In a Year of Ups and Downs, U.S. Exports to the Arabian Gulf Boom

Although total U.S. agricultural exports tumbled in 1998, they showed exceptional growth in some nations of the Gulf Cooperation Council: the United Arab Emirates (UAE), Bahrain, Kuwait, Oman and Qatar (collectively known as the GCC-5; Saudi Arabia is the remaining member.)

Reversing a two-year decline, U.S. food and agricultural exports to these countries on the Arabian Gulf boomed in calendar year 1998 to a new record of $298 million, f.o.b. basis: a quantum 50-percent leap over 1997 exports.

Consumer-ready products led the way, with intermediate products and bulk commodities comprising relatively smaller shares of the U.S. export pie. Bringing in a record $145 million, consumer-ready products proved to be the backbone of U.S. agricultural exports to the GCC-5 last year, making up 49 percent of total U.S. sales. Products with record increases include red meat, breakfast cereals, tree nuts, fresh fruits and other miscellaneous grocery items.

In 1998, as in other recent years, intermediate products (a category that includes vegetable oils and beverage bases) represented the second-largest sector for U.S. agricultural exports to the GCC-5. They racked up $119 million in sales and made up 40 percent of the U.S. agricultural total to the region. They also showed a tremendous 130-percent gain over U.S. intermediate exports in 1997.

Bulk commodities still account for the smallest part of U.S. agricultural exports to the GCC-5. Nevertheless, U.S. bulk sales showed an impressive threefold increase, from $6.5 million in 1997 to about $19 million in 1998 (6 percent of the U.S. agricultural total).

Forestry products and seafood exports remained fairly stable at about $14 million, or roughly 5 percent of U.S. exports.

In comparing 1998 to 1997, the percentage increase in U.S. exports to the five nations showed considerable variation, ranging from 13 percent in Kuwait to 128 percent in Bahrain. Qatar, Oman and the UAE registered respective increases of 25, 51 and 61 percent.

The UAE, whose 1998 U.S. imports just topped $190 million (65 percent of all U.S. sales to the region) is by far the largest market for U.S. products in the GCC-5. Kuwait ranks second, and accounted for 19 percent of U.S. sales last year. The remaining 16 percent was split among Bahrain, Oman and Qatar. The bare figures, however, don’t tell the whole story: it’s estimated that 50 to 60 percent of all UAE agricultural imports are re-exported to Middle Eastern countries, and also to Asia and Africa.

What are the principal reasons for the enormous growth in U.S. exports to the GCC-5?

Although U.S. exports to the GCC-5 through the first quarter of 1999 are on pace with 1998, there is a definite sense that regional imports will decline this year.

The decrease will likely result from oil prices, which had plummeted to near-record absolute lows before their recent strengthening. The low prices induced negative effects that resounded throughout the region’s economy, affecting new oil exploration and pumping, construction and industrial projects.

In addition, especially for a trade hub like Dubai in the UAE, Russia’s continuing economic troubles and slack demand by traditional markets like Iran have dampened the usual re-export trade traffic.

If petroleum prices hold steady or go higher, this bodes well for the region’s economy. It will set in motion the positive multiple consequences which will lead to greater imports, including food.

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The authors are the director and agricultural specialists of the Agricultural Trade Office at the American Consulate General, Dubai, the United Arab Emirates. Tel.: (011-97-14) 314-063; Fax: (011-97-14) 314-998; e-mail: atodubai@emirates.net.ae; web site: http://www.usembabu.gov.ae/atodubai.htm

Saudi Arabia Offers Enticing Niche Markets, Too

By John H. Wilson and Rosemary Shenouda

Like its fellow GCC members, Saudi Arabia offers some interesting markets for U.S. exporters of agricultural products. Saudi Arabia’s ever-increasing number of Class A supermarkets and large food service sector, catering to a large foreign labor force, provide significant outlets for U.S. consumer food products. inayea2

First, Let’s Concentrate on Tomatoes

The Saudi market for tomato concentrate and tomato-based sauces is estimated at an annual 22,000 metric tons. About 10,000 tons of the market consists of tomato paste, and another 7,000 - 10,000 tons of ketchup. U.S. exporters have garnered a significant share of this market.

The United States is a leading supplier of ketchup and flavored tomato sauces to the Saudi retail market. In general, Saudis tend to prefer U.S. tomato products over other brands, regarding U.S. products as being of high quality.

About 40 percent of Saudi tomato product imports arrive pre-packaged, and the other 60 percent goes for local manufacturing and re-packing.

Peanut Butter’s Popularity Spreads

The Saudi peanut butter market is estimated at about 3,000 metric tons a year. Local production of peanut butter accounts for less than 10 percent of total consumption.

U.S. exporters dominate this market; they supplied 2,000 tons in calendar year 1998, garnering a whopping 98-percent share.

Saudi peanut butter consumers are mainly Western expatriates and Asians. However, an increasing number of Saudis, particularly children, are becoming regular peanut butter consumers.

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The authors are the director and agricultural specialist of the Agricultural Trade Office at the American Embassy, Riyadh, Saudi Arabia. Tel.: (011-96-61) 488-3800; Fax: (011-99-61) 482-4364; e-mail: fasriyadh@hotmail.com