumer Protection (SCCP), headed by Minister of Economy and Chairman of the committee, His Excellency Sultan Bin Saeed Al Mansouri, reviewed and rejected requests from food suppliers for a price hike on their products.

    This deal may come as a relief to consumers but for the region’s food suppliers, many of whom are facing tough times in the current global market, the ruling is less straight forward, as ABC Baking operations manager Amer Abu Salem pointed out.

    “I think the Ministry should look into this on a case-by-case basis,” he suggested. “Then if necessary it could support a few essential products, such as flour, oil and sugar, to help business and ensure steady prices to keep the end consumer satisfied and protected.”

    For now, however, the focus is firmly on the consumer rather than suppliers.

    The SCCP’s Al Mansouri commented: “Consumer protection is a priority for us; it is essential in strengthening customer confidence and thus driving domestic demand.”

    The importance of this scheme was highlighted last month, when suppliers and retail outlets were warned by Al Mansouri that the Ministry of Economy would take “serious actions against any attempt aimed at disrupting the market equilibrium”.

    Suppliers across the UAE have had mixed reactions to the ruling, but agreed that such a decision should not be taken lightly.

    Middle East Franchising chief executive Fadil Alnassar said he recognised that for now the Ministry’s main focus was “to keep the living level for people in the country affordable”.

    “It is good to keep the price levels down as much as you can,” he agreed. “But we also have to be realistic about how we can achieve that without a conflict of interests.”

    ABC Baking’s Salem suggested that the government could also consider helping suppliers, by allowing struggling companies to stay in
    business through government subsidies for key commodities.

    However one supplier insisted current market prices were not causing any problems and said his company was seeing a boom in business, despite the gloomy global economy.

    Wet Fish Trading managing director Mark Allan commented: “I import two to three times a week from abroad and the prices are now lower than when I first arrived in the country four years ago.

    “The current exchange rate between the UK and the UAE is working to my advantage, giving us the opportunity to pass savings onto the customer.”

    ABC Baking’s Salem agreed that maintaining value-for-money and quality standards was an important part of retaining business and claimed that while “strategic decisions” regarding cost-cutting would have to made, “whoever can maintain and improve the quality of products produced during the current situation will gain in the long term”.

    Wet Fish Trading’s Allan added that the secret for suppliers was “to remain competitive, otherwise they will not get work”.

    Allan said he was convinced costs would remain stable over the next few months, with or without the government stepping in to freeze prices.

    “My gut feeling says prices will remain stable; they need to, as stability inspires confidence,” he concluded.

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