Demand And Supply Of Agricultural Products

motive And make out Of Agricultural ProductsThe floriculture in UAE is reserved to dates, vegetables, fish, eggs and dairy products (Ministry of Foreign trade, 2011). Tunnel body politic is the way forward to agriculture in UAE, more than and more people argon learning the techniques involved in dig farming. For a country like UAE which is a surrender the sphere on hand(predicate) for farming is limited, and the piss resources ar to a fault limited, in that locationfore development the modish technologies in farming plays a vital role in dictatorial the ply and pack of awkward products in UAE.Water plays an historic role in change magnitude or decreasing the supply of local unsophisticated products in UAE. One of the studies revealed that the consumption of water in UAE on individual basis is one of the highschoolest in the origination (Gorn exclusively Tordorova, 2009). For a country with already a precise low export of bucolic products and local issue, hi gh water consumption makes it even more complex to cater for shortages of rural products in UAE.The Government in UAE is involved in discovering new ways to make up the charge gettable for cultivation by using desert reclamation initiatives (Salama, 2008). The government has a muniment of investing in tree planting schemes and irrigation systems to increase the substance coarse production of UAE. The planting schemes involve planting trees which aid crops to survive wind and as well as stop soil erosion, the schemes also involve initiatives to plant shrubs and date palms. According to figures released by Ministry of Agriculture and Fisheries, UAE is producing 600,000 tonnes of crops approximately which include, cucumbers, tomatoes, lettuce, aubergines, cabbages and feed for live stock. The Government of UAE is rapidly change magnitude the land available for cultivation by converting desert into cultivated land one of the example is the 40,500 hectares of land available f or cultivation along the Liwa Oasis, which has been converted from dessert into cultivatable land, in UAE there are more than 6,000 greenhouses and 22,700 farms.UAE is also committed to invest in agriculture overseas on islands and some other part of the founding, because 85 per cent of the pastoral products in UAE are import which include wheat, rice and corn. This is a major threat go about by a country clip to become the business hub of the foundation with an change magnitude population, therefore the supply and bespeak forces play a major role in agriculture in UAE. some other strategy followed by UAE to tackle pabulum shortages is to create food storage facilities where large quantities of uncouth products could be stored for longer time periods.Agricultural Imports and Exports of UAEUAE is the largest importer of agricultural products in the region and the imports of agricultural product in UAE will increase this year following(a) the drought in the major expo rters of agricultural products in the world which are Russia and Ukraine. Consequently rapidly changing the ask and supply of agricultural products in UAE and presents a major challenge for the Government to deal with supply and conduct forces in Agricultural products.The global food crisis has reached alarming emplacement posing a major threat to economies with increasing population and consumption of agricultural products. Also the major suppliers of world agricultural products will experience a reduction in their yield of agricultural products this year due to draughts in different parts of the world. The world crop production has change magnitude due to the use of latest techniques for farming as shown by the following figure-1 (GRIDA, n.d.).figure07.jpgFigure Trends in crop production of the worldThe increase in world crop production here is because of the increased cropland and rangeland area, increased of yield and greater cropping intensity. Therefore to cater the curre nt demand of agricultural products it is necessary to use the latest technologies to increase the yield. As the interpret clearly shows the most production increase is seen in Soybeans showing more than 4 per cent increase in the production. Cotton wheat and rice take a lot of water hence are impossible to be position in a desert with limited water resources, therefore wheat and rice also adds up to the demand in agricultural products in UAE. Abu Dhabi is pass in agricultural research and development to come up with new ways of farming using minimal water resources. One of the most important techniques to save water in agriculture is to use piping systems, this system enables the farmer to save water in agriculture up to 40 per cent thence the classical techniques of farming.Following the credit crunch the world has moved into era of scarcity of resources and an increase in the population, more and more people are moving into urban areas in search of a better future and business opportunities. The phenomenon of the move to urban areas is creating humungous pressure on the demand created by urban areas for agricultural products. Most of the agricultural products are used as part of food therefore an increase in population is directly related to the demand created for agricultural products. Another factor affecting the supply of the agricultural products is the limited life of the product due to which suppliers have to pay heavy cost in storing the products at long last affecting the supply of agricultural products.Therefore supplying agricultural products from all over the world becomes a challenge for even the developed economies of the world with limited local production of agricultural products. In the global colonisation the consumer in UAE is ready to pay higher prices for quality agricultural products following which the suppliers in agricultural establish countries are targeting UAE to earn better profits. Attracting suppliers from India, Pakistan, Russia, Ukraine, US, Australia and other parts of the world have lift offed shipping their agricultural products to the consumers in UAE. Due to complexities and investings involved in shipping agricultural products overseas and selling it to buyers overseas, the farmers in agriculture enriched countries