Food Prices in GCC Could Rise Due to Supply Chain Disruptions
Access to agricultural produce and certain food imports to the GCC could be affected by global supply chain disruptions in the future, according to findings of a new report.
A study by Marmore, the research arm of Kuwait Financial Centre, Markaz, looked at the impact of global events on food security in the GCC.
According to the report, the region has employed sufficient financial buffers to ensure a continuous supply of food imports long-term, along with wielding the ability to absorb intermittent price shocks. However, import dependence on agricultural produce has raised concerns over supply chain disruptions and its impact on food prices and shortages.
In Kuwait, 95% of the country’s food needs are met through imports. The study stated that in January 2022, food shipping costs to the country reportedly increased tenfold, from $1,400 to $14,000 per tonne, while food inflation in March 2023 was recorded at 7.46% YoY, rising from 7% YoY in the previous month.
In recent years, COVID-19, the Russia-Ukraine conflict, higher freight costs, and climate change have contributed to food shortages globally. In 2022, the Global Report on Food Crisis by the World Food Programme revealed a rise in food shortages to 205 million people, up from 135 million in 2019. Wheat, eggs, and palm oil were among the commodities experiencing shortages, with Ukraine’s grain and oilseed exports declining due to the war. Despite temporary declines, food prices increased since October 2019, peaking in March 2022, before stabilisation was aided by the Black Sea Grain Initiative in July of the year.
Despite their reliance on imports, GCC nations have maintained access to essential food items due to long-term food security measures implemented after the 2007-2008 food crisis, the report further added. Countries like the UAE, Qatar, and Kuwait have adopted various strategies to strengthen their food security systems, including formulating national food strategies to boost domestic production, diversifying import sources, reducing waste, and building reserve capacity.
Additionally, these countries are embracing agritech, such as vertical farming and digital tools, to enhance supply chains and increase food production. In response to unfavourable climate conditions for agriculture, Saudi Arabia and the UAE have also invested in farmlands overseas.
Kuwait in particular is looking at boosting local food supply, along with diversifying import sources, and streamlining border control procedures to meet future challenges.
