Rice black market hits UAE

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RICE SHORTAGE: A black market for rice has emerged in the UAE after government efforts to limit inflation through targeted price controls pushed rice supplies off store shelves. (Getty Images)

A black market for rice has emerged in the UAE after government efforts to limit inflation through targeted price controls pushed rice supplies off store shelves, traders and consumers say.

The Ministry of Economy of the second-largest Arab economy has been trying to curb inflation, which hit a 20-year peak of 11.1 percent last year, partly by signing agreements with supermarket chains to fix food prices at 2007 levels.

"Now, it is not just a shortage of rice...we also have a black market for rice where some dealers will sell you any type of rice you want," an Abu Dhabi-based food trader said.

"The price you pay a black market dealer could be as much as 20 percent more than what you pay normally."

A March decision by India, the world's second-biggest rice exporter in 2007, to ban exports of non-basmati rice, the most popular in the UAE, triggered a wave of panic buying, causing benchmark Thai prices to nearly treble.

Last year, the UAE imported about 750,000 tonnes of rice mainly from India, Pakistan, Thailand and Egypt.

"Good quality rice from India and Pakistan, which is the only type of rice most of us eat here, is very hard to find sometimes in many supermarket, until very recently when we started to find out where we can get it," housewife Shama Chaurasia said.

"Not everyone knows about black market dealers as the government is keeping a close eye on them, but I don't think the situation is getting any better soon."

Traders in the UAE have said the Gulf Arab country will continue to face a shortfall in rice supplies at least until August when consumer and producer nations replenish stocks and expected extra crops boost supplies.

The UAE is planning to secure more Thai rice imports this year to meet domestic demand, while its capital Abu Dhabi aims to develop over 70,000 acres of farmland in Africa's largest country Sudan as the first step in a broader strategy to secure food supplies amid rising prices.

Soaring food prices are a main driver of inflation across the world's biggest oil-exporting region, where most states, including the UAE, peg their currencies to the ailing dollar, which raises import costs.

Many rice importers are demanding at least a 25 percent subsidy, while the Emirates Society for Consumer Protection has urged the government to subsidise basic food items as part of measures to curb food price rises, which it expects to reach 40 percent this year.

"The number of traders who stopped importing rice in the last couple of months is scary. They want subsidies and compensation and the government is not giving any," one rice trader said.

"We cannot import and make losses, if the countries we are importing from like Pakistan, demand higher prices and sell their output to other destination," he added.

The UAE economy ministry plans to unveil other measures to protect consumers from rising prices, but would continue with a no-subsidy policy, the ministry under-secretary Mohammed Abdul Aziz Al-Shihhi said on Thursday.

He added that food and commodity inflation in the UAE should ease this year after the Gulf state imposed price controls, but global trends will continue to drive prices. (Reuters)

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