Look out below, Indian press rolling

Vivian Salama

The National | September 20. 2008 5:26PM GMT

MUMBAI // At a time when mature media markets are reducing the size of their operations and laying off hundreds of employees, India’s print media is growing at a steady rate, offering better salaries and more job opportunities. But some industry experts caution that India’s largest media conglomerate, Bennett, Coleman and Co, the owner of The Times of India, is wooing advertising revenues away from other newspapers, impairing their quality and growth rate.

According to media experts, 65 per cent of advertising revenue is cornered by the Times of India Group, forcing other publications to fight for their survival. While Indian newspapers are the cheapest in the world, many publishers have instituted price increases to neutralise the impact of soaring newsprint costs.

Many publishers are also postponing expansion plans, while some are increasing advertising tariffs to offset the higher costs. Metro Now, an English-language newspaper in Delhi, and The Times of India have delayed expansion plans in recent months, while the Business Standard has shut down its newly launched an edition in Rajkot city.

“For any other newspaper to survive, they have to depend on very aggressive marketing and diversification of their media platforms,” said Sanjay Ranade, the head of the communication and journalism department at the University of Mumbai. 

“This impacts the indigenous newspapers the most because with the rising literacy, rising political awareness and rising purchasing power, the demand for indigenous newspapers is going up, but revenues are not going up.”

A report released in July by GroupM, the media-buying arm of WPP Group, said the Indian media would witness 20 per cent growth this year and advertisers would continue to give priority to newspapers and television. India’s newspaper advertising market increased 18 per cent last year.

According to the World Association of Newspapers, 60 of the world’s 100 top-selling dailies are published in Asia, with the sheer population numbers undoubtedly giving it a boost. In China, more than 98 million copies of newspapers were sold every day last year followed by India, with more than 88 million, and Japan with 69 million. In comparison, the US sold only 53 million copies every day and Germany 21 million copies. All of India’s newspapers are privately owned.

“Business is booming and I think there is a lot of hunger to have that [kind of] analysis,” said S Mitra Kalita, the national editor at Mint, a New Delhi business newspaper published by India’s HT Media in association with The Wall Street Journal. “India is so competitive now and as a new product, we want people to read us so we have to redefine the standards of the industry in terms of accuracy and quality.”

The print media continues to attract the largest share of media advertising in India, mainly as a result of the rise of the tabloid and increased regional focus. The Times of India is the largest English-language newspaper, with an average daily distribution of 2.14 million copies. According to the 2006 National Readership Study, the Dainik Jagran is the most widely  circulated Hindi-language newspaper, with 21.2 million readers. 

“We are growing and moving to proper corporatisation of newspapers,” said Mr Ranade of the University of Mumbai. “The Indian reporters are getting more money than before and we will see the industry become more commercial and corporate in the next seven years.”

With advertising revenue being focused on English-language newspapers, most experts agree that there is no chance of any local-language newspapers overtaking the industry. 

“English is the future of this country for the media, and especially for magazines, which are picked up mainly by English speakers,” said Sandipan Singh, the chief operating officer for Images Group, which publishes nearly a dozen industry magazines, mostly in English.

As with many newspapers in the West, Indian newspapers are faced with the challenge of offering a product that positions them as a favourable alternative to the new media boom, and some experts say the incorporation of new media is absolutely imperative for the survival of the newspaper industry.

“Unless they diversify into other media, where advanced literacy is not necessary, then their survival is in jeopardy,” Mr Ranade said. “Newspapers in indigenous languages are turning to other platforms, be it online and satellite networks, but they have to step up these efforts if they want to survive.”

Ms Kalita agreed: “We’ve integrated on the web, reporters blog, I blog, everybody blogs,” she said. “It’s so much more ingrained into multitasking and there is definitely the same shift in readership that has affected the US.”

Back to Dubai…

I’m back from a fantastic week of reporting in Bombay (Mumbai) – which I believe I can say, without hesitation, is the most insane (but wonderful) city I’ve ever visited.  While I had very little time for anything other than work, I did get to catch the tail end of the Ganesha Chaturthi – or Ganesh Festival – which honors the Hindu deity Ganesh, known as the Remover of Obstacles.  

