Department of Economic Development in Abu Dhabi organized a workshop entitled “How to Rationalize Consumption” in Al Ain Mall. The event coincides with the World Food Day which is celebrated every year on the 16th of October. During the workshop, which was open to the public, the participants came to know about the consequences of the rise in consumption indicated by the increase in prices, decrease in savings, decrease in Zakat (Muslims’ alms), increase in imports, decrease in food stocks, in addition to environmental pollution resulting from wastes and global warming.
The workshop, which was run by Dr Alaa El-Din Hassan, senior economic researcher in DED’s Economic Studies Department, showed how prices are affected by consumption especially that it mainly depends on imports.During the workshop, Dr Alaa El-Din Hassan focused on the family’s budget and the burden of relying on loans to cover consumption expenditure. He highlighted the consumption expenditure formula and the concept of rationalizing consumption, focusing on 3 basic commodities that should be inevitably rationalized.
Dr Alaa El-Din showed the consequences of extravagance in those commodities, then he tackled the amount of food wastes in comparison with global rates. He gave a hint on Abu Dhabi’s project of “Preservation of Grace” that aims at making use of excess food in wedding parties and ceremonies.Mona Al Suwaidi, head of the Economic Studies, said that the Department of Economic Development was keen on organizing this workshop to celebrate World Food Day which has lately been a major event since the world food crisis that took place in 2007/2008.
In this context, she pointed out that countries and international organizations exert great efforts to draw up strategies and policies to face the price hikes of food commodities which are closely monitored by Food and Agriculture Organization (FAO) in the light of the worst wave of drought ever witnessed by the food-producing countries.
Al Suwaidi stressed that the UAE showed notable interest in the food security issue on the regional level by setting up the Sub-regional Office for the Gulf Cooperation Council (GCC) and Yemen in January 2011. She said that according to the Statistics Center-Abu Dhabi, food and non-alcoholic beverages were the highest category that contributed to the rise in the rate of inflation during the first nine months of the year 2012. “This category contributed by 55.5 % of the total rate of inflation which registered 1.3%, in comparison to the same period in 2011.She pointed out that there were a number of factors that affect price rises, some of which are related to demand due to the growth in population or the increase in the consumption rate. Other factors are associated with unfavorable weather which affects crops such as the drought which hit the USA.Al Suwaidi added that one of the causes of the rise in food prices is the growing demand for bio-fuels. “The policy taken by some countries to limit exports puts pressure on supply and hence on prices. Epidemics and diseases like birds’ flu and E. coli bacteria and the pollution resulting from radiation leakage also affect food commodities in the market.” Al Suwaidi said.Mona Al Suwaidi, the head of Economic Studies in DED, said “There is no doubt that countries relying mainly on imports for the provision of food commodities are the most likely to suffer from global price shocks, especially those of inelastic commodities such as food commodities where demand isn’t much affected by the rise in prices and consequently the burden is placed heavily on the end consumer.
She said that this requires serious efforts from the governments of those countries to closely monitor prices and afford enough stocks of the long-life commodities like grains. They also have to encourage food industry in order to make canned and frozen commodities available in case there’re crises in the world market. “This will ensure stability in prices and mitigate the effects of the soaring global prices on the local consumer.” Al Suwaidi explained.She stressed the importance of having strategic stocks of commodities in case the country’s agricultural environment is not suitable for cultivating such crops, as is the case with rice which is a main dish for Emirates and which is 100% imported.Al Suwaidi stated that the wise leadership of the UAE was keen on subsiding commodities to ease the burden of the rise in prices and the fluctuation of prices on the citizens and to secure their needs of the basic commodities. She also hailed the efforts exerted by the Ministry of Economy in cooperation with the Department of Economic Development in Abu Dhabi to stabilize prices and control any violations.She also lauded the efforts exerted by Abu Dhabi Food Control Authority to upgrade the agricultural sector in a bid to increase its contribution to the aggregate local production and to support its role in achieving food security from local production and stabilizing the prices level.
“Owing to the importance of laying a strategy for the food security and making a strategic stock available, the general secretariat of the Executive Council issued decision no. 5/2010 regarding food security strategy and strategic stock in the emirate”. Al Suwaidi added. “It includes approval on adopting the food security strategy across the Emirate, establishing a strategic stock of basic commodities and setting up Food Security Center in the emirate.”
The head of Economic Studies concluded her speech by underlying that the positive results achieved by those efforts would be maximized though cooperation with consumers and letting them know the importance of rationalizing their consumption and minimizing wasteful patterns of consumption, she pointed out that the workshops aims to raise consumer awareness of his important role in the success of government plans and strategies which aim at facing rising global prices and maximizing the utilization of our local resources.
Dr. Alaa Eddin Hussein, a senior economic researches in DED, stated that the celebration of the World Food Day on the 16th of October coincided this year with another series of skyrocketing global prices especially food prices and this can be curbed only through the joint efforts of all concerned stakeholders government entities, producers and consumers.
