Middle East households cannot afford regional conflict

Supermarkets in the region are anticipating pressure on food prices this year as a result of attacks on ships in the Red Sea. Bloomberg

Around a trillion dollars’ worth of food is thought to be discarded each year. The culture of profligacy is both shocking and concerning, but perhaps not surprising, considering millennials and their generational predecessors were born into a world of cheap food. In the last quarter of the 20th century, global food prices fell by 75 per cent.

Times have changed, even if humanity’s relationship with food is slower to do so. Since the mid-2000s, food prices have climbed to dizzying heights. The Covid-19 pandemic, the war in Ukraine and accelerated climate change have compounded the challenges. Global prices have settled somewhat in recent months, according to the UN Food and Agricultural Organisation’s food index, but in the Middle East, renewed conflict has braced people for the worst.

This week at Gulfood, an annual trade show in Dubai for the food and beverage industry, UAE supermarket bosses told The National that while they are doing their best to keep prices stable for consumers, geopolitical shocks are rendering it a struggle. These sentiments are echoed across the Middle East, and in lower income countries they are even more pronounced. The proximate source of fears is Israel’s continued war in Gaza and the subsequent attacks on commercial vessels in the Red Sea by Yemen’s Houthi rebel group.

These conflicts show little sign of slowing down. On Monday, the Houthis attacked a UK-registered and Lebanese-operated cargo vessel, forcing its crew to abandon ship.

The Middle East is particularly reliant on shipping lanes, with the region as a whole importing the majority of its food. Some markets, such as the GCC, import as much as 85 per cent.

“There is already an impact in terms of supply, cost and availability,” said Rajiv Warrier, chief executive of the multinational supermarket chain Choithrams. Mr Warrier anticipates that prolonged disturbances to Red Sea shipping could result in GCC food prices rising by the second half of 2024, with a corresponding impact on general inflation.

Not all of the region’s food depends on Red Sea passage, but the effects of Houthi attacks reach into other shipping routes, too. Lulu Group, one of the Middle East’s largest supermarket chains, has sourcing offices across China and South-east Asia that can supply food using the Indian Ocean. But as a greater number of shipping firms divert their vessels from the Red Sea, insurance costs and other overheads rise for everyone. Flying food in is among the least preferable options, but it has become more common.

The Middle East is already among the world’s most price-sensitive regions. For its poorest, every percentage point increase in the price of food can have dire consequences. The World Bank cites “mounting evidence that negative [price] shocks can have multi-generational effects on development outcomes in education, health and income”, pushing the most vulnerable deeper into a poverty trap. The rise in prices caused by the Ukraine war in 2022, the World Bank says, may have even stunted the development of up to 285,000 babies in the Mena region.

Even if the Gaza war is resolved and the Houthis cease their campaign in the Red Sea, it will be some time before the world can hope for a return to “cheap food”. Some economists warn that, in a world getting warmer ever year, it may never happen. But whatever the long-term trend turns out to be, there is little doubt that some of the worst damage is being done by short-term shocks that could – with enough political will – be avoided.