restrain from getting involved in foreign trade. Inviting speculators in the trade who buy the products from farmers and then sell it in international markets, these speculators hold the power of affecting the price of agricultural products because of the ability to store and hold large quantities of a particular product. enable speculators to store the product until they find the right price to reap higher profits, this creates a shortage in supply and increasing the demand for the product which last increases the price of the product to the level at which the speculators are ready to sell their products to the consumers in UAE.ImportsUAE is the largest importer of agricultura l products in the Gulf, the consumers of UAE have the highest consumption when it comes to consuming water and other agricultural products. Due to limited resources for agricultural activities the country has to heavily rely on agricultural imports from all over the world. UAE is also used as a re-export hub of the world many suppliers buy their products from underdeveloped or developing countries of the world with trade restrictions and then bring the products to UAE enabling them to ship the products anywhere in world, the geographical location of UAE makes it attractive for suppliers from all over the world for re-exports.The agricultural products imported in UAE areWheatRiceCornTobaccoConsumer Ready Goods internalityFruit veg ProductsLive Animals and their productsAnimal and vegetable fats, oils and waxesWheat, rice and cotton are completed exported from other parts of the world due to high water consumption involved in the production of these products. Tobacco, Meat, Fruit, an d vegetable products are also being planted in UAE using the latest tunnel techniques enabling year round production and helping UAE to cope with the extraordinary demand created for agricultural by a multiplying society. This year the imports are believed to surge again following the international food crisis, but the worlds production of agricultural products has also increased. Farmers all over the world are involved in using latest techniques of farming increasing the total production per area and reducing the water consumption by 40 per cent, enabling farmers to produce at lower cost.UAE imported AED 3.71 billion worth of agricultural products from US alone in 2011, which was up from AED 440 million in 2010 (Duncan, 2012). This shows the rapid increase in the consumption consequently increasing the demand for agricultural products in UAE. This rapid increase in the consumption of UAE in just one year is directly related to the increase in the population of UAE and also the coun try is set to become the business hub of the world attracting more tourist and business men from all over the world increasing the consumption of agricultural products. UAE also imports agricultural products from other parts of the world. Some of the top agricultural imports of UAE are shown with the help of following figure-2 (Gulfood 2010 Briefing, 2010).Figure UAE Top agricultural ImportsThe graph clearly shows the major imports which are hides skins, fats oils, wood products, Meat Animals, prepared Foods and vegetable products. The major chunk of the UAE agricultural demand is the vegetable products as shown by the graph above, the vegetable products have limited life hence require storage capabilities to extend the life of the product, due to which the supply of vegetables becomes a complex execution starting from the farmer in the developing countries and making it available in the local store of UAE. Abu Dhabi has taken many initiatives to grow vegetables using tunnel fa rming enabling the farmers to produce round the year and also doubling the yield at the same time reducing the water consumption of the crop as well.The government in UAE is involved in initiatives to promote urban farming by offering agricultural studies in colleges and schools and also providing awareness on how to start urban farming, in effort to fight the huge imports of agricultural products in UAE. One of the ideas recently introduce is to use rooftops of buildings in urban areas for farming purposes, tunnels could be used to create the atmosphere required for the production of any crop year round. At the moment UAE is importing agricultural products from all over the world to tackle its sharply rising imports of agricultural products. Another step taken by the government is to invest in agriculture overseas to tackle the world food crisis.UAE has become the major importer of Agricultural products in the region, the major countries which import to UAE are 18 percentage impor ts are from India, 13 percent from Brazil, 12 percent China, 10 percent United States, 8 percent Australia and the rest 39 percent of the agricultural products are imported from other parts of the world as shown by the pie chart in figure-3.Figure 2007 Data for Dubai and Sharjah Percent Market ShareIndia being the largest supplier of agricultural products to UAE in 2007, the pie chart clearly shows the sizeableness of UAE in the agriculture of the world. Therefore the supply of agricultural products to UAE is a matter affecting the whole world and the food prices in the world, in this time of ceding back it is vital for an economy like UAE to reach equilibrium in the supply and demand of agricultural products to provide sufficient food for the country.In the trade of agricultural products Imports play a major role in case of UAE as shown by the figures above. Therefore in reaching equilibrium in supply and demand forces or agricultural products in UAE managing imports is very im portant. The government of UAE is actively involved in investing overseas to meet the increasing demand of agricultural products in UAE, following the world food crisis it is predicted that the UAE food consumption will increase exerting more pressure on the consumption driving the demand even more higher than the current levels and eventually increasing imports of agricultural products to the country.ExportsThe exports of agricultural products from UAE have been limited to dates and other few vegetable products, agriculture in desert requires desert reclamation. UAE government is involved in