Poultry consumption in the UAE is growing, but local production is not keeping up

While planned growth in poultry meat production in the United Arab Emirates (UAE) has been hampered, consumption and imports of chicken meat in the UAE are projected to rise in 2022 due to a robust economic recovery. Consolidation of the poultry industry and a healthier trade are also emerging.

Due to limited arable land and nominal rainfall, most forms of agriculture in the UAE are complex. Most of the poultry industry is concentrated in Abu Dhabi. As a result, the country is dependent on imports not only for food, but for almost all inputs to the poultry sector, from medicines and packaging to equipment and feed. Poultry imports are projected at 415,000 tons in 2021 and 445,000 tons in 2022 as trade recovers and the market begins to stabilize.

From September 2019 to September 2021, the price of coarse grains increased by 55%. These and other production costs in the poultry sector, combined with the government-imposed price ceiling for fresh chicken at retail outlets (AED21.5 plus VAT on all fresh chicken sold in the UAE), have hampered growth in UAE poultry production and reduced profitability. In addition, in 2021, strong competition from Brazil (frozen products) and the Kingdom of Saudi Arabia (fresh poultry) also contributed to the reduction in production in the UAE. Production in 2022 is projected to be unchanged from 2021 (56,000 tons).

With global food prices rising, poultry remains a relatively cheap source of animal protein in the UAE. As of July 2021, poultry prices were -0.5% lower than the same period last year and have been declining every month in 2021 from record high prices in 2020. Due to the impact of the Covid-19 pandemic, consumption is forecast to increase marginally to 456,000 t in 2022 from around 441,000 t in 2021.

Amid high U.S. prices and ongoing logistical disruptions, the UAE has turned to other sources of supplies for meat and poultry products. More than 98% of US poultry meat exported to the UAE is chicken leg quarters. Some reports, however, note the difficulty of sourcing these products from the US at prices that are competitive with other globally sourced products. The labor force in the construction sector is the main driver of demand for chicken legs. The workers love chicken legs because they prefer dark meat and it's affordable. But the construction sector in Dubai has slowed down, hurting US market share in the local poultry market.

Product packaging and dimensions have led to an increase in the market share of other countries, including Brazil, in the UAE market. The standard US package size is a 20 kg package, while most other export countries use a 12 kg package. Considering the convenience of moving the product (for example, selling the product to smaller restaurants that may not be able to use all the chicken in a larger package or want to buy a smaller quantity), smaller packages are often preferred. U.S. chicken leg halves are also larger than competitors, and this hurts demand because chicken is usually served with rice, and smaller chicken leg quarters allow the meat to be spread out among larger portions. Brazil's market share also increased in 2021.

After a tough 2021 due to higher input costs, UAE poultry exports are projected to rise to 45,000t in 2022 as raw material prices fall and production volumes adjust. During the summer months, poultry farms in the Emirates often freeze some of the local produce. These frozen and further processed products make up the bulk of the UAE's chicken meat exports.