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As recession drives consumers to cut costs, their commitment to organic food has been tested with sales growth slowing – but so far, sales are not falling. How green are our wallets?

Grown without the use of synthetic fertilisers and pesticides, organic food has been booming, driven by claims it is healthier, tastes better and its production does less damage to the environment than conventional agriculture.

The global market for organic food and beverages was worth $22.75 billion (Dh83.56bn) in 2007, after more than doubling in five years, according to market research firm Euromonitor International. The United States accounted for about 45 percent of that total.

With economies in crisis, the trend is slowing in the United States, Britain, France and Europe’s most important market for organic food, Germany. So far, Britain is the market tipped for a fall as shrinking incomes force the newly green to save money.

Typical growth rates of 20 to 30 per cent for organic food sales in the United States eased in the second half of 2008 as middle- and upper-income families felt the strain of layoffs and declining investment portfolios, said Tom Pirovano, Director of industry insights at market research firm The Nielsen.

Sales in December were up 5.6 per cent, year on year, against a 25.6 per cent rise a year earlier.

Even though growth is slowing, Pirovano noted that most people who purchased organic foods were very committed. “I’m not convinced that we are going to see big declines in organics any time soon,” he said.

Nielsen data measures packaged foods with bar codes at many retail outlets. Discount retailer Wal-Mart does not participate in the market research.

Late on a Friday in London’s South Kensington, shoppers at the Whole Foods store owned by the US-based organic and natural foods supermarket were sparse.

“I always try to buy organic if I can. But I definitely have cut back,” said Mary Boynton, 20, adding that she buys more organic produce from supermarkets which have a cheaper offer.

Shares in Whole Foods Market Inc have been on a broadly weakening trend since 2006 and trades around $11, down from nearly $80 in late 2005. But Michael Besancon of Whole Foods, which claims the world-leading slot in the sector with more than 270 stores in North America and Britain, says there is a hard core.

“It is not a fad,” said Besancon, the company’s Senior Global Vice-President of purchasing, distribution and marketing. “I’m 62 and my mother is still waiting for me to shave my beard and stop eating organic food. That isn’t going to happen.”

Ronnie Cummins, National Director of the Organic Consumers Association, said occasional buyers of organic produce were cutting back, but regular buyers were lightening up on processed food in favour of organic whole fruits, vegetables and meats.

“They are trying to stretch their money but they are not willing to stop buying organic,” he said. “We think in the long run the prognosis is good. The energy crisis and climate change can only really be addressed with organic production.”

Wholefoods’ Besancon argued consumers were treating organic purchases differently from those of other premium products. “When you buy organic you believe it is inherently better for you and the planet,” he said. “Who can afford to get sick? So people are becoming more introspective about what they eat. There is growth in the category. It is just less than it was.”

If the relative cost of healthcare is one significant factor keeping well-educated Americans with organic produce, in Germany producers argue organic foods are being helped out of a niche into the mainstream.

Growth in Germany’s organic food sales in 2008 to €5.8bn did slow to about 10 percent, the German organic food industry association BOLW estimates.

This compared with 14 per cent growth booked in 2007.

Five questions about… UN World water day

What is it it? In 1993, the United Nations General Assembly declared March 22 as World Day for Water (also known as World Water Day).

This day was first formally proposed in Agenda 21 of the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, Brazil. Observance began in 1993 and has grown significantly ever since.

The UN invited its member nations to devote this day to implementing UN recommendations and promoting concrete activities within their countries.

Each year, one of the various UN agencies involved in water issues takes the lead in promoting and co-ordinating international activities for World Day for Water.

What is the theme of this year’s event? The official theme is “transboundary water – sharing water, sharing opportunities”.

However, the International Committee of the Red Cross has also called on governments to ensure safe water and decent sanitation for civilians in conflict zones. In many conflicts, disease kills more civilians than bullets.

