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Importers manipulate Saudi meat market

JEDDAH: For generations, lamb has been a traditional staple used in a multitude of dishes at wedding banquets and has become a must for Saudi dining tables for iftar and sahoor meals during the holy month of Ramadan.

According to industry sources, this has helped some businessmen cash in heftily by monopolizing the import meat market and allowing them to manipulate prices in their favor.

"Recently, with the unavoidable increase in demand for lamb and other meat due to the wedding season and upcoming Ramadan, many Saudi businessmen have visited meat exporting countries such as Syria, India, Pakistan, Sudan and Somalia to secure sole distributorship contracts with local meat suppliers," Hassan Hamoud Ali Nasser, a butcher at Al-Manal Al-Gharbia Shop who has worked in Jeddah for more than 25 years, told Arab News.

If a Saudi businessman were to go a particular country and secure a contract allowing him to act as a sole distributor of meat to the Kingdom, he would be able to set prices as desired, he explained.

In addition, he would not have any pressure to keep prices stable due to commercial competition since he is the only Saudi supplier for that country.

"These kinds of business deals have been the main cause of a 15 to 20 percent increase in prices since last month," Nasser said.

When asked if the Ministry of Commerce or Ministry of Agriculture were regulating these kinds of deals to keep prices fair, Nasser said these organizations were only there to ensure that imported livestock were healthy and making sure correct license-related procedures were being followed.

Nasser said another factor driving up prices is the ban on the import of chilled meat to Saudi Arabia, which has been in effect for the past four to five years.

"We are only receiving live animals from approved exporting countries and since live animals are more expensive than chilled meat, consumers are forced to pay higher prices," he said.

He said prices of live animals fluctuate daily in the local market, which in turn forces him to change prices at his shop to make a profit.

Nasser also said that imports from Australia have declined by up to 70 percent due to skyrocketing prices. Previously, the market used to be very popular, he added.

Mutton exports from Australia to Saudi Arabia were an estimated 21,473 tons in 2009, according to the Meat and Livestock Australia. This is only around half of 2008 levels.

Recent pricing information from Portland and Fremantle, the two Australian ports where large numbers of sheep are shipped to Saudi Arabia and the Gulf, revealed prices had increased from SR375 to SR450 per animal.

Nasser said a whole Australian sheep is being sold on the Saudi market for SR800 to SR900 per animal, up from SR400 two months ago.

According to estimates from Business Monitor International (BMI), meat consumption is forecast to increase by 7.92 percent from 2011 through to 2014, exceeding BMI's prediction of a GDP growth of only 2.85 percent.

Prices of sheep at the Jeddah livestock market south of the city reflected the increase in cost.

"The current price for a local Saudi Nagdi is SR80 a kilogram or SR950 per head, Sudanese Sawakni is SR800 to SR850 per head, Somali Balbali is SR750, while Syrian Noami is SR700 to SR750 per head," said Mishari Abu Khaled, owner of an animal stall in the livestock market.

Abu Khaled also added that he expects prices to increase further in the next few days.

"I can see prices easily going up by another SR150 to SR300 per head, depending on what type of sheep is purchased and depending on where it is bought," he said.

He added that this was due to the start of the high shopping season in preparation for Ramadan.

By Sarah Abdullah

© Arab News 2010