Hindus celebrate this 10 day festival to bestow his presence on earth for all his devotee.  On the final day of the Ganesh festival thousands of plaster idols are immersed into water bodies by devotees.  I was lucky enough to catch this ceremony on my first night in Bombay.  Interestingly enough, I wondered how hundreds of thousands of statues could be immersed in the sea without having either an environmental impact or simply just sitting there for all of eternity!  My friend, a local, told me of a campaign in recent years to make the idols out of plaster that dissolves without having too negative an impacting the sea creatures.  I will post photos soon!

Better pay and jobs keeps Indian workers at home

By Vivian Salama

The National | September 18. 2008 9:20PM UAE

MUMBAI // Higher salaries and increasing market maturity in India are making it increasingly difficult for companies in the GCC to lure skilled labour.
Developments and expansion in the retail, IT and construction sectors are creating more jobs, making it a viable option for many workers to either remain in India or return home from overseas.

“People are attracted back here on the basis of attractive salaries and packages,” said Nicola Evoli, an international sales strategist for Grottini Retail Environments. “There is a demand for a certain calibre of employees in India and, until recently, those positions were given to American, British and Australian consultants. However, more and more you see Indians filling these positions.”

According to the Confederation of Indian Industry (CII), India will require at least 30 million additional skilled workers in sectors such as health care, banking and financial services, retail, the motor vehicle industry and construction by 2015. These sectors employ about 40 million skilled workers. Construction is expected to create between 13 million and 15 million jobs in the next seven years, up 39 per cent from the 33 million it employed last year, according to the CII.

Consequently, the country was expected to have one of the highest pay increases in the world at 14.1 per cent, nearly 10 per cent above the local inflation rate, a Mercer report released earlier this year revealed. Higher salaries and greater employment prospects are making India an appealing alternative to those who once opted to leave the country because of limited prospects.

About six million Indian nationals live in the GCC and account for as much as 50 per cent of the expatriate workforce in some Gulf countries.

“There are several factors in the market that could reduce flows of Indian labour to the UAE,” said Venu Rajamony, the consul general of India in Dubai. “The demand for workers is high and salaries have gone up in India, whereas in the GCC, the cost of living is really going up.”

According to a recent survey released by Bayt.com, nearly three quarters of residents in the UAE say their salaries have not kept pace with the soaring cost of living. The report, released last month, found consumer confidence had taken a hit under inflation and soaring living costs.

However, there is evidence that the region’s governments are working to combat this growing concern.

A Hay Group Compensation and Benefits report, also released last week, revealed that aggressive salary increases, particularly for professional and supervisory jobs in the UAE, were occurring.

Based on information from more than 264 employers throughout the UAE, the average basic salary increase was eight per cent. Some analysts say this is not enough to keep up with the region’s skyrocketing cost of living.

“Inflation will have an impact on attracting new people to the GCC,” said Mary Nicola, an economist with Standard Chartered Bank in Dubai. “Now that the cost of living is more expensive, businesses when trying to set up shop and attract new talent have to fork over more money.”

Certainly, India is not sheltered from the soaring inflation rates taking hold of economies around the world. The country’s inflation rate in recent weeks was quoted at 12.63 per cent, however, the prime minister of India Manmohan Singh said this week he expected that rate to ease slightly to 12.1 per cent later this year.

The Gulf does offer one significant advantage that some analysts believe could hinder India’s efforts to woo labour back to its domestic industries. The government of India imposes an income tax on individuals, companies, firms, co-operative societies and trusts, whereas the Gulf remains tax free. 

“Here in India, there are very high salaries on top-ranking jobs, miserable salaries in the low-ranking jobs, and in between you have not too many attractive positions to attract employment back from overseas markets, especially from the Gulf where the salaries are tax free,” Dr Evoli said. “Just as Dubai is getting very expensive, Mumbai is also getting very expensive, so it is a bit complicated to say that India will remain a better option for employment.”

Some analysts believe that despite the expansion of India’s economy and the development of several industries, the country, with a population of more than 1.1 billion people, cannot keep up with the demand for employment.

“This country needs 20 million jobs every year, but we produce only 10 to 11 million jobs,” said Ireena Vittal, a partner with the consultancy firm McKinsey in Mumbai. “Even if these industries grow to twice their size, I think some people will still opt for employment in the Gulf.”