What has happened in previous years? People get involved in a variety of different ways – anything to raise awareness of the pressing need to conserve water and ensure the right people have access to clean supplies.

What is happening this year? Currently, there are almost 100 official events taking place in almost 30 countries around the world. These range from poetry competitions to awareness-raising walks and rallies.

How do I get involved? Visit www.worldwaterday.org for more information.

Verbatim

‘This is another milestone in the return of mass unemployment to the UK, and it will get worse before it gets better as unemployment always persists even after a recovery starts’

Brendan Barber, TUC general secretary, quoted by the BBC, as official figures showed the number of jobless in the UK rose to two million for the first time since 1997

Abu Dhabi Abu Dhabi will launch a benchmark dollar-denominated bond following investor meetings in the US and Europe commencing next week, Citigroup, one of the arrangers of the deal said.

The bond is part of a global medium term note programme that the emirate has mandated Citi, Deutsche Bank and JPMorgan to arrange, Citi said. “With the recent compression in [credit default swaps] spreads, it appears that Abu Dhabi wants to capitalise on improving market sentiment to raise funds abroad,” said Delphine Arrighi, Standard Chartered Middle East and Africa fixed income and rates strategist.

Sharjah United Arab Bank (UAB) has reported a net profit of 18.4 per cent to achieve Dh250.2 million during the fiscal year ending December 31, 2008, compared to Dh211.3m the bank made in 2007.

According to the 2008 UAB business report, the bank recorded a 19.2 per cent rise in its share dividend, while its net operational revenue also rose by 22.6 per cent to reach Dh397m, compared to Dh324m in 2007.

The bank’s total assets stood at Dh7.5 billion, appreciating by 22.2 per cent against 2007, its total loans and lending also rose by 39.7 per cent to reach Dh5.5bn, while its total customer deposits also rose by 20.5 per cent to reach Dh5bn.

New York Crude oil is poised to gain for a fifth week, the longest winning streak in 11 months, on the Federal Reserve’s plan to end the recession by spending $1 trillion (Dh3.67trn) buying back debt.

Oil climbed above $50 a barrel on Thursday to close at a three-month high as the Fed’s plans spurred expectations that efforts to end the economic slump will aid a recovery in oil demand. The dollar traded near a two-month low against the euro, prompting investors to purchase oil and other commodities.

“The positive oil price is being supported by the weakening dollar and a strengthening in the equity markets,” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group in London. “There has been a reaffirmation in the relationship between oil and the dollar.” Crude oil for May delivery, the most actively traded contract, was at $51.68 a barrel, down 36 cents, on the New York Mercantile Exchange at 9.45am in London.

Cirrus Developments, a real estate developer, yesterday said it has presented a restructuring proposal to the purchasers of Aquarius Gate project that will convert their status from “unit purchasers” to “shareholders” in new project company.

The proposal has already been presented to the Real Estate Regulatory Agency (Rera) and was worked on by Wong Partnership, a leading law firm with extensive experience in real estate funds, the company said in a press release.

Behnam Eshragh, Chairman of Cirrus Developments, said: “This proposal is for information only and does not nullify the reservation form, the property purchase and sales agreement and/or any notices which are in place. It provides a way forward for Aquarius Gate and offers a collaborative solution for the purchasers and the developer.”

“We have presented the proposal to Rera and they have asked us to discuss it with the purchasers, which we are now actively doing. We are confident this proposal will work. It requires significant sacrifice from us as the developer as it is an erosion of profit.”

The offer will be limited to the purchasers who agree to pay (or have paid) the installments up to 30 per cent.

The remaining amount to reach 30 per cent, which is currently overdue, will be collected over a period of 12 months.

The benefits for existing customers will be as follows: they will become part owners [investors] and so have a say how and when the project is developed, the investors will be entitled to a share in the potential profits which will be paid upon completion of the project and future commitments will be based on actual cost as opposed to a selling price.

