Middle East and North African markets

About the region

The Middle East and North Africa (MENA) region spans a significant area and includes diverse ethnicities, political systems, socio economic standards, languages, currencies and agricultural capabilities.  It has a population of approximately 500 million people, across 20 countries.

The region continues to need food in raw and processed form, with many countries importing over 90 per cent of their food needs.

Future population growth rates make MENA a compelling market prospect as countries rely on imports to meet food requirements.

The region is diverse in terms of product preferences and trading patterns and it is attractive to an extensive range of competing countries that are keen to maintain and expand their market share. Australia as a nation makes up only 1.5 per cent of total agriculture import into the region, with Victoria accounting for 40 per cent of total Australian exports (2019/2020), highlighting a considerable opportunity for the State to grow its share and expand into new markets as the region embraces new buying habits and methods.

Victoria has an enviable status in the region as an agri-food provider, with its key qualities including reliability, safety and being highly innovative. Pricing is the key export challenge, with Victoria competing against countries with lower costs and quality.

Priority countries and opportunities

A recently completed agricultural study of the region by Stewart Routledge and Associates, commissioned by Agriculture Victoria, identified several priority countries and opportunities for Victorian agriculture, particularly for small to medium sized enterprises.

The priority countries identified were:

• United Arab Emirates (UAE)
• Saudi Arabia
• Qatar
• Kuwait
• Egypt
• Jordan
• Bahrain
• Oman

Key opportunities identified for the retail and foodservice sectors include:

• Dairy
• Grains
• Prepared Foods
• Horticulture (berries, summer fruits, almonds, citrus)
• Animal feed
• Red meat (premium)

The region is quickly shifting to focus on a healthier lifestyle and eating habits, boosting demand for organic and health food categories, including meat alternatives and highly nutritious foods. There is a growing demand for these categories predominately in the UAE and few other gulf countries, however it has not been fully embraced across the entire region as yet. This is mainly due to the relatively high cost and limited availability of products, given their niche categorisation, with the likes of meat alternatives yet to be accepted in the wider local culture and demographics.

In addition, there has been considerable growth through e-Commerce channels, with post pandemic consumers open to ordering online, especially for groceries. Food sector purchases using e-Commerce channels made up approximately 27 per cent of the gulf region’s sales, however the channel still faces minor obstacles in registration and approval by authorities, distribution, adequate and consistent infrastructure and major retailer support. Until all elements are aligned, e-Commerce food sector purchases will likely continue to lag behind the categories of beauty, cosmetics and electronics.

Insights and forecasts

Economic growth in the MENA region was forecast to reach an average of 2.4 per cent in 2020-21, as higher crude oil prices and the roll out of vaccines drive recovery in oil-exporting countries (World Bank, 2021).

COVID-19 highlighted the region’s dependence on imports and food security as a top priority for governments across the region.  Nations were prompt to diversify their import sources, streamline logistics and build adequate food reserves.

Many Gulf States rely heavily on expatriate (expat) workers. Job losses due to the impact of the COVID-19 pandemic saw a population decline of around 4-10 per cent, with demographics changing as many skilled expat workers returned home. The Pandemic has also increased competition and accelerated the shift towards more value seeking behaviour.

Moderate growth is expected despite the slow economic conditions and the impact of COVID-19, with major regional events including Expo 2020 (UAE) and the 2022 FIFA World Cup (Qatar) boosting growth, with strong vaccination campaigns and the easing of travel restrictions encouraging tourism and business travel.

The demand for high-quality food and beverage products is showing some persistence, providing key opportunities for Victoria’s dairy, meat, prepared food and health food industries. However, there are current challenges to meeting this demand due to the high cost of sea and air freight and supply-chain disruptions. These unprecedented global conditions are forecasted to continue until the end of 2022. In addition, increasing non-tariff barriers and market fragmentation also need to be considered when pursuing business opportunities within the region.

Victorian food and fibre exports to MENA were valued at $907 million in the 2020-21 financial year, a decrease of $47 million (5 per cent) on 2019-20. The United Arab Emirates, Saudi Arabia and Qatar were Victoria’s highest value markets accounting for 70 per cent of food and fibre exports, with Saudi Arabia, Yemen and Morocco seeing the strongest growth.

Grain imports have experienced significant (127%) growth (mainly Barley), largely due to deregulation of Saudi Arabia’s industry, revised China market conditions and drought in the Black Sea region (Russia/Ukraine). In contrast, there has been a 30 per cent decline in meat imports due to supply chain issues including air freight capacity, low demand in the foodservice sector, products being diverted into retail and high prices.

Further information

To find out more about accessing Middle Eastern and North African markets, contact the Pathways to Export team at pathwaystoexport@agriculture.vic.gov.au, or sign up to the newsletter.