ICICI Bank denies rumours

Vivian Salama

The National | September 18. 2008 11:38PM UAE 

MUMBAI // ICICI Bank, India’s second-largest lender, has denied rumours that its top executives have been selling their holdings because of its links to the now defunct Lehman Brothers.

ICICI shares fell 5.3 per cent to 560.05 Indian rupees (Dh44.55), their lowest level since July 17, at the close of trading in Mumbai on Wednesday. The bank, which earlier dropped as much as 10.4 per cent, has declined 55 per cent this year.

“These rumours are baseless and irresponsible, and no shares have been sold by members of the top management of the bank during the current year,” ICICI said in a statement.

On Tuesday, the Mumbai-based bank reported that its UK banking subsidiary held €57 million (Dh300m) of senior bonds issued by Lehman Brothers, which filed a petition for bankruptcy earlier this week. 

The securities accounted for less than one per cent of the unit’s assets, said Chanda Kochhar, the joint managing director at ICICI. The UK division, which has already set aside US$12m (Dh44m) to cover losses on the Lehman investment, may increase provisions by $28m.

ICICI is India’s most exposed bank to financial turmoil in the US. 

But with an overall balance sheet of about $100bn, analysts say ICICI’s exposure to Lehman Brothers does not raise serious concerns. 

“There may be a second order or a third order impact down the line, but for now exposure is limited,” said Shankar Narayanaswamy, a senior fixed-income credit analyst for Standard Chartered Bank in Mumbai. “ICICI has been borrowing to expand their international operations, so that will be impacted.”

The rupee eased yesterday as the fall in Asian stocks raised concerns of more capital outflows, but suspected intervention by the central bank curbed a further drop. Asian stocks fell between three and four per cent, with emergency actions by central banks and governments around the world failing to ease a financial crisis that has sent investors fleeing to gold and government bonds.

Earlier this week, India’s Finance Ministry urged the Reserve Bank of India (RBI) to re-examine norms governing derivatives exposure of banks in order to shield the country’s banking sector from ongoing financial fallout from the US. Mr Narayanaswamy said no market was immune to the current crisis.

“In India, the equity markets have been sustained by capital flows from international investors,” he said. “Apart from the issue that valuations are getting questioned, there is an equity issue because of foreigners pulling out money from emerging markets in India and elsewhere, so it is not wise to believe we are immune.”

Shares in ICICI Bank yesterday rose 2.78 per cent to 575.85 rupees.

* with Bloomberg

Retail Developers Head to India

Vivian Salama

The National | September 16. 2008 8:35PM UAE

MUMBAI //Reforms to India’s once obstructive foreign direct investment policies are seen as the driving force needed to ignite the country’s buoyant retail industry by luring property developers from around the world.

Previous barriers, including excessive red tape, have stalled progress to seize the massive opportunities that India’s retail property market has to offer. 

However, policy reforms at the start of this year have opened the doors for more companies to take advantage of India’s booming retail sector.

“The market in the UAE will get saturated very soon, so retail developers have to look at other markets,” said Shavak Srivastava, the managing director of Sq.Ft. Consulting UAE, based in Dubai. “India has had a lot of restrictions as far as foreign investments, but this is now changing. We will see a lot of developers going into the country.”

Worth approximately US$350 billion (Dh1.28 trillion) a year in sales, India’s retail sector is expected to woo more than $35bn in investments in the next five years, according to the consultancy Technopak.

Currently, foreign developers can undertake construction activities within a space of 50,000 square feet. 

However, the Indian government is under pressure to raise that ceiling to facilitate higher foreign direct investment in the property sector. While there have been improvements to government policies, industry leaders say more needs to be done.

“There is still a lot of work needed to clean up the mess in the system,” said Ashwin Puri, the chief executive of Property Zone, a retail property consultancy. “Traditionally, Indian development companies were family-run, so they tended to keep things close to themselves, but now they are beginning to grasp the benefits of foreign investments, so I think we will see a lot of changes to come.”

Only six to seven per cent of India’s retail industry is “organised”, with small businesses traditionally dominating the sector. However, the growing spending power by the country’s emerging middle class has created a massive demand for broader, more diverse retail options.

“Around 300 million people are considered part of the middle and upper middle class in India,” said Mr Srivastava. “All of these people are potential consumers, so there is a huge potential and much more than anything that is offered in the Gulf.”

