The Higher Consumer Protection Committee yesterday moved to curb “agflation” in the UAE, capping any price increases in eggs and chicken.
The committee rejected requests by poultry companies for a 15 to 20 per cent increase in prices of eggs and for 25 to 37 per cent increase in prices of chicken, ruling that increases should not exceed 10 per cent for eggs and 12 per cent for fresh slaughtered chicken.
Yesterday, investment advisory firm Merrill Lynch warned on agricultural inflation or agflation.
“It is affecting a variety of agricultural products, markets and countries. Agflation will remain a force on the inflationary front in the coming years,” it said in a report.
Arab economies are particularly vulnerable to rising food prices because they are net importers of food with a “food deficit” of $110 billion according to the Arab League. “The problem of increasing prices of eggs and poultry has to be radically solved through encouraging private sector companies to invest in this vital industry.
Al Saleh also urged the private sector to use new suppliers to source eggs and poultry. He also urged co-operatives to directly import from producing countries.
“The committee is not seeking to price all products and goods on the market. This intervention is illegal and is totally against the UAE’s free economy approach”, he stressed adding that the body is tasked with combating monopolies formed by producers.
The Higher Consumer Protection Committee’s membership comprises representatives of ministries, economic departments and the UAE federation of chambers of commerce and industry and its decisions are taken unanimously. The issue of rice prices will be discussed at its next meeting.
Food prices will remain high globally in 2008, Merrill Lynch said in its report. And agflation is fuelling overall inflation, especially in emerging economies.
“Global constraints on food production are shifting production patterns and pressuring prices... The emerging markets are going through a period of economic development and urbanisation where per capita incomes are rising. As a result, food consumption is transitioning from a simple subsistence diet to more processed foods,” the Merrill’s report said. “Energy’s introduction into the global agricultural production function has put tremendous upward pressure on food prices.”
As a result, egg and soybean prices are at all time highs globally.
Committee caps egg and chicken prices