The sanctions imposed by Saudi Arabia and other Arab states on Qatar have been a blessing for Mohammed Kuwari and his al-Rawa brand of yoghurt. With competing Saudi products off the shelves, his business is booming.
“Our sales doubled! There’s lots of production as you can see and we have a big share in the market now,” said the 30-year-old dairy factory owner.
Previously he struggled to compete against products trucked in from Saudi firms like the Middle East’s biggest dairy, Almarai.
But last week Saudi Arabia, the United Arab Emirates, Egypt and Bahrain imposed an economic and diplomatic boycott on Qatar, accusing the small Gulf state of funding terrorism and cosying up to their enemy Iran, which Qatar denies.
The measures have disrupted imports in Qatar, which buys most of its food from the neighbors that have ostracized it.
Change in trading patterns?
Qatar’s own mostly small consumer businesses say they are finding new suppliers, which could alter established trading patterns in the Gulf.
Plastic and cardboard that Kuwari’s company uses to make packaging are stuck in containers in Dubai, he said.
“We were stunned at first. Our supply of raw materials was completely cut off,” said Kuwari. “But we took action.”
Kuwari says he will terminate contracts for raw materials from the Dubai-based conglomerate JRD international worth 30 million riyals ($8.21 million) a year. Instead he is forging deals with Turkish, Indian and Chinese companies to secure future supplies that will be shipped to Qatar via ports in Oman and Kuwait.
Pulling plug on contracts
Qatar typically imports perishable goods through its land link with Saudi Arabia. Millions of dollars of other goods and materials also come every month via Dubai’s Jebel Ali port which serves as a major re-export hub for the Gulf.
Businesses in Qatar say they are pulling the plug on UAE and Saudi contracts, and don’t expect to resume them even if the diplomatic storm blows over.
“We are not working with them again. They didn’t honor their agreements. Our products are being held up there,” said Ahmed al-Khalaf, chairman of International Projects Development Co. and owner of a Qatari meat processing plant that imports materials from the UAE.
“We may not have many factories in Qatar but we have the money to buy from other sources.”
Qatar is the world’s richest country per capita, with just 2.7 million residents and income from the world’s biggest exports of liquefied natural gas. Nearly 90 percent of its population are foreign guest workers, mostly from South Asia or poorer countries in the Middle East.
Dubai offers lower costs and shorter shipping times than many other ports in the Middle East. But Oman’s Sohar port has been trying to compete by expanding its capacity. Business from Qatar could help that effort.
On Monday, Qatar launched two new shipping services to Omani ports as the gas-rich country seeks to secure food supplies closed off by the Saudi-led boycott.