Malls, not private shops, are the order of the day. About 300 mall projects are currently under way across India, many of which cover more than one million sq ft. More than 100 million sq ft of gross leasable area (GLA) is due for completion by the end of the year, according to India’s Associated Chambers of Commerce and Industry (Assocham).

Numerous UAE-based developers are already tapping into the Indian market in search of new and prosperous opportunities. Emaar MGF, the property developer’s Indian subsidiary, has the most established presence in the country with a number of projects in the works including Central Plaza, a shopping centre in Mohali Hills in Punjab. 

A spokesperson for Emaar MGF said the company planned to contribute approximately 18 million sq ft of retail space and 55 million sq ft of residential development across India by 2010.

Last year, Dubai-based Al Fajer Properties announced a joint venture to create a property fund in India to facilitate investments by small investors in Dubai. Majid al Futtaim Group is also studying opportunities, although no deals have been finalised.

Lulu Group, a subsidiary of Emke Group, also recently started construction on a mixed-used development in the Indian city of Kochi, set to be one of the country’s largest shopping centres. The Dh1.2bn multiplex will include a shopping mall, a five-star hotel and a tower geared exclusively for travel and tourism businesses when it opens in 2010.

Despite the ease of foreign investment restrictions, a number of obstacles still stand in the way of real investment in India’s retail sector. 

The land acquisition process is long and tedious, often deterring companies from carrying through with the process. Skyrocketing property prices have also been a concern, however prices have eased in recent weeks. One of the biggest concerns of industry leaders is the lack of domestic training and experience for properly exploiting the market.

“The country really needs to clean up the mess of the system,” said Mr Puri. 

“India has the resources but doesn’t have experience, and I think that is where a lot of the more developed markets, like those in the GCC, come into play.”

Export Ban Frustrates Farmers

Vivian Salama

The National | September 15. 2008 8:13PM UAE

MUMBAI // Rice farmers are growing increasingly frustrated as their planting season nears and India’s export ban on the grain continues. With planting just two weeks away, farmers fear they will suffer financially as countries, including the UAE, turn to other markets to satisfy demand. 

India’s non-basmati rice – the most affordable and popular variety of this staple grain – has not left its borders since April. The government in New Delhi said the ban was to safeguard domestic supplies for the world’s second-largest population.

However, the embargo has many critics abroad – heavily rice-reliant countries in the Gulf – and in India. This month, the country’s food ministry estimated positive yields of 6.24 million tonnes for the coming rice season, well above the target of 5.2 million tonnes. The government has already opted to lift the ban on corn exports, saying it expected to harvest a bigger crop this year.
“We have to protect the interest of farmers,” India’s agriculture minister, Sharad Pawar, told Reuters.

The Indian government had originally imposed the ban on non- basmati rice last October, but lifted it following protests from exporters. It later re-implemented the ban and added a duty of US$200 (Dh735) per tonne for the export of basmati rice. 

Now, talks to reverse the ban on certain types of rice have stalled, despite positive forecasted yields. Farmers are angered by the ban, saying it is detrimental to India’s agricultural sector.

“Farmers don’t want bans on rice or wheat,” said Balbir Singh Rajewal, a paddy farmer and president of the Bhartiya Kisan Union of Punjab. “When exports are banned, farmers lose money.”

The decision by countries such as India, Egypt and Brazil to limit exports on rice as a way to curb skyrocketing prices and feared domestic shortages has been criticised by Gulf-based retailers whose businesses rely heavily on sales of the grain.

The price of the benchmark 100 per cent B grade white rice was up last week to $735 per tonne, although it has slipped with falling oil prices from its record high of $1,080 per tonne in April.

The UAE imports more than 75,000 tonnes of rice annually from countries including India, Pakistan, Thailand, Vietnam and the Philippines. More than 3.5 million Indians live in GCC countries, with 1.4 million in the UAE alone, making this a hot-button issue in the region.

However, those representing India’s agricultural sector insist that the stakes are even higher domestically. Agriculture is a major component of the economy, from which more than 66 per cent of Indians earn their living. 

While India currently holds a 53 per cent share in the global basmati rice market, many industry insiders are concerned that countries such as those in the GCC, which once relied heavily on India for their rice supplies, will turn to other sources such as Pakistan and Thailand to satisfy demand.

