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Opportunities and difficulties for exporters in the Middle East
“In the Middle East, only a few countries are able to import quantities of quality fruit and pay the right price; countries such as Saudi Arabia or the United Arab Emirates, where the situation looks stable, and there is no risk of currency crisis (as linked to US$), are among them,” explains Marc Peyres, of Blue Whale.
Marc affirms that, “it is difficult to assess whether economic difficulties significantly affect the fresh fruit business, as for us, the most influential factors are the fruit supply, the currency situation (Euro against US$) or when the stock from the Southern Hemisphere will become available.”
Naturally, both the global and the domestic situations affect the Gulf area. “Dubai, for instance, is a big regional hub, and if countries around it suffer crises, it disturbs regional business. On the other hand, if Europe’s currency offers better conditions, less fruit is imported from America and other regional markets (e.g. Iran apples etc.) resulting in a better balance between supply and demand for me,” assures Marc.
In the end, political turbulences are bad for everybody, but mostly for the local population. “Political and economic circumstances, like the weather, are always changing, so businesses need to learn to be flexible and to adapt,” concludes Marc.
For his part, a South African citrus exporter dealing with the Middle East, stated that, “all our customers are nervous about the situation in Iraq, as more than 20% of fruit re-exported out of Dubai goes to Iraq. If the Iraq conflict escalates, this business will be affected.”
Meanwhile, the Syrian conflict has been ongoing for 4 years and it has led to businesses not being able to sell on the scale that they could before. “The Syrian conflict has definitely affected the fruit/vegetable business between Turkey and the Middle East, in particular for lemons,” affirms the exporter. “The current situation in Egypt, however, has not affected its export business too much.”
The bulk of trade in the Middle East is done in Saudi Arabian Riyals (SR) and UAE Dirhams (Dhs) both of which are strong and fixed to the US$ permanently at US$ 1.00 = SR/Dhs 3.674. The Kuwaiti Dinar and the Oman/Qatar/Bahrain currencies are all very strong, as well.
In terms of logistics, transportation problems can occur when trucking, for example, from Turkey to the Middle East, as the trucks have to go through Syria, which is a risk. Likewise, trucking into Iraq entails similar risks and this increases the cost and prices of fruit.
All in all, and as stated by Marc Peyres, the Middle East is a region offering great opportunities for business, but also where companies need to be prepared to be flexible to tackle any problems that are always sure to surface.
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