How to Start Dairy Farming in UAE from Scratch: A Step-by-Step Guide for Beginners

Dairy Farming is a major sub-division of the agriculture sector. It means rearing dairy animals to produce milk and various milk products. The key dairy animals used to produce dairy products include cows, camels, buffalo, goats, horses, sheep, etc. Dairy farming also includes producing various milk products such as yogurt, cheese, cream, powdered milk, condensed milk, butter, Laban, Kurut, etc.

Why do the Farmers practice Dairy Farming?

Dairy Farming is a very profitable business all across the globe because:

Dairy products are demanded and consumed by people of all age groups because it has high nutritional value, so the demand never falls.
Marketing and selling milk and milk products is not a very difficult process. Dairy products generally have high demand in rural and urban areas and do not require huge advertising expenditure.
Dairy farming can be started on either a small-scale or large-scale depending upon the resources and technology available to the dairy farmer. Therefore, even small and marginal farmers can carry out dairy farming and benefit from it.
Dairy farming provides a good source of income for the unemployed rural population.

How to start Dairy farming in UAE from scratch

Dairy Industry in the United Arab Emirates

The dairy industry in the United Arab Emirates is increasing quickly. In 2020, the demand for milk and milk products was approximately US$1.66 billion, and it has been estimated that by 2026 the demand for dairy products will reach about US$ 2.47 billion, showing a growth rate of around 32.79%. The critical reasons for the increase in demand for dairy products are the increasing population, rapid economic growth, an increase in the per-capita income of the people, a massive influx of tourists, and an increase in health consciousness among people, especially after COVID-19.

Impact of COVID-19

Changing consumption patterns are considered to be one of the key reasons for the increase in demand for dairy products. Various studies and surveys were conducted to conclude that post-COVID-19 the residents in the United Arab Emirates have started focusing on nutrition-rich food. To further break down the demand figures, it has been observed that flavored and organic milk consumption is showing a steep rise.

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Dairy farming in the UAE is carried out by large-scale dairy companies.

In the United Arab Emirates, the dairy industry is dominated by large-scale industries. Carrying out dairy farming on a small scale is very difficult because of numerous challenges such as extreme heat, availability of food for animals, storage of milk and milk products, etc. A huge amount of investment is required to meet the challenges; hence it is tough for any small-scale farmer to be successful in dairy farming. Details about various challenges and the steps which are taken to mitigate the challenges are discussed later in the article.

Steps that are required to open a dairy farm in the United Arab Emirates

Understanding the existing market.

Key dairy products that are in demand

Before setting up a dairy plant in the United Arab Emirates, it is imperative to remember that dairy product consumption patterns differ across all 7 emirates. Dubai, Abu Dhabi, and Sharjah are key cosmopolitan cities. The demand for dairy products in these emirates is slightly different from the other emirates because the maximum population in the three emirates is of ex-pats and people from other countries.

In the places where there are more people from an outside country, the demand for commodities like flavored milk, flavored yogurt, cream, butter, cow ghee, different varieties of cheese, laban, etc is high. In the UAE, some country/region-specific milk products are in huge demand, such as:

Laban: Laban is a dairy product made from fermented milk. It is made by churning the fermented milk (milk is fermented for around 24 hours) and removing the butter from it. In a simple context, it can be considered one of the forms of buttermilk. Laban is a probiotic drink that has a very cooling effect on the body. Due to high temperatures, it is consumed on a large scale in the country.
Labneh: Labneh is like a soft cheese made from strained yogurt and used in Mediterranean dishes.
Kurut: It is a traditional fermented dairy product that is made by drying the yogurt and adding salt to it. The dry yogurt is given a round shape.
Liquid Milk: Like in any other country, the demand for liquid milk is also high in UAE. Camel milk, full-fat milk, skimmed milk, and semi-skimmed milk are in high demand. Additionally, the demand for flavored milk is also gaining popularity, especially among the younger generations.
Yoghurt: Yoghurt of different kinds can be easily found in the market. Different flavored yogurt, lactose-free yogurt, high protein yogurt, etc are available in the market, especially in areas with a significant population of ex-pats of western countries.
The other products like ghee, butter, whey, cream, milk powder, ice cream, etc. also have a huge demand

The demand pattern for different dairy products differs not only between emirates but also within cities. Thus, proper research about the market is very important.

