Australia / Analyst Insights
Gulf states represent a growing market for Australian agriculture

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by Sam Johnson
Jul 11 2017

While many Australian agricultural exporters have been focusing on Asian markets in recent years, the Gulf States have been growing in size and affluence. The region’s arid land and climate mean that a substantial portion of its food requirements must be sourced from imports.

Liberalised trade laws in the United Arab Emirates (UAE) have helped the country become a hub for re-exports to the rest of the region, which includes Bahrain, Kuwait, Oman and Saudi Arabia. Demand for Australian meat, horticultural goods, sugar and grain crops from many of these countries has surged over the past five years. The value of Australian meat product exports to these six countries is expected to grow at an annualised 17.7% over the five years through 2016-17, reaching over $1 billion.

Population and demographic trends in the region have changed significantly over the past decade. Increasing birth rates and a surge in expatriate populations have driven strong population growth over the past decade. For example, the UAE’s population doubled between 2005 and 2015. Rising affluence among residents and a growing tourism sector have boosted demand for premium agricultural goods, further increasing revenue received by Australian exporters.

The value of Australian fresh, dried and frozen vegetable and fruit exports to the UAE is expected to rise at an annualised 15.2% over the five years through 2016-17. In May 2017, the UAE and Australia announced that non-tariff barriers would ease for chilled beef and lamb exports, extending the maximum allowable shelf life of these products. This will likely reduce transport costs associated with exporting premium chilled meat to these markets, benefiting local exporters.

Meat product exports to Saudi Arabia are also expected to grow over the same period. Beef exports have largely driven this growth, with sheep meat products also contributing to a lesser degree. Similarly, the value of grain exports to Bahrain, largely driven by wheat, are expected to skyrocket over the five years through 2016-17. Meat, vegetables and fruit exports have increased most consistently across the Gulf States. However, competition to access these growing markets is strong among other agricultural export regions, such as the European Union, the United States and China. Nevertheless, local exporters that can access this growing market stand to benefit from rising demand.

Agricultural exports to other countries and regions have also grown over the past five years, particularly to the United States and East Asian countries. However, these markets are already larger and more established export destinations for Australia’s agriculture industries. Additionally, concerns surrounding protectionist sentiment in the United States following its exit from the Trans-Pacific Partnership Agreement could hamper future demand growth.

Australia’s relative lack of market penetration in the emerging Gulf States presents an opportunity for greater export growth over the next five years. However, current political difficulties in the region, with Saudi Arabia and UAE suspending trade with Qatar, could limit the ability of domestic exporters to expand in Qatar. This is particularly relevant as the UAE is a hub for re-exports to Gulf States.

Related industries:

Meat Processing

Grain Growing