initiatives for desert reclamation to increase the local production of agricultural products.The exports of agricultural products in UAE includeDatesAnimal or Vegetable Fats, oils and waxesLive animals and their productsVegetable ProductsDates have been historically imported from UAE which is a competitive edge of the country in the industry to be able to produce high quality dates, alongside w hich the government is also starting initiatives to commercialize camel milk in surge to reduce the import of milk and start exporting milk from UAE. Tunnel farming has enabled farmers in UAE to produce year round and supply vegetables globally in offseason.The government has started different initiatives to increase local production of agricultural goods by introducing following concepts.Island FarmingTunnel FarmingDesert ReclamationInvesting overseas in agricultureUAE is involved in farming on islands in the Gulf by using latest techniques of production using tunnel farming the government is trying to help reduce the imports of agricultural products by being self-sufficient. In todays world of credit crunch self sufficiency play a vital role in the victory of an economy, the global village has enabled countries with limited resources to be self sufficient by investing overseas.Therefore investing overseas to increase re-exports of UAE plays an important role in the current strate gy of being self sufficient in agricultural products. Imports and exports of agricultural products play an important role in the supply and demand of agricultural products to the country. The imports and exports of agricultural products in UAE is shown by following figure-4, which clearly shows how rapidly the demand for agricultural products is increasing over the passage of time.Figure Imports and Exports of Agricultural products in UAEThe graph above clearly shows the increasing trend in the agricultural products of UAE and shows almost no change in the behaviour of exports and they are stagnant at USD 1 billion approximately from 2005 to 2006, whereas imports have increased from approximately USD 6 billion in 2005 to above USD 9 billion in 2007.Further the statistics reveal that total Imports of Animal or vegetable fats, oils and waxes for first six months of 2012 were AED 1.268 billion and exports were AED 485 million approximately (National Bureau of Statistics, 2012). Live A nimals and their products were also imported and the total imports were AED 5.806 billion and exports were AED 646 million, also AED 11.483 billion worth of vegetable products were imported and AED 304 million were exported. The figures show a substantial increase in imports of vegetable products for country with shortages of water and land available for cultivation.UAE government is taking concrete steps to invest in agricultural products overseas, which include, Egypt, Pakistan, Japan and other fertile parts of the world (Farm Land Grab, 2010). The statistics reveal that the investment in agricultural products by UAE in other countries will increase with the passage of time, as the rising demand of agricultural products invites more and more investors into the industry.Supply and Demand of Agricultural Products in UAEIn the era of global food crisis one of the major challenges faced by UAE is to make sure the uninterrupted supply of agricultural products whether with imports or l ocal production (Malek, 2013). The fresh statistics of 2013 reveal that 90 per cent of the Agricultural products are imported globally, which shows UAEs reliance on the international food market. In 2013 the food crisis is expected to become a major problem for UAE.After a detailed analysis conducted above the following figure-5 shows the supply and demand curves for agricultural products of UAE.Figure Supply and Demand Curves for UAE Agricultural productsAs we can see in figure-5 as the demand increases the supply body stagnant which clearly shows, UAE needs to invest to increase the local production of agricultural products and also the country must(prenominal)(prenominal) explore investing overseas for food shortages alongside using latest techniques for farming in UAE. The gap between the curves clearly shows the shortage of food faced by UAE and adding the world food crisis the situation will worsen in 2013.To tackle the food shortages in UAE the farmers have turned to tunn el farming, tunnels allows farmers to curb the temperature and the sunlight required for the growth of the plant (UAE Interact, 2012). It also acts as an incubator enabling the farmer to adjust the atmosphere as required by the plants, also pipe irrigation system is used which helps in preservation water. Sustainable farming is the concept launched by the UAE government from Abu Dhabi to fight the food shortage.In our case the demand for agricultural products in UAE is increasing as shown by the figure-4, creating a shortage, also the local production of UAE is limited due to water shortages and limited land available for cultivation. Therefore the government is focusing on tunnel farming and other techniques of water efficient farming in UAE.Demand refers to the human relationship between how much of anything people are willing to purchase available at different prices (Grant Vidler, 2000, p. 10). Therefore the increasing exports show that there is a shortage of agricultural pr oducts in the market, eventually increasing the demand for agricultural products.Demand and Supply CurveEconomic theory reveals that a shortage in supply eventually increases prices, and surplus in supply reduces demand and decreases the prices eventually (Mceacher, 2012, p. 86). such(prenominal) a state in economics is known as the state of disequilibrium, when there is a shortage or a surplus. In UAE the demand for agricultural products is increasing on a fast rate, eventually requiring more supply of goods and creating a shortage of agricultural products in the market. The world is already going through a worldwide food crisis followed by the draughts in major exporters of agricultural products like Ukraine and Russia.Managing the demand for agricultural products in UAE is a challenge faced by the government. The shortage in the supply of agricultural products will eventually