“A lot of that rice is coming into the Middle East right now, but what is happening is that non-basmati has been replaced from countries like Thailand, where prices are starting to get lower week by week,” explained Sunil Bhanji, the Middle East general manager for Tilda, which has its farms in the Indian state of Haryana.

Burhan Turkmani, the general manager of Al Rabiah Trading, based in Dubai, said: “We used to get our non-basmati rice from India but ever since the ban, we have been importing non-basmati from any other countries, like Thailand. For other types of rice, we try not to rely on India now because their prices have soared since the ban.”

Today, the food chain that takes the most basic items from the ground, and via a series of wholesalers and middlemen eventually into a retail shop and into consumers’ hands, has come under strain, with soaring oil and food prices gripping the world. Retailers in the UAE, who have been forced to cap their prices in recent months, say importers should pay the price. But importers say they are at the mercy of exporters.

“In terms of who calls the shots or holds more clout with regard to the distribution chain, it would be the middleman, often private exporters or marketing boards who take from the farmer and then set export prices,” explained Abah Ofon, a soft commodities analyst for Standard Chartered Bank.

Governments in the GCC have recently made it their priority to build up strategic food reserves to protect against export bans and high prices, while eliminating the added costs brought on by middlemen. The Government of Abu Dhabi has already finalised a scheme to purchase farmland in Northern Sudan, and is currently in talks with the governments of Pakistan, Egypt and Kazakhstan. 

Indian farmers insist that rather than curbing exports, their country’s agricultural sector would benefit far more from similar investments by the GCC countries. 

“This would bring many good things to India,” Mr Setia said. “India now encourages foreign investment and farmland investments would be a welcome step.”

Dubai’s non-oil trade jumps 54 per cent

Vivian Salama

The National

September 7. 2008 6:20PM GMT

DUBAI // Non-oil foreign trade surged by 54 per cent in the first half of the year in Dubai as the emirate continues to diversify away from its dependence on fossil fuel and transform itself into an economic hub.

Dubai recorded a massive jump of Dh104.4 billion (US$28.4bn) in non-oil foreign trade compared with the same period last year, to reach Dh296.6b, according to a report released by Dubai World’s contracts and statistics department, which is commissioned by the Government to compile the trade figures. 

The department said exports recorded significant growth, expanding by Dh7.5bn, or 59 per cent, in the first half of the year to Dh20.1bn. Re-exports registered similar gains, jumping 58 per cent to Dh70.3bn. 

Saeed al Qaizi, the director of procurement for the department, said Dubai had established itself as a trading hub for investments in various industries. 

“Excellent development of infrastructure and reinforcement of its competitive potentials have helped Dubai to become an attractive economic hub,” said Mr Qaizi. Abu Dhabi also showed significant gains in the first half of the year, growing by 28.4 per cent to Dh46.64bn. Non-oil trade is a central cornerstone to the UAE’s economy as it seeks to move away from its oil dependency.

“What you are seeing is growing trade of capital goods as the UAE diversifies and they expand their different industries,” explained Mary Nicola, an economist with Standard Chartered Bank. 

“One of the chief areas of trade is capital transfer and knowledge transfer, and that is where Asia comes to play.”

Ms Nicola said the UAE did not run the risk of a deficit with a trade surplus of close to 20 per cent. However, she said an increasing GDP per capita was accompanied by an increase in reliance on consumer goods, particularly in the UAE, where consumption levels were high. 

“There will be an increased reliance on other countries, particularly for consumer goods – not only for food but even clothes, cars and consumer goods like electronics,” she said. 

“As people get richer, they want to spend more, so you will see more imports from other countries… with food being the main issue here.”

India topped the list of Dubai’s main trading partners in the import, export and re-export sectors during the period. 
In imports, bilateral trade volume grew by 49.6 per cent, reaching Dh24.1bn against Dh16.1bn in the first half of last year. 

“Trade relations have been doing very well and India’s direct contacts with the UAE, and particularly Dubai, go back centuries,” said Venu Rajamony, India’s consul general in Dubai. “We have been one of the number one trading partners [with Dubai] for a long time, and we are happy to maintain that position.”

Dominating the list of imports from India are gems and jewellery, vegetables, fruits, spices, engineering goods, tea, meat, rice, textiles, marine products, machinery and plastic products. 

Rice trade has been an issue of contention between India and the UAE in recent months, since India decided to ban the export of all non-basmati rice in an effort to alleviate soaring food prices and potential shortages at home.