Dubai-based National General Insurance yesterday said it achieved a 26 per cent increase in the gross premium income from Dh290 million in 2007 to Dh365m in 2008. The technical profits also increased by 54 per cent over the same period to reach Dh66m against Dh42m for 2007.

The company’s general meeting also approved a cash dividend of a 10 per cent of the capital, and a 10 per cent bonus share issue for the financial year ended December 31, 2008.

“Our ratio of technical profits to overall premium written at 18 per cent is one of the highest in the market, while it is at 54 per cent to the capital and 240 per cent to the shareholders’ equity. Due to the reduction in the value of financial assets, the company achieved net profits amounting to Dh20m,” said Khalid Jassim Bin Kalban, Chairman of NGI.

“The fourth quarter of 2008 has witnessed several challenges at the international and local levels, affecting most of the world’s economies and hitting the insurance and reinsurance business at large,” Bin Kalban said.

“The most remarkable were the near collapse of the world’s largest insurance company AIG and also the effects could be seen on most of European reinsurance firms. Most local insurance firms couldn’t escape the current global crisis as technical profits and return on investments were badly hit, affecting the net profits and shareholders’ equity in such firms. Our company has not escaped from this crisis, but we managed to achieve good results and remarkable growth in gross premium income and technical profits,” said Bin Kalban.

Abdul Zahra A Ali, the general manager of the company, said the company will maintain the technical results level in 2009 and introduce new products that will help promote its market position. The company is operating in all insurance classes including life, health insurance and all types of general insurances. It operates through seven branches including the head office. The company is about to start marketing its products through Emirates NBD.

DP World, the global terminal operating arm of Dubai World, has started 2009 with a decline in consolidated throughput across its network, with an average slowdown of eight per cent registered in the first two months of the year.

Despite announcing strong results for 2008, company officials said the volume deceleration witnessed in the last quarter of 2008 had continued into early 2009 with no signs of easing in the foreseeable future. The company considers its current market valuation disappointing and will call a board meeting in the coming months to evaluate available options to address the situation.

The company results announced yesterday showed profit after tax for continuing operations rising by 48 per cent to $621 million (Dh2.28 billion), while revenue growth increased 20 per cent to $3.3bn.

The company’s consolidated throughput grew at 15 per cent to 27.7 million TEUs (twenty foot equivalent units) in 2008 compared to 24 million TEUs in 2007.

“It is difficult to comment with certainty about our projections for this year since forecasts are being adjusted almost on a daily basis,” said Mohammad Sharaf, Chief Executive Officer of DP World.

“But our business model has the flexibility to adapt to these turbulent market conditions by focusing on cost containment, maximising cash generation and minimising the impact on margins and profitability.”

The company is aiming for a three per cent cost reduction through increased efficiency in its operations.

Sharaf said the company had carried out some minimal lay offs in some regions but noted that it was initially pursuing non-human related cost-cutting measures.

He said while cash generation was important at this stage, the company had no plans to access the government or shareholders for financial support.

However, Yuvraj Narayan, DP World’s Chief Finance Officer, said the company would not rule out re-listing on the financial market, although it considers this a very distant option.

As a result of falling utilisation rates across container terminals globally, DP World will also defer up to 50 per cent of all new capacity until demand recovers. The company will go ahead with projects nearing completion such as Peru and Ho Chi Minh City and also invest more in terminals that joined its portfolio in 2008.

“We continue to focus on new terminal facilities that are in the final stages of completion such as Callao in Peru and Ho Chi Minh City in Vietnam, which are due to open later this year or early next year,” said Sultan Ahmed bin Sulayem, Chairman of Dubai World.

“Those ports that joined our portfolio in 2008 will benefit from investment to ensure the receive appropriate equipment to develop them into cost efficient, higher margin terminals,” he said, adding that capital expenditure for 2009 would be in the region of $800m.

All the other projects including the $2.2bn London Gateway and the planned Jebel Ali Port Terminal 3 will remain under review.

