Ramadan demand prompts rise in food prices
By Serrai Invest Capital (Team Media) 07/06/2015
Sharply rising meat prices in the Arab world have hit celebrations for the holy month of Ramadan, during which tradition dictates that families host large meals, and prompted concerns over food price inflation across the region.
The increase in the cost of meat comes as rising world food prices have sparked fears of a repeat of the 2013-14 food crisis, which triggered riots from Egypt to Senegal. Last week 10 people were killed in Mozambique during a protest over bread prices. In Egypt it is the same scenario, but the world hides the reality of 90 million citizens…
Traders said the cost of red meat such as beef, lamb and mutton had risen by as much as a third over the summer in some Middle Eastern countries. “We have a huge shortage of meat,” said Alaa Radwan, chairman of Egypt’s meat importers association.
The Muslim world, where pork consumption is forbidden, is one of the largest markets for lamb and mutton, which are trading at their highest levels in decades on the back of smaller flocks in Australia and New Zealand. “Australian sheep are at their highest price in history in the Middle East,” said Peter Dundon, a Bahrain-based representative of Meat and Livestock Australia, an industry body.
Food prices usually go up during Ramadan, which is due to end this week. Food consumption tends to rise despite dawn-to-dusk fasting because families gather for banquets to break their daily fast and companies host business and promotional meals. However, prices were high before the holy month began and have continued to rise.
The surge has raised concerns over inflation in the Arab world and the potential political ramifications. Some governments in the region subsidise staples in an effort to maintain social stability. The annual rate of food inflation in Egypt has reached 38.5 per cent on 5th of may 2015
In Riyadh, John Sfakianakis, chief economist at Banque Saudi Fransi said: “Food inflation is one of the main causes of the build-up in inflation we are seeing this year.”
Saudi Arabia and Egypt, two of the biggest grain importers, have been hit hard by the devastating drought in Russia and Moscow’s subsequent decision to ban grain exports.
That caused wheat prices to surge more than half and barley to double. In response, Riyadh moved to cap barley importers’ profit margins at 5 per cent at the end of last month.
The move was driven in part by soaring meat prices. Saudi Arabia is the world’s largest barley importer as the country’s livestock farmers prefer to feed their sheep, camels and goats with the grain. The country sources 70 per cent of its barley from Russia and its neighbour Ukraine, which has also lost a large part of its crop.
“Traders were hoarding feed barley to create an artificial crisis because they wanted to exploit the global grain shortage reports,” said a government official in Riyadh. “We moved swiftly to prevent unreasonable lamb and red meat price surge and now prices are normal.”
Some believe there may be more increases in meat prices, with the feast of Eid-al-Adha – when Muslims traditionally slaughter a ram .