lead to a food inflation in UAE by the year 2013, to control inflation in agricultural products the gover nment has come up with strategies to increase agriculture by using latest techniques to produce more by using less water.According to law of demand if the price of the good increases the quantity demanded falls, provided other things stay equal (Mankiw, 2012, p. 73). Therefore the demand and price of a agricultural products have an inverse relationship. The above figure clearly shows the demand and supply curves for the agricultural products in UAE, both the demand and supply curve show that there is an increasing shortage in the supply of agricultural products in UAE. Attracting more and more investors from all over the world to invest in agricultural products in UAE, the most attractive region for investors in UAE have become overseas investment in agricultural products. As the world becomes a global village to deal with the increasing volatility and fluctuations in the supply and demand of agricultural products in UAE the government must come up with initiatives to primary(preno minal)tain storage for agricultural products, as well as promoting urban farming, tunnel farming and other farming technologies.Factors affecting Demand SupplySome of the most important factors on which the demand of agricultural products in UAE depends are price of the product, prices of the related products, consumer income, expectation of future price changes, tastes and number of consumers (Carbaugh, 2010, p. 30). Demand for agricultural products plays the main part in the trade of agricultural products in UAE, consequently increasing the imports of agricultural products in UAE to record levels, making UAE the hub of agricultural products imports and exports. The explanation of these factors with approve to agricultural products of UAE is as follows. charge of the productPrice of a product plays a very important role in the demand of that product. If the demand goes up it exerts upward pressure on the price of the product, when the product supplied are equal to the product dem and the equilibrium price is reached (Hill, 2006, p. 32). Therefore the price of a product has a direct relationship with the demand of the product, in the case of UAE the agricultural products are experiencing an increase in demand.The prices for agricultural products in UAE are vulnerable because of low local production, desert land and water shortages (Kawach, 2010). According to the figures released by the government of Abu Dhabi, in 2009 the food imports increased by 31.5 per cent which was the record high surge in the imports of agricultural products. The main reason is the rapid increase in the population of UAE and also the food prices paid by the consumers in UAE attracts suppliers from all over the world.Prices of the related productsPrices of other related products with agricultural products also matter some of them are pesticides and other sprays required for farming, the materials required for desert reclamation and animal feed etc. Overall all affecting the prices and eventually increasing or decreasing the demand for agricultural products.Consumer IncomeThe income elasticity of demand represents the change in demand of a product with respect to the change of consumer income (Whittington Delaney, 2008, p. 126). The economic theory suggests that if the consumer income increases it also increases the demand for agricultural products or other normal goods.A study revealed that the monthly household income in UAE has reached up to AED 18,248 while the average household expenditure is AED 11,241 in 2009 (Bundhun, 2009). This increase in the consumer income in UAE will definitely affect the demand for agricultural products in UAE and eventually increasing the imports of agricultural products in UAE. Therefore we can say that consumer income is directly proportional to demand of agricultural products in UAE.Expectations of future price changesThe agricultural market has become very volatile due to the world food crisis, and following the draughts in th e major economies of the world which certainly affects the future prices of the agricultural products to increase at a fast rate.TastesThe consumer preferences and tastes play a vital role in creating a demand for any product, the health conscious consumer of UAE has definitely increased the demand for vegetables and other healthy food products. The taste preferences of the consumer in UAE have dramatically increased the demand for agricultural products in UAE.Number of ConsumersUAE is experiencing a rapid increase in population as shown by the following figure (World Bank, 2013).population.pngFigure Population of UAEThe above figure-6 clearly shows how rapidly the population of UAE has increased from 1995 to 2011, which increases the demand for agricultural products by the consumers of UAE.ConclusionsThe government of UAE must boost up the initiatives started for development of agriculture in the country. The following must be paid full assistance to survive the credit crunch pre vailing in the global world.Investment in Agriculture abroadThe government of UAE has started investing in agricultural based countries like the followingPakistanKazakhstanEgyptInvesting overseas is the answer to the problem of shortages in supply of the agricultural products in UAE, these investments will also increase the re-exports of UAE and will help to attain equilibrium by filling the supply shortage in the agricultural market of UAE.Tunnel FarmingTunnel farming is also other way forward to provide for the huge demand of agricultural products in UAE. The government has taken steps in Abu Dubai for desert reclamation and tunnel farming. These tunnels enable farmers to produce year round and at a faster pace which helps to increase the yield of the crop as well as reduces the water customs duty by 40 per cent.Agriculture on IslandsKeeping up with the high demand another way forward is the farming on islands in the Gulf, UAE must pursue its permanent mission in the UN to recla im the Iranian occupied islands, as the country is face huge demand for agricultural product which must be taken care of before the food crisis gears up in the international food markets.