Sharaf said while their terminals in developed regions were registering double digit declines in volumes, the performance in the UAE and most of the Middle East continues to be less impacted.

The Europe, Middle East and Africa (Emea) region was the best performing of all regions despite the decline in volumes in Europe in the second half of 2008 due to the contribution of volumes from new terminal additions and strong growth at Dubai ports.

Container throughput at Jebel Ali Port increased to 11.8 million TEUs last year and the number is expected to improve this year with the opening of Terminal 2, expected to add a capacity of five million TEUs.

Last week, DP World officially took control of operations at the port of Algiers, now known as DP World Djazair, as part of its 30-year concession to develop the two ports of Algiers and Djen Djen in Algeria.

In February, DP World opened its ultra modern container terminal at Doraleh in Djibouti with a capacity of 1.2 million TEUs, expanding its African network.

Sharaf said the company would work to ensure efficiency to clients but noted that as policy, it had no plans to reduce port tariffs across its portfolio.

DP World recently announced that it would make no changes to its existing port charges.

The population of the UAE and its partners in the six-nation Gulf Co-operation Council (GCC) gained more than 1.7 million in two years to peak at around 38.5 million at the end of 2008, according to the United Nations.

Despite the large increase, the combined per capita income of the six members surged by nearly $7,000 (Dh25,711) in 2008 because of high growth in their economies due to a sharp rise in oil prices, the UN’s Economic and Social Commission for Western Asia (WSCWA) said in a study.

From 36.807 million at the end of 2006, the population of the 28-year-old Gulf economic, defence and political alliance climbed to a record high of 38.564 millio at the end of 2008, an increase of 1.757 million or 4.77 per cent, said ESCWA, which groups the GCC and other countries in the Middle East.

The GCC population at the end of 2008 included 21,747 males and 16,817 females and the 24-65 age group accounted for the larger part.

A breakdown showed Saudi Arabia, the world’s top oil exporter, remained the largest populated GCC nation, with its population rising by 4.8 per cent from 25.194 million at the end of 2006 to 26.424 million at the end of 2008.

The UAE had the second largest population of 4.865 million at the end of 2008, compared with 4.659 million at the end of 2006, a growth of 4.4 per cent, according to the Beirut-based ESCWA.

Kuwait’s population, the third largest, recorded the highest growth of 5.2 per cent to 2.910 million from 2.765 million during that period.

Oman’s population grew by 4.6 per cent to 2.732 million from 2.612 million while that of Qatar increased by 3.3 per cent to 868,000 from 840,000. Bahrain, the smallest GCC member, recorded a growth in its population by around 3.6 per cent to 765,000 from 738,000.

The report gave no figures on the GCC’s GDP per capita income but according to independent estimates, it stood at around $26,900 in 2008 compared with nearly $20,000 in 2006.

The ratio was based on GDP figures provided this week by the Saudi American Bank (Samba), which put the GCC’s combined gross domestic product at $1,037 billion in 2008 compared with nearly $736bn in 2006.

The surge in the GDP by around 40 per cent was a result of a sharp increase in the group’s oil export earnings, which climbed to their highest level of more than $500bn last year from about $313bn in 2006. A breakdown for 2008 showed Qatar remained by far the wealthiest Arab nation in terms of GDP per capita, which stood at around $104,650.

The UAE was second to Qatar, with a per capita of nearly $55,960. The per capita stood at about $46.900 in Kuwait, $26,300 in Bahrain, $18,680 in Oman and around $17,650 in Saudi Arabia.

DDDD
After last year’s win by Australia’s Sun Classique jockey Kevin Shea, seen here with owner Lionel Cohen (R) and trainer W V Rippon (L), the world’s richest horse race returns to Nad Al Sheba.
Coldplay makes its Middle East debut next weekend. The one-off show from the Grammy award-winning foursome comes as the final stop on the world tour for their critically acclaimed fourth album, Viva Le Vida.

