GOIC calls for dairy union

A new report has called for the establishment of a dairy producers and manufacturers union in the GCC as a step towards ending price wars and unifying industry policies.

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By  Lynne Nolan Published  May 2, 2006

A recommendation has been made for a dairy producers and manufacturers union to be established in the GCC. According to the report by the Gulf Organisation for Industrial Consulting (GOIC), the union would direct investments towards certain dairy products such as cheese and butter, and establish a research institute for dairy and milk production. The report highlights obstacles facing the industry, including the lack of natural grazing, the need for investment to set up advanced irrigation systems, high weather temperatures and climate change. “The lack of co-ordination between industrialists in member states can be considered among the causes of the growth of the Gulf industry being impeded. The GOIC has called for the establishment of a Gulf union to put an end to a price war, similar to two years ago,” commented Nasser Alhussain, head of information unit, GOIC. One senior manager of a UAE cooperative supermarket however, said that although anything is possible, with so many different markets — each with their own strong points and problems — and private companies with different strategies, establishing a union would be very difficult. “There is a tendency for people to think that retailers are exploiting the customers so a cartel would avoid overcharging, but this is untrue. Consumers are not idiots. With more products than consumers, there is more choice than ever, and without a union, consumers have cheaper produce on offer, as well as promotions,” he said. Finding new markets, observing quality issues such as filling and packaging, paying attention to training and encouraging exports are all steps recommended in the report to solve the problems facing the sector. There are currently 153 dairy factories in the GCC with a design capacity of 3.2 million tonnes annually. Investments are estimated at US $1.8 billion and there are 21,666 employees. Saudi Arabia alone owns the largest number of working factories, where its share is about 60%. It is understood that a union would contribute to the development of the dairy sector through a number of missions, such as drawing up a policy for manufacturing, buying and marketing dairy goods, as well as granting new licenses for working in the dairy sector.

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