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Market Composition

The United Arab Emirates does not depend much on imported dairy products. The local production of milk meets the majority of demand. Only approximately 24% of liquid milk, 13% yogurt, and 11% laban are imported. The products are imported not because of less production capacity. One of the key reasons for import is the demand for specific milk brands of foreign countries (which are majorly consumed by the people of those countries).

For example, there is a demand for Amul milk among the Indian people, Elle & Vire is a French company that exports milk to UAE, etc. The United Arab Emirates is the second largest producer of milk and dairy products in the ‘Gulf Corporation Council (GCC) region after Saudi Arabia.

Competitors

The foremost local milk producers and various milk products are NFPC (National Foods Product Company), Almarai, Al-Ain Dairy, Al-Rawabi Dairy, and Dubai Dairy Company. Together, they occupy the majority percentage (approximately 94%) of the total dairy products market in the UAE.

Identifying and Finalizing the Location of the Dairy Company

Any new entrepreneur who wishes to open a dairy plant in the UAE first must decide about the manufacturing unit’s location. The production center can either be located on the Mainland or in the Free Zone. Additionally, the decision about the city where the company will be established is equally essential because certain rules and regulations are emirate specific.

Legal Requirements and Certifications required for Opening a Dairy Farm in the United Arab Emirates

The United Arab Emirates has strict regulations for ensuring the smooth running of the business enterprise. All the entrepreneurs (whether the dairy company/or not a dairy company) must ensure that they comply with:

All the rules and regulations that govern their respective business.
All the laws which protect labor and consumer rights.
All laws protect intellectual property rights.
All laws relating to free zones in which the business is set up.
All laws relating to health, safety, and environment.

In order to open a dairy plant in the country, it is essential to ensure that all the legal requirements and certifications related to the incorporation of the dairy company are understood.

Important certifications

For creating demand in a highly competitive and established market, the dairy products manufactured by the new company must comply fully with all the national and international quality standards, such as:

Hazard Analysis Critical Control Point (HACCP)
ISO 9001:2015; ISO 14001:2015; ISO 45001: 2018
ISO 22000:2018 for Food Safety Management
Halal Certificate for Camel Milk Powder
EQM Certifications for flavored milk, flavored laban, pasteurized milk, etc

What is Emirates Quality Mark (EQM)?

In order to certify and ensure that the quality of milk and milk products being sold is of good quality, the “Emirates Authority for Standardisation and Metrology” (ESMA), has made “Emirates Quality Mark” (EQM) standards. EQM certification is an indicator that the dairy products comply with the UAE national standards, regional standards, and international standards, and they are manufactured and produced by a company that has an effective quality management system. The validity of EQM certification is three years.

The products which require EQM certification are:

Flavoured Yoghurt
Flavoured Milk
Yogurturt
Laban
Flavoured Laban
Pasteurized Camel Milk
Goal Milk
Laban Drink

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The products which do not require EQM certifications are:

Dairy products consumed by infants and children
Food items mentioned in the UAE standard number: 457 UAE.S/GSO
Milk Products that restaurants prepare for recipes (For instance, Iranian milk)
Dairy products are used as raw materials for processing food, and dairy products are imported for licensed industrial enterprises.

Legal requirements

License: The entrepreneur who wishes to open a new company has first to decide whether the company will be located on the ‘Mainland’ or in the ‘Free Zone’ because there are some differences in the license requirements for both places:
- For the Commercial Companies located in the UAE mainland, a commercial license of 3 pages is required; the Professional Companies located in the UAE mainland should have a one-page trade license.
- All the companies established in the UAE free zone need to have a “Trade License” or a “Certificate of a license,” renewable either in 1 year or two years.

Establishment Cards: Every company in the free zone or mainland must obtain an establishment card by registering with the General Directorate of Residency and Foreign Affairs. This card is required to obtain visa approvals for ex-pat staff.

Labour Establishment Card: This card can be obtained from the Ministry of Labor, and the companies located only on the mainland are required to obtain it. This card enables the company to get workforce approval from the ministry.

Trademark Registrations Certificate

Testaments for the Protection of Assets: Foreign businessmen can obtain testaments/will drafted according to the country’s laws. This will protect the assets and the business in case of any dispute and ensure that the assets will not be treated as per Sharia Law.