Where? Emirates Palace grounds, Abu Dhabi

What time? Doors open at 4pm, and the show is scheduled to begin at 9pm.

What to expect: If the boys’ recent performances in Australia and at the Brit Awards are anything to go by, then this will be one show that will be remembered by the UAE for many years to come. Expect frontman Chris Martin and the rest of the band to belt out all the hits, including Viva La Vida, Violet Hill, Lost, Fix you, Yellow, Clocks, The Scientist, Lovers in Japan… the list goes on.

Attendance: 15,000

Who’s going to be there? Coldplay obviously – that’s frontman Martin, lead guitarist Jonny Buckland, bassist Guy Berryman, and drummer Will Champion. You never know, Martin’s wife, Hollywood star Gwyneth Paltrow might make it to town with children Apple and Moses. And of course, over 15,000 fans will be there to witness the band’s first show in the region.

What the organisers say: Live Nation issued a statement saying: “Coldplay’s debut performance in the Middle East is set to attract one of the biggest attendances in the UAE. Regional fans of the band have waited along time for this show and they won’t be disappointed.”

What we say: Tickets for this show are like gold dust. If you haven’t got yours, then start searching; if you have, don’t rub it in your friends’ faces unless you’re willing to get hurt with whatever object thrown at you.

Tickets? Judging by the online ticketing outlets, the event is completely sold out, but we’re confident, tickets will continue popping up until the day of the gig. They’re priced at Dh295, Dh495, Dh795 and Dh895. Keep checking Timeouttickets.com and Boxofficeme.com for the latest updates.

It’s that time of the year again when some of the world’s finest horses and trainers congregate for the world’s richest day of racing, giving away a total of $21.25 million (Dh77.98m) in prize money. Yep, it’s the Dubai World Cup.

Where? Nad Al Sheba Racecourse, Dubai

What time? Doors open at 12pm, and races begin at 6pm.

What to expect: Seven races featuring horses from 12 countries. The highlight comes in the form of a top class field of 15 record-breaking runners fighting it out for the $6m Dubai World Cup top prize, sponsored by Emirates Airline. The hot favourite is local hero Asiatic Boy, trained by Albertus Maximus. Aside from all the horsing around, there’s plenty of entertainment, including music, a top selection of food, savouries and the fashion of course.

Attendance: 50,000

Who’s going to be there? The crème de la crème of the UAE’s VIPs, celebrities, as well as locals and expatriates. So take your camera.

What the organisers say: “The 14th renewal of the Dubai World Cup is set to be engraved in UAE history as it is the final meeting to be staged at the Nad Al Sheba Racecourse before racing is moved to the iconic horse racing city, Meydan.”

What we say: Go on; it’s your chance to be part of history with this being the last ever tournament at the legendary Nad Al Sheba Racecourse. Plus, where else can you dress in your best suit/frock and mingle with the city’s It crowd?

Tickets? Most categories are sold out. But at the time of going to print, the Maktoum Terrace, priced Dh1,000 and Silks, priced Dh2,500 are still available. Visit Dubaiworldcup.com for more.

Greetings earthlings…

If the recession’s turned you into a penny pincher then forget Coldplay and the races and switch off for the night to celebrate Earth Hour. From 8.30pm on March 28, many of the city’s major landmarks (and neighbouring Abu Dhabi and Sharjah) will switch their power off to participate in the world’s first election between Earth and global warming. You decide if you want to cast your vote for the future of mankind. We doubt the Dubai World Cup will issue a blackout, but if Chris Martin has a say, we reckon Coldplay will hold off tuning their instruments until after 9.30pm. (Bindu Rai)

Driving lesson with off-road zone

Driving off road is one of life’s many pleasures in the UAE. With vast stretches of desert just a short distance from Dubai, it’s a pastime many people enjoy – but one not everyone masters instantly. Whether it’s a lack of confidence on the dunes or getting to grips with the gears, everything is made easy at Off-Road Zone’s Off-Road Drive course at Jebel Ali, so we grabbed our keys and put our 4×4 through its paces.

