Due to a number of factors, including a poor agricultural sector that typically produces fruits and vegetables like tomatoes, onions, and melons, Kuwait is severely dependent on imported food.
The GDP of the nation's agriculture industry is less than 0.5%. Further agricultural growth looks doubtful with an average rainfall of 4.5 inches, 0.6% of arable land (10,600 hectares), and anticipated expansions in city and real estate development.
For most nations, a badly developed agriculture sector would be a serious concern. Kuwait, in comparison, may avoid such hazards due to its small population, higher national income, and diverse food supply chain.
Poixel conducted market research to look at the key developments in Kuwait’s farming industry and how it impacts the supply chain
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2022: New Developments in the Farming Industry of Kuwait
According to the Kuwaiti Farmers' Union, farmers in Kuwait are losing money owing to a lack of government support. Members of the union have warned that if they do not receive aid, they would have to sell their goods for free.
Farmers face inadequate financial returns from both production and sales processes in Kuwait, according to the group, which has appealed for government involvement.
Farmers have experienced significant losses at the start of this year's agricultural season.
According to Abdullah Al-Damak, President of the Kuwait Union of Farmers, the Council of Ministers has enacted a bill requiring cooperative societies to acquire at least 75% of Kuwait agricultural goods directly from farmers.
Damak noted that this ministerial decision demonstrates the government's recognition of the need of assisting Kuwait's farmers, especially given the agricultural sector's acute labor crisis.
According to Kuwait Union of Farmers, Farmers are in need of more marketing outlets to advertise their produce. These areas could include new areas such as Al-Mutlaa, South Al-Abdullah, West Abdullah Al-Mubarak, and South Sabah Al-Ahmad.
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The Farmers Market and Auctions
Given Kuwait's strong demand for fresh vegetables, auctions are particularly competitive. In Kuwait, the agricultural sector is subject to strict laws and unfair business tactics by suppliers and cooperatives. Farmers are also unable to sell their fresh produce directly to co-operatives. They are compelled to sell them at farmer's markets (chabra) and farmers' associations
Every day, cooperatives are seen bidding in the aforementioned auctions. However, cooperatives do not require their members to engage in auctions in order to receive imported produce. Because of this, farmers will sell directly to retailers or suppliers.
Supermarkets, on the other hand, are far more challenging to bargain with because of the stringent rules governing annual contractual costs, the amount paid per sold item instead of the overall quantity of things purchased, and tight quality standards.
Prices during auctions are thought to be extremely low when compared to the price at which fresh produce has previously been sold. Produce can be purchased at auctions by individuals, but suppliers or middlemen are not permitted to purchase it at auctions and resell it in cooperatives.
Farms are of the opinion that consumers seek out and prefer local products and want to support their neighborhood farmers. However, because of the nature of the market, customers often choose to purchase foreign goods. That is because imported produce is better quality and Kuwait’s farm produce is very limited.
Additionally, vendors and middlemen have imported fresh products in order to sell them directly to consumers and profit from the coops. Farmers sell their products at auctions at a modest profit margin, and then coops sell them to end users at a much larger profit margin.
Supply chain
Farmers can sell their goods in a variety of ways, including directly to companies, through auctions, or at wholesale pricing. The best way for farmers to sell their goods is through auctions because wholesale is not profitable for them. Because the farmer handles packing and delivery, wholesale is expensive. Farmers thus obtain pitiful margins on their marketed produce.
Poixel discovers that owing to the low amount of daily orders, farmers believe the restaurant and hotel industries are not lucrative. Due to the expense and their wish to keep their business to themselves in order to minimize involvement with outside parties, farmers are hesitant to hand over the operation of their farms to other parties. Therefore, they favor having total control over the supply chain, which is ultimately unproductive owing to quality control and rising expenses.
Challenges
The agricultural sector has its own problems, too. Kuwaiti farmers encounter a variety of problems, such as rigged auctions, erratic electricity, and water cuts, and traditional farmers often deal with inclement weather that can harm their crops. Farmers' productivity has decreased and they are no longer growing as many crops and products due to the restrictions on where they may sell their fresh food. A sizable number of farmers have chosen to maintain their farms for their leisure and amusement while producing as little as possible.
Conclusion
Get our full market research report on the farming industry of Kuwait, along with insights into the future of vertical farming and flower industry in Kuwait. Reach out to us at info@poixel.com to initiate a market research study for your business.