Mr Rajamony said he understood his government was considering lifting the ban on one type of rice, but “nothing has been decided yet as far as I know”.

China was Dubai’s second-biggest trading partner, reaching Dh23.8bn and up 29.9 per cent compared with the same period last year. The US maintained third place with Dh16.4bn worth of imports during the period.

India also topped trading partners in exports at Dh8.3bn during the first six months of the year, a growth rate of 44.4 per cent. 

Mr Rajamony said the Indian government hoped the two countries would engage in greater trade in the engineering and agriculture sectors. 

Switzerland was the second-largest recipient of Dubai exports at Dh1.5bn, growing by a staggering 6,040 per cent since the first half of last year. 
The Jebel Ali Free Zone has also jumped significantly from 16th place to third, with exports reaching Dh800 million.

India once again topped the list of re-export partners, at Dh21.9bn, followed by Iran at Dh10.2bn and Switzerland with Dh4.8bn.

vsalama@thenational.ae

Retailers Seek Relief from Importers

 

By Vivian Salama

The National

DUBAI // Tensions are brewing between UAE-based importers and food retailers over ways to ease the burden of rising commodity prices. Record prices on staple items such as rice and wheat have left supermarkets scrambling for solutions to help customers cope.

“We’re not shying away from our responsibilities,” said V Nandakumar, a spokesman for Lulu hypermarkets, which signed a memorandum of understanding last month with the Ministry of Economy implementing price caps on 32 basic items. “From the wholesalers and importers and suppliers, we hope that they also follow similar price caps or some kind of measures to curb the [impact of] inflation.”

However, according to Burhan Turkmani, the general manager of the Dubai-based Al Rabiah Trading, importers are at the mercy of global exporting countries as market prices on commodities continue to climb.

“We are dealing with exporters and brokers outside this country, so the price is out of our hands and in their hands,” said Mr Turkmani, whose company imports staple foods from countries including Thailand, Vietnam, Pakistan, India and Egypt.

Various factors, including limited water and agricultural land, force countries in the Gulf to rely heavily on imported food items. The UAE imports nearly 85 per cent of its food. However, more than 70 per cent of all UAE food imports, worth Dh11.01 billion (US$2.9bn) annually, are then re-exported to markets around the world, including other GCC countries, the Indian subcontinent, North and East Africa, and the Central Asian Republics.

Global rice prices jumped from US$650 to US$1,000 a tonne in the first three months of this year, reaching a 25-year high. Last week, Thai rice surged to a record US$1,000 a tonne, three times its level in January, and India’s export prices for basmati rice rose from US$1,100 to US$1,200. In March, India halted exports of non-basmati rice as a way to curb rising prices and avoid domestic shortages, a move that has attracted strong criticism from UAE retailers, whose customers include the 1.4 million Indian nationals living here.

According to Riaz Hussein Bhojani, the general manager of a Dubai-based importer, Rashwell Company, the landed price of Pakistani basmati rice is now Dh5,505 a tonne, up from Dh2,569 last year. Mr Bhojani said he now paid as much as Dh230 for a 39kg sack of Pakistani basmati rice. Al Rabiah pays about Dh160 for each 38kg bag of Indian basmati rice, up from Dh115 last year.

“There is absolutely no point in putting a cap on anybody without listening to the importers,” said Mr Bhojani. “The Government needs to form a price committee and then take people from the importers and from ministry and maybe some retailers and find solutions.”

This week, Baniyas Co-operative Society followed the lead of larger retailers such as Carrefour, Union Co-operative Society and Lulu hypermarkets by implementing price caps on dozens of basic commodities in an effort to ease the burden of inflation. Many retailers fear that price caps will ultimately result in losses since they are buying their commodity stocks at one price but selling them for less.

“Price caps should be on the suppliers, not the retailers,” said David Berrick, the retail general manager of Abela Supermarkets. “We can lower our prices and use the marketing tool of ‘everyday low prices’, but if supplier costs go up, we have no choice but to raise prices.”

Mr Turkmani said he understood the concerns of retailers. However, suppliers are being faced with similar challenges. “If importing costs go up, then we are left with no choice but to boost our prices,” he said.