WHAT IS IT?

Off-Road Drive is a purpose-built car assault course set up within the grounds of the Jebel Ali Shooting Club. Drivers have to tackle a number of challenges, including potholes (to test suspension), a curved hill (to learn how to prevent getting stuck) and a summit (to know where to stop on a dune) among other things.

While the course may look easy, it does test your nerves at times – especially while tackling the log hill, where we were warned the car might bounce off it. Not surprisingly, I was more than a little relieved when we made it over to the other side in one piece.

JUST LIKE THE REAL THING?

While the course does not fully represent the conditions you can experience in the open desert, the principles are the same. The soft sand area is a great test for turning on the gas round corners and teaches you how to avoid grinding the tyres in the sand.

And don’t worry, an instructor is in the car at all times offering tips and explaining techniques such as the difference between four wheel drive high and low, as you steer round the obstacles.

EXTRA TESTS

Team work is encouraged throughout the session with passengers offering encouragement and guidance to the driver. They are particularly helpful in pointing out posts during the reverse drive but are put to the test during the blindfold challenge. Co-drivers must guide drivers through the potholes, which didn’t go well for my team as I veered more towards the posts than the potholes.

Overall, though, this is a great day to get to grips with your car and learn the techniques before they are needed for real.

HOW DO I BOOK?

Visit www.off-roadzone.com or call 050 774 2346. The course costs Dh750 per person with discounts for group bookings. Customers can take their own car or use a supplied one.

Demand for chemical companies could recover soon as Asian and Middle Eastern companies take aim at targets in the industrialised world, a chemical industry consultant at PricewaterhouseCoopers (PwC) said.
Mergers and acquisitions have dried up during the economic crisis, and the downturn in the chemical industry, described by veterans as the worst they have experienced, has brought many sellers to the table but few buyers.

However, a recent PwC poll of more than 1,000 company chief executives shows that about one in three CEOs at global chemical companies are eyeing cross-border acquisitions over the next 12 months, compared with just one in four across all industries.

Volker Fitzner, who coordinates PwC’s global advisory service for chemical companies, told Reuters on Wednesday that companies from Asia and the Middle East could emerge as key buyers, but deals would initially be small or medium-sized.

“Middle Eastern companies have access to the raw materials. That’s their asset. They are now keen to expand upstream into specialty chemicals, where you have to be closer to the customers and where acquisitions in Europe or the US could be helpful,” Fitzner said.

Middle Eastern chemical groups, such as Saudi Basic Industries have invested heavily in petrochemical plants close to oil refineries around the Gulf.

“It’s safe to assume they have the financial clout because of the good cash flow from petrochemicals.”

Asian companies, in turn, could become suitors because many of them are government controlled and therefore less reliant on financial markets for their funding.

“The Chinese government is trying to advance its specialty chemicals companies strategically,” said Fitzner.

The head of ChemChina Group, which in 2006 bought Rhodia’s silicones unit, was quoted in PwC’s survey as saying the Chinese chemical maker saw buying opportunities during the downturn.

The drive among players in the industrialised world to hive off low-margin mass chemicals is at least partially matched by demand, even though some plants will have to be closed, Fitzner said.

“There are companies in the area of base chemicals where size is key, and that’s where we will see some buyers,” who are eyeing cost advantages by adding capacity, he said.

Companies have so far been struggling to find buyers for their chemical units.

Hexion pulled out of its planned takeover of chemicals peer Huntsman Corp in December, and Dow Chemical only agreed to go through with its purchase of Rohm and Haas after getting concessions.

European specialty chemicals makers, including BASF and Bayer have ruled out large takeovers as they grapple with capacity overhang, and BASF is trying to sell off its low-margin leather and textile chemicals unit as well as its styrenic plastics businesses.