Restoring
the agro-food Industry is going to be an essential component of
reconstruction efforts in Iraq, notes Frost & Sullivan’s Food
Practice
Dubai, United Arab Emirates-Tuesday 28 August 2018 [ AETOS Wire ]
Iraq
is among the most non-developed countries in the agro-food industry
across Middle East and North Africa. The country lost its glory owing to
the wars in the last 2 decades, extremist conflicts, drought and past
sanctions. The development of the agro-food industry slowed since 2003
and the country depended on imports to cater to its essential needs.
Many SMEs have either closed down or operating at only 20-30% of their
capacity due to restrictions which hamper their productivity.
Now
that the ISIS conflicts have subsided, stabilisation and humanitarian
efforts are being taken, along with budgets allocated by large
international financiers (Word Bank, IMF, etc.). These measures are
expected to revitalize the sector. Food security, self-sufficiency,
benefit for poor population in both rural and urban areas are some of
the key objectives of Iraqi agro-food policies, as part of the 2018/19
Budget.
As
a part of the agro-foods industry, the Iraq packaged foods sector has
great potential to grow. Iraq’s population is expected to boom, reaching
over 47 million people by 2025, and perhaps as much as 50 million by
2035. Besides, factors like large youth population, rise in GDP per
capita and ongoing security stabilization programs are expected to drive
the packaged foods market in Iraq. Most importantly, Iraq hosts more
than 20 million Shia pilgrims every year which increases the market to
more than 60 million people.
“Canned
foods, semi-prepared meals, cereals, pasta, pickles, snacks and
confectioneries are expected to grow at CAGR of 8-10% within the next 5
years. Flour-based products, dairies, chocolates & confectionary
products, canned food, processed meat, tomato pastes and sauces
accounted for over 70% of the total packaged food market in Iraq,” said
Ali Mirmohammad, Sr. Consultant and Business Development Manager at
Frost & Sullivan.
For more information on this analysis and to access the info graphics, click here.
“Poverty
reduction and food security programs supported by World Bank and IMF to
raise household disposable incomes and reduce the unemployment rate
among youth population are key market drivers for the packaged foods
market in the next 5 years. As a result, it is expected that the quality
will be more important than price among mid-level citizens. Western
tastes, beside quality of packaging and more natural tastes are going to
be more important among youth population in Iraq”, said Mirmohammad.
“The Iraqi food market craves for western style supermarkets and large
fast food chain services in large cities like Baghdad, Basra and KRG
region”.
In
spite of the challenges of doing business in Iraq, it calls for
emerging investment opportunities from global players. Renovations,
technology upgradation, modern management and appropriate supply chain
systems are key development factors for the Iraqi packaged food
industry. Apart from that, the country needs billions of dollars
investment as an immediate outlay to develop relevant infrastructures
such as water, electricity, transportation fleets, warehouses, cold
storages, etc.
Food
security and unemployment being major concerns, the Government plans to
support local manufacturing and cut imports by at least 30-35% within
the next 5 years. Currently, the country imports more than USD 6 billion
of agro-food products (both officially and under the table cross border
supplies) from neighbours as local manufacturing cannot meet more than
20-25% of domestic demand. Insufficient agricultural feedstock,
expensive logistics and lack of liquidity is the reason for local food
companies to lack a competitive edge over international rivals.
The
initial plan is to leverage managerial and technological leadership of
global players to revitalise local manufacturing facilities in dates
pressing, dairies, vegetable oils, flour mills, pasta, canned and frozen
foods, bottled water, soft drinks and bread products. An attractive
legal framework has been established for greater protection and
incentives for new investors. To facilitate investment, the National
Investment Law 13 (2006) has been amended to allow non-Iraqis to own
land, as well as investment partnerships with state-owned enterprises.
The same law exempts foreign companies from tax for up to 10 years and
import fees for a period of three years.
Post
the ISIS war, the outlook for foreign direct investment in Iraq is
expected to improve with strengthened security and a more normalised
business environment. Consequently, both regional and global alliances
will support the country in its reconstruction efforts are this is
expected to drive the economy’s growth in the mid-term. As a result,
Iraq can be an important emerging market destination for regional and
global players; however, having a good market share requires a great
understanding of the socio-cultural composition besides religion and
taste factors.
Frost
& Sullivan recently came out with a thought leadership document
titled “Iraq’s Untapped Opportunities; Path to Investment Boom”
highlighting the country’s economic growth across various sectors. Click
here to view the press release of this analysis. The document also
covers the packaged foods market in Iraq which has great potential,
attracting immense investment opportunities from global companies.
If
you are interested in gaining more information on Iraq’s packaged food
market and speaking with our experts, please feel free to get in touch
with me at achandhoke@frost.com.
About Frost & Sullivan
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over five decades, Frost & Sullivan has become world-renowned
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Trends, new business models and companies to action, resulting in a
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Contacts
Anita Chandhoke
Corporate Communications - MEA
E: achandhoke@frost.com
http://ww2.frost.com
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