Poor logistics pushing up food prices in Qatar

Inadequate logistical facilities, such as price-competitive warehouses, and high freight rates are among the main reasons for relatively high food prices in Qatar compared to neighbouring countries.

Despite market regulatory mechanisms being in place, prices of many food items have soared over the past few years due to ever-growing demand, which experts believe could have easily been kept under control with adequate support services and better planning.

Consumers here who frequent markets in Saudi Arabia and the United Arab Emirates often remark on the lower food prices there. For instance, a two-litre bottle of fresh milk of a popular brand from Saudi Arabia costs about 30-40 percent less in these neighbouring countries.

Qatar’s population has witnessed rapid growth over the past several years, but resources and facilities to support the population have not kept pace with it.

Within one month (between August and September 2013), Qatar’s population increased by more than 170,000 (largely due to the influx of foreign workers), putting tremendous pressure on resources.

Roads, public transportation, commercial centres, housing units, medical facilities, schools and others social services have seen some growth with the rise in the population, but there has been limited or negligible growth in wholesale markets and warehouses. According to industry insiders, these facilities are running under tremendous pressure.

Experts from the industry suggest that there is an urgent need for massive investment in the sector to build more contemporary or air-conditioned wholesale markets and a cluster of strategically located warehouses to provide adequate food storage facilities at affordable prices to cater to the ever-growing population. 

“There are not enough warehouses to support the food requirements of the current level of population as per the level of food security that we are aspiring to achieve,” said Ali Hasan Al Khalaf, Chairman of Qatar Consumer Complexes. 

“The country needs to develop big warehouses so that importers can source food in big volumes from the countries of origin instead of buying from second or third parties.”

Al Khalaf added: “With a state-of-the-art new airport and an upcoming seaport, we cannot continue leaving the country’s food security at the mercy of others due to a lack of enough warehouses and better logistics.”

Speaking on the need to develop more wholesale markets, he said that the Central Market was set up when Qatar’s population was a little over 200,000. That figure has now grown to over two million. 

“We are still relying on the same facility for catering to a population which has grown ten times larger,” he remarked.

According to official statistics, Qatar’s population grew from 744,028 in 2004 to 2,151,745 on June 30, 2014 — an average annual growth rate of more than 18 percent. 

Read more at: The Peninsula