Kuwait's food industry faces difficult challenges - includes related article on Kuwait's living conditions

AgExporter, Sept, 1991 by Hovaguim M. Kizirian, Philip A. Letarte

Kuwait's Food Industry Faces Difficult Challenges

To anyone with access to a television or newspaper, the fact that Kuwait was hard hit by the Persian Gulf War is painfully obvious. However, general conditions there since liberation are slowly improving. The food sector, in particular, was left in disarray and faces a number of challenges in order to get back to normal.

For example, dairy and poultry farms were reportedly destroyed or damaged with the flocks and herds lost. These businesses provided just over one-third of local poultry and egg needs. About 35 dairy operations supplied milk from a total herd of 15,000 dairy cattle.

The Kuwaiti government is expected to assist in rehabilitating these farms and restoring their flocks and herds, but no decision has been announced yet.

Kuwait also produced a modest amount of greenhouse vegetables. Most of the greenhouses are damaged or inoperative because of the absence of their owners and staff.

Importing/Wholesaling

At present, about 20 percent of Kuwait's food importers and wholesalers are reportedly in operation, with more trickling back every week. Most food companies were owned or managed by Palestinian and Jordanian expatriates, whose return to Kuwait is uncertain.

Food firms currently operating are those managed by Kuwaitis, including the government-owned Kuwait Supply Company, Kuwait Flour Mills and Bakeries Company and the Livestock Transport and Trading Company. It appears that an increasing number of the pre-invasion firms will be managed directly by the original Kuwaiti sponsors, or with the help of expatriates from friendly nations.

Port Handling Facilities Limited

Only the Shuaiba port is presently operational. Its use is limited because most of the port handling facilities, such as fork-lifts, container cranes and storage facilities, were either taken or destroyed by the Iraqis.

Food imports into Kuwait up to now have arrived by truck via Saudi Arabia or by ship from Dubai.

Immediately after liberation, the Kuwaiti government's Supply Committee, operating from Dammam, Saudi Arabia, purchased a wide range of food and non-food consumer items from Saudi Arabia and Dubai and sent them to Kuwait by land. These were distributed free during the first month after liberation to all residents by the Kuwait Supply Company through consumer cooperatives.

Since then, the products have been sold in the cooperatives at cost. The Supply Committee recently discontinued the above operations and the cooperatives are now being supplied through normal distribution channels.

The Kuwaiti government loaned the Kuwait Union of Consumer Cooperatives US$70 million so it could restock necessary food and consumer items for its member cooperatives. The Union established a purchasing office in Dubai, United Arab Emirates, for this purpose.

The Kuwait Supply Company will soon revert to its pre-invasion role of importer, distributor and subsidizer of food products deemed to be essential. These products include rice, white sugar, milk powder, barley and corn for feed.

The government-controlled Kuwait Flour Mills and Bakeries Company recently received a shipment of 30,000 metric tons of Saudi wheat. Its general manager said that it has stocks of Saudi flour which will be sufficient for about two months. After that, it will need to import wheat to meet the country's flour needs. Since USDA authorized an Export Enhancement Program initiative for wheat to Kuwait in June, over one-fourth of this allocation has been purchased by the Kuwait Flour Mills and Bakeries Company.

The Kuwait Livestock Transport and Trading Company resumed importing live sheep and cattle for slaughter in Kuwait. It has already received a delivery of sheep from Australia.

In addition to the above state-controlled or subsidized companies, a small but growing numbers of established or new-to-market private food companies are importing food and other consumer products from firms in Saudi Arabia, Dubai and Bahrain. These firms are supplying the cooperative societies as well as private retail outlets with fresh, frozen and dry food products. The restoration of electric power to most of Kuwait City and its surroundings has facilitated the importation and distribution of frozen and chilled foods.

No Changes Seen in Retailing

An estimated 75 percent of food retailing in Kuwait was handled by the cooperative societies before the invasion. No change is expected in that pattern in the immediate future.

There are 40 cooperatives in Kuwait with over 600 branches. Two cooperatives are not in operation but will resume business in the near future. Also, a large number of branches are closed due to lack of staff, destruction of facilities and/or reduced business.

The cooperatives are poorly stocked at present. About 50 percent of the shelves in some cooperatives are empty. Compared to pre-invasion levels, stocks are down by 50-60 percent at the present time, with new orders "on the water."

The balanced of the retail trade is handled by private firms. This includes large Western-style supermarkets, smaller neighborhood stores and the central market.