Food consumption in the GCC region will expand at a compound annual growth rate of 3.1 per cent, reaching 49.1 million metric tonnes by 2017 in line with the rapidly growing population and increase in foreign tourists, a report said.

The increase is also attributed to the rising income levels of the region, said the latest report by Alpen Capital, an investment banking advisory service provider. The report focuses on production, import and consumption volumes of key food segments and their growth potential.

Per capita food consumption for the GCC region is forecast to reach 971.2 kg by 2015 and 983 kg by 2017, the Gulf Daily News quoted the report.

Strong GDP growth and increasing per capita income is one of the key drivers that would impact the growth of the industry, the report says.

Per capita consumption in the region is low compared to that in developed economies and is expected to increase at a relatively higher rate with growing affluence.

Another factor contributing to the growth in food consumption is the expected expansion of the GCC population from 41.7 million in 2010 to 49.9 million by 2017.

Urbanisation and the resultant improvement in marketing and distribution infrastructure also continue to have a profound effect on food consumption.

"The GCC food sector is likely to experience healthy growth in the medium to long-term," Alpen Capital managing director Sameena Ahmad said.

"The industry also continues to benefit from increasing government support, foreign investments and private sector participation," she added.

"Although high dependence on imports poses a challenge for the economy, it creates several opportunities for private sector companies to position themselves and take advantage of the growing demand," Ahmad said.

The report suggests that in order to attract foreign investments and increase private sector participation, GCC governments could further enhance initiatives to drive production in the region, by encouraging the use of techniques like organic farming, hydroponics and greenhouse plantations.

Increased efforts to acquire foreign agricultural land and boost contract farming will also help drive production and address food security.

In order to reduce GCC's dependence on imports, the private sector could be used to develop infrastructure for food storage and transportation. Increased support for local food processing firms by providing them direct subsidies is another way to support growth.

"From an investor perspective, the outlook for the sector continues to be positive," says the bank's UAE managing director Mahboob Murshed.

"With favourable demographic factors and stronger balance sheet positions, GCC food companies offer attractive investment propositions for long-term investors.

"We also see merger and acquisition activities taking place to satisfy investor appetite which are not just restricted to GCC businesses. There are many companies and financial investors beyond the region who are seizing the opportunities available," Murshed added. – TradeArabia News Service