He also pointed out that the main role of government entities is to ensure the availability of commodities and services for all nationals and expats, monitoring prices and making sure no unjustified increases in prices are allowed. As for the logical rise in prices due to the rise in global prices, the political leadership of the country has directed unwavering attention to this issue as H.H. Sheikh Khalifa bin Zayed Al Nahyan, President of UAE, ordered the transformation of the annual Mir Ramadan into a regular supplies program that continues throughout the year to alleviate any financial burdens in this respect and ensure that citizen’s obtain all their needs at reduced prices thanks to government subsidies.
The lecturer also pointed out that His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of UAE gave orders that government subsidies should be extended in this regard to include new types of foods such as dates, cooking oil, juices and various brands of mineral water and tomato paste so they would be sold to UAE nationals at prices below their actual cost throughout the year, in addition to rice and flour which have been sold to UAE nationals at reduced prices for a long time.
Dr. Alaa Eddin statd that the new subsidized commodities project would save around AED 13,000 per year for each UAE national in comparison to AED 1500 per year in the Mir Ramadan project with 767% increase in this respect.
He also pointed out that the consumer should rationalize his consumption and reduce the wasteful consumption which costs the government large amounts of money in subsidies.
He stated that the workshop entitled “How to Rationalize Consumption” targets the general public including UAE national and expats in order to raise awareness of the paramount importance of rationalizing consumption, and pointed out that in order to avail from government efforts in this respect. During the workshop that attracted a large turnout, Dr. Alaa Eddin highlighted the negative impacts of high consumption, high prices, low saving and zakat, low exports and re-export rates, increase of imports and the lack of stock and high pollution rates (greenhouse effect and wastes).
He indicated that the salaries in Abu Dhabi constitute 57.2% of the citizens' income and 91.5% of the non-citizens income. He said that the average spending of an Emirati family in Abu Dhabi is 25,457 Dirhams per month, whereas a non-Emirati family spends 8,866 Dirhams per month. He added that in Abu Dhabi, a family spending on foodstuffs and non-alcoholic beverages constitutes 16.1% of the total consumption rate, which is considered relatively high. During the workshop, providing an example of economical consumption, Dr. Alaa said that the journey of producing rice is six months and that one kilo of rice requires 3000 to 4500 liters of water; tantamount to 150 – 225 bottles of 20 liters each. He said that our societies have harmful practices and habits that contradict the principle of economical spending, particularly the rice commodity that is often served in a manner exceeding the actual need of guests, and the result is surplus food going to the garbage. The lecturer said that the local annual consumption rate of rice is 921,000 tons annually in 2011 compared to 890,000 tons in 2010, whilst the annual average consumption per capita rate in the UAE is 109.7 kilos in 2011 compared to 107.7 kilos in 2010. He said that the cost of annual increase in rice consumption for a family size of 8 amounted to 7,847 Dirhams in 2011 compared to 7,575 Dirhams in 2010. The cost of the annual increase in rice consumption for a non-Emirati family size of four is 3,924 Dirhams in 2011 compared to 3,788 in 2010. He indicated that the cost of the increase in rice consumption amounted to 8.2 billion Dirhams in 2011 compared to 7.8 billion in 2010. Dr. Alaa Eddin Hassan also said that a report issued by the Waste Management Center in Abu Dhabi in 2009 said that the food waste constitute 34% of the entire volume of waste in the UAE. Abu Dhabi alone produces nearly 2300 tons of home waste per day, with the waste production per capital in the UAE amounting to 2.3 kilograms per day being the highest internationally.
During the workshop, the lecturer asked the audience as to whether we can specify our actual needs of commodities, or do we always buy more than our needs? Do we assess the losses we sustain as a result of purchasing more commodities than we actually need, do we have into consideration the damage or expiry of such surplus goods when purchased and then remain unused? He revealed that the number of starving people around the world is nearly 870 million, constituting nearly 12% of the world, the entire population of which is nearly 7 billion. The lecturer urged the Emirati and non-Emirati audiences to interact with the Preservation of Grace initiative supervised by the Red Crescent organization with the aim of collecting surplus food and redistributing it to the poor. Dr. Alaa Eddin also provided the grace of water as an example of economical consumption. He said that in Abu Dhabi per capita consumption in apartments is estimated at 170 – 200 liters per day, according to the Environment Authority in Abu Dhabi. In villas, daily consumption rises to 270 – 1760 liters per capita, which is seven times as much as the maximum level allowable in advanced countries where consumption is as low as 150 – 250 liters per capital.
He said that the cost of water for a family size of eight in an apartment is 4500 – 5300 Dirhams per year, whereas the cost of water for the same family size in a villa is 7200 – 46800 Dirhams annually.
Concluding his presentation about the need to be economical in commodities' consumption, the lecturer recommended that the audience must review the shopping list before embarking on buying commodities, have a specific budget into consideration, avoid imitation, raise children's awareness of being economical, avoid extravagance, and only buy what is necessary, spend money within the limits of your income, and avoid the raising of loans to buy consumer goods.