This week, the Ministry of Economy urged retailers to start stockpiling basic food items to prevent shortages caused by export bans in countries such India, Egypt and Brazil. The ministry has also urged local retailers to consider eliminating the middlemen when importing 15 basic commodities as a cost-cutting measure.

“It’s cheaper for the hypermarkets to buy from the farms directly because it eliminates the costs from middle agencies plus it encourages greater sales competition, which ultimately benefits the consumer,” said a spokesman for the Emirates Society of Consumer Protection.

Mr Turkmani objects to such alternatives, saying the industry will suffer major consequences. “Retailers don’t have the experience to deal directly with the farmers,” he said. “We know the best locations, have the best contacts, and can find the best quality of food out there. Eliminating importers would be a mistake.”

The chief executive of Carrefour shares the Government’s sentiments. “We are obliged to find new resources,” said José Luis Duràn last month at the World Retail Congress in Barcelona, Spain. “We must ask how we can work directly with farmers to ensure sustainability, good quality, with reasonable prices.”

Ultimately, said Mr Nandakumar of Lulu, dialogue between regional retailers and importers had thus far been counterproductive. “We are having a blame game here,” he said. “We did our part. Now some kind of initiative from the suppliers and importers must be done to gain the confidence of the country.”

India to relax limits on rice exports

Vivian Salama in Dubai and Surya Bhattacharya in Abu Dhabi

April 24. 2008 8:36PM GMT

 

DUBAI // India will ease its restrictions on rice exports to the UAE, as fears of inflation-driven food shortages spread, according Kamal Nath, India’s Minister of Commerce and Industry. 

During a visit to Dubai this week Mr Nath said that a surplus in this season’s rice and wheat production has reduced the likelihood of lengthy export bans.

“We’ve had record crops,” he said yesterday. “We had 227.2 million tonnes in output of rice, wheat and spices, showing a positive trend.”

Government officials estimate that India will export some 5.5 million tonnes of rice in the next year, up from 3.8 million tonnes last year.

The government had originally imposed the ban last October but lifted it following protests from exporters.

Last month’s decision by Delhi to halt exports of non-basmati rice as a way of curbing skyrocketing domestic prices and reducing the danger of local shortages has received much critisism from UAE retailers, whose businesses rely heavily on sales of the grain.

More than 3.5 million Indian nationals live in the Gulf Co-operation Council (GCC) countries, with 1.4 million in the UAE alone, a population the minister said his government is very sensitive to.

“We are conscious that there is a large Indian population and they need to have rice of Indian origin, so we are looking to find a way out,” Mr Nath said.

The UAE imports 80,000 tonnes of rice annually from countries including India, Pakistan, Thailand, Vietnam and the Philippines. While it is not one of the world’s largest importers of the grain, the significant size of the low-income population that consumes rice makes it a critical issue, according to economists.

“Given their salaries, they are most affected, because they spend a large portion of their income on food,” said Abah Ofon, a commodity analyst with Standard Chartered Bank.

Global rice prices jumped from US$650 (Dh2387) to $1,000 per tonne in the first three months of this year alone, hitting a 25-year high. India’s export prices for basmati rice have also gone up from $1,100 to $1,200 in an effort to reduce external demand.

This week, as members of Dubai’s Indian community gathered to welcome Mr Nath, Yusuf Ali, the chief executive of Emke group, which owns the Lulu supermarket chain, appealed publicly to the minister, saying that the removal of rice bans is an issue of great urgency.

“I am forced to make a request on behalf of the UAE,” said Mr Ali. “If this continues, it could become a severe problem in two to three months.”

Several UAE supermarket groups have sought to ease the burden of inflation by implementing price caps on various basic commodities. Last week Carrefour, the region’s largest retailer, signed a memorandum of understanding (MoU) with the Economy Ministry freezing prices on 52 items. Earlier pacts were also signed with the Union Co-operative Society and Lulu Supermarkets, placing ceilings on essentials such as cooking oil, flour, sugar, milk and eggs.

However, Mr Nath criticized the use of price caps as a tool for easing the impact of inflation, saying that it fails to address the underlying cause of the problem. 

“You can’t have price caps at the retail level, you can only have it at the supplier level,” he said, adding that he believes the inflation level has peaked. 

