|
|
Bahrain Food and Drink Report Q1 2008Published by: Business Monitor International Published: Feb. 20, 2008 - 61 Pages Table of Contents
AbstractWith the pressure of soaring commodity costs being felt by food and drink producers throughout theworld, the Bahraini industry is struggling to deal with these issues. Rising commodity prices are beingeven more sharply felt as the value of the Bahraini currency falls along with the dollar, to which it ispegged. Although cutting interest rates will ease the pressure for revaluation in the short-term, the dollarpeg issue cannot be ignored forever. Indeed with the Gulf Cooperation Council (GCC), excluding Kuwait,still holding out and refraining from revaluing their currencies, inflation could push even higher in 2008and in the medium to long-term the five remaining states will need to reconsider their respective currencypolicies and move away from the dollar peg. Food price inflation continues to be a significant concernand many continue to speculate what the government plans to do to address this, particularly after theSaudi government moved to increase subsidies.The Bahraini food and drink industry already survives through heavy government subsidies, with thegovernment spending over US$29.2mn in 2006 alone on subsidising the cost of meat, chicken and flour.The government’s rationale for such high subsidies is that these are needed in order to combat the risingcost of living and ensure a high standard of living for its citizens. As the government sets the price formany staple goods, these often do not reflect the actual global costs, with the government making up thedifference. However, these subsidies do not cover all food and drink products, and consequently, the pricefor many food items has shot up, with the government absorbing part of the impact. A number of global factors have converged to lead to major increases in the prices for foodstuffthroughout the world. The increasing demand for agricultural products from a growing middle class indeveloping countries such as China and India, which are now more able to afford imported food; poorgrowing conditions in the US, Australia and Europe, which are all major wheat producers; and a newemphasis on biofuels, which has spurred demand for key crops. These rising prices have been even moreacutely felt in Bahrain, which is highly dependent on imports to meet its food and drink needs. Given its ecological restrictions, Bahrain is highly dependent on food and drink imports to meet the needsof it population. While the government has made some efforts to rectify this, the reality is that there islittle that can be done, due to the climate’s unsuitability for most forms of agriculture. The island receivesminimal rainfall and accordingly, annual harvests and outputs are highly dependent on whether the sectorhas been fortunate enough to receive favourable weather conditions that year. Given this high level ofvulnerability to global markets and trends, the Bahraini consumers will inevitably start to feel the pressurefrom the dollar’s decline and rising commodity costs, despite the government’s best efforts to cushionthem from this. Get Full Details About This Report >> |
|
|||
|
About MarketResearch.com
|
||||