Muslim spend on food rose 6.9% last year to $1.27 trillion and is expected to reach $1.67 trillion by 2025.
The global COVID-19 pandemic, supply chain disruptions and extreme weather conditions have made food security a headline-grabber with Muslim countries particularly hard-hit by the climatic disruption.
Internationally food inflation has risen 40%, exacerbating food security and underpinning strategies for countries to adapt to current and future challenges in this arena.
DinarStandard’s State of the Global Islamic Economy Report 2022 estimates Muslim spend on food will grow 7% to $1.27 trillion this year on top of the 6.9% growth achieved in 2021 and achieve a 7.1% four-year compound annual growth rate by 2025.
See - Infographic SGIE 2022: Halal food
“In the halal food sector, there was not significant change in 2021, but the Middle East and North Africa (MENA) region experienced significant merger and acquisition (M&A) investments (with) Emirati, Saudi Arabian and Qatari groups acquiring companies in Egypt and Jordan,” said Dr Mohamed Ali, a partner at DinarStandard.
M&A and investments in expanding food production have continued at pace, partly driven by the focus on localised farming, production and food processing. In halal food, the Middle East and Malaysia have been particularly active, while Nigeria has seen major investments, including the public-private partnership with the global business-to-business (B2B) agriculture and halal marketplace OneAgrix. There has also been activity in non-Muslim majority countries with investments in halal food companies, ingredients manufacturers and Halal fast-food chains growing internationally.
The report highlighted how the pandemic had created opportunities as the food system reshaped in line with disrupted supply chains. Ali said COVID-19 forced governments to realise they should rely on local production first and then only source regionally.
“We have to build regional food security strategies as no country can have a standalone national strategy. Halal food could be a big player in OIC (Organisation of Islamic Council) countries for regional food security strategies,” he said.
There was an equal flurry in inter-OIC trade deals and greater cooperation to develop the trade in halal food. Major trade agreements, such as the African Continental Free Trade Area (AcFTA), aimed to eliminate the majority of import tariffs, will potentially become lifelines for more equitable food distribution.
However, Ali indicated there remained work to be done as OIC intra-trade represented less than 20% of global OIC trade. There were particularly halal restrictions and a sort of standby situation regarding numerous trade agreements.
“These trade agreements are important as we can’t leave everything to the private sector,” said Ali.
The OIC has been proactive with the Islamic Organisation for Food Security (IOFS), implementing 16 food security programmes that have included establishing the Islamic Food Processing Association, a Grain Fund and a Food Security Reserve.
Food technology attracted significant attention with Nigeria launching Africa’s first agricultural electronic centre to develop climate-smart farming and Dubai launching the Food Tech Valley, a specialised zone hosting a farming research and development facility.
Technology is also being harnessed for traceability and logistics, while the pandemic has spurred the digitisation of food retailing and restaurants. Blockchain is also being used to ensure food origins, notably for meat, following various global scandals worldwide.
Malaysia’s Malakat Ecosystem has developed the world's first Halal Block chain Network for tracing the origins of imported beef. Regulations have also tightened across the supply chain, while halal standards have been bolstered in various countries.
The OIC’s Standards and Metrology Institute for the Islamic Countries (SMIIC) introduced an international halal supply chain management system standard. Ali said with more consumers seeking out halal certified products, the sector is set to remain a key driver of the Islamic economy.
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