The problem high prices is not limited to this region, with the UN World Food Programme (WFP) describing soaring food prices as a “silent tsunami.” Yesterday, For the first time US rice prices surpassed the $25 mark per 100 pounds on the Chicago exchange yesterday and Wal-Mart, the world’s largest retailer, has restricted the purchases of certain types of rice at its Sam’s Club warehouse stores.

“I am concerned,” said Khaled Zanul Abid, the general manager of Talal Supermarkets in Jebel Ali. “I’m from India – if I can’t get the rice that I eat then it will be a big problem for me and the same for my Indian customers.”

While fears of rice shortages are of major concern to both consumers and food retailers, local advocacy groups warn that a fixation on one commodity could cause the prices of other products to spiral.

“This is not just limited to rice,” said Mohammed Mohammed, the head of membership for the Emirates Society of Consumer Protection, a subsidiary of the Economy Ministry. “It is so important that the country doesn’t focus only on this issue because, when you close the door on alternatives, you risk creating problems that are far bigger than any country’s abilities [to solve].”

vsalama@thenational.ae

sbhattacharya@thenational.ae

Who Can Match Israel’s Lobby?

Here’s my latest commentary in PostGlobal (washingtonpost.com)  As always, I am interested to hear your thoughts!

by Vivian Salama

The day after I returned from a three-year stint reporting in the Middle East, while war raged between Israel and Hezbollah militants, I turned on the news back here at home. It was eye-opening.

At the time I was jet-lagged, culture-shocked, and feeling seriously withdrawn from the controversy from which I had so suddenly removed myself. It was a difficult time to return. The first story I saw on TV was a pro-Israel war rally taking place here in New York. Would-be presidential candidate Hillary Clinton gave the keynote address. She told the crowd of thousands, “We will stand with Israel because Israel is standing for American values as well as Israeli ones.”

A day or two later, still glued to the television set, I caught one of Pat Buchanan’s several MSNBC appearances. With the blunt candor he is known for, Buchanan said, with regard to presidential hopefuls and the Israel-Hezbollah war, “Let’s face it: there are more people in America who will vote for you because you are pro-Israel than those who will vote for you because you are pro-Arab.”

According to Mearsheimer and Walt, authors of the controversial Israel Lobby, “we use ‘the Lobby’ as a convenient short-hand term for the loose coalition of individuals and organizations who actively work to shape U.S. foreign policy in a pro-Israel direction.” Of course, this should not be blurred with the Jewish lobby. The Israel Lobby has more influence on U.S. foreign policy because it has the support of many conservative Christian groups, which the mainstream media dubbed “Christian Zionists” in the days following September 11th. Certainly it is worth noting that Israel receives the most U.S. foreign aid per year ($2.5 billion in 2006, according to Reuters), though I hesitate to say that this is directly the result of the lobby – especially since Egypt and Colombia, the second and third highest recipients, respectfully, do not have nearly the same lobbying support as does Israel.

Rather than question the power and/or influence of the Israel lobby, I’d like to pose a related question: Is there any lobby that is nearly as influential as Israel’s? The recent decision by a U.S. Congressional panel to recognize the Armenian genocide in Ottoman Turkey was a major success for the Armenian Lobby in America – though it came after many years of lobbying. After a countermeasure supported by the Turkish Lobby, as many as eleven House members later withdrew their support for the genocide resolution. Of course, this is likely due to America’s reliance on Turkey as a strategic regional partner rather than the Turkish lobby’s pull in Washington. The Indian Lobby has been gaining ground in the U.S., particularly in light of the somewhat recent nuclear deal between the U.S. and India.

Still, none have mobilized in the way the Israel Lobby has since the days of World War II. (An interesting book documenting the earlier days of the Israel/Jewish Lobby is Arieh J. Kochavi’s “Post-Holocaust Politics”).

What about the Arab lobby? There is no cohesive Arab lobby in the U.S. Groups such as the American-Arab Anti-Discrimination Committee, the Arab American Institute (AAI) and a few Islamic groups pose as lobbyists, but it is really the oil companies (or their respective Gulf monarchs) and various donors who serve as the true supplicants. The problem is that they do not truly represent the Arab people.

There’s no telling whether recent developments, including Condoleezza Rice’s comments about the imminence of a Palestinian state or AIPAC’s legal troubles, will eventually level the lobbying playing field. For now, however, it is hard to imagine that any group will surpass the Israel lobby’s ability to win hearts and minds in Washington.