In case of incorporating a Limited Liability Company (LLC): This is the most popular method of opening a business in the UAE. The ‘Dubai Economic Development (DED) is the organization that issues all the licenses in case of setting up an LLC. There are many legal requirements for opening a company (whether dairy/not dairy) as a Limited Liability Company, such as: if the company is located on the mainland, then a UAE local partner national should hold at least 51% share in the company, minimum capital requirement for opening an LLC as per Dubai Licensing Authorities is AED 300,000, and there are many such other requirements.

The general documents that are required to be submitted by the entrepreneur who wishes to open an LLC are:

Passport copies are certified for all the shareholders.
UAE Residence visa (if applicable).
No objection certificate (NOC) by a UAE resident who is a sponsor.
Two certified address proofs for every shareholder.
Sovereign Application form which has been signed.
Reference Letter (Bank/Professional) for every shareholder

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The entrepreneur’s home country and the relevant UAE consulate should attest all the required documents. Additionally, all the documents need to be translated into the Arabic language by an official translator

Funds required

The bare minimum fund required to open a Limited Liability Company on the mainland is AED 13,270. This cost only includes the charges for fulfilling some important legal requirements. The dairy company will require additional funds depending on the number of dairy products it plans to manufacture, the machinery it plans to use, the type of dairy animals, etc. Similarly, the minimum cost to set up a Limited Liability Company in Free Zone is AED 17,900 (cost only includes the charges for fulfilling some important legal requirements).

Understand the Difficulties and Take Relevant Steps to Address the Situation

Intense Heat because of the Geographical Location

Challenge: The harsh climate and intense heat do not provide a natural environment for dairy farming. The cattle are not used to such strong heat and they require special protection. In the summer, the temperature crosses 50 degrees, and the dairy animals must tolerate the high temperatures. Warm and humid climatic conditions affect dairy animals, reducing the quantity and quality of milk produced and harming their health.

Methods adopted to address the challenge: The companies take the following measures to address the challenge: (i) Dairy plants use thick curtains to block the sun’s rays and protect the animals from sunlight, (ii) use air-cooled industrial water chillers, (iii) coolers & wall mounted fans, etc. to maintain the temperature below 25 degrees. Additionally, to decrease the negative impact of heat on dairy animals, manufacturing companies use ear tags that monitor the health and activity of each cow.

Low availability of fodder and water

Challenge: The desert environment does not support dairy farming because of the absence of natural grazing grasslands.

Methods adopted to address the challenge: Animal food is imported from other countries such as the United States of America, South Africa, Brazil, Argentina, etc. The dairy companies ensure that the required nutrition in the food is maintained so that the dairy animals are healthy and do not require added medicines. In addition, many dairy farms use water treatment plants with ozone and ultra-violet ray filtration systems to meet the water requirements.

Knowledge about the latest technology and equipment required

In the United Arab Emirates, the latest technology and equipment are used to manufacture milk and milk products. Equipment and machines are required for further processing of milk (like pasteurization, standardization, fermentation, and homogenization) to maintain the quality and nutrition of milk. Any new entrepreneur who wishes to open a dairy company must identify and arrange for the machines and equipment required in the production process of dairy products.

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Dairy Animals

There is a list of approved countries for importing livestock. This list is issued by the United Arab Emirates Ministry of Climate Change and Environment. Not all animals can be imported from any country. For instance:

No livestock can be imported from the Bahamas
Only Sheep, Goats & Cows can be imported from Belgium and Brazil, but Camels cannot be imported from these countries
Sheep & Goats, Camels, and Cows can be imported from Bahrain.

Similarly, there are restrictions on the type of dairy animals imported from different countries.

Conclusion

Dairy Farming Industry in the United Arab Emirates is a booming industry because of the ever-increasing population, tourist influx, health-conscious population, and fast economic growth. The demand for milk and milk products is majorly met by local dairy companies, because of which the import of dairy products is very less. Therefore, it is very important to study the market and meet all the legal requirements to open a dairy company.

Some of these laws are emirate specific (for instance, certain laws will apply only to Dubai and not to any other emirate). The dairy industry only has large players in the market because there are a lot of challenges in the dairy industry (such as high temperatures and low availability of fodder and water for dairy animals) and large companies can only afford the large funds required to meet the challenges.

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