The time is right for the GCC to stockpile grain

As summer in the northern hemisphere draws to a close, farmers are enjoying a bumper harvest.

From the US and France to Kazakhstan and China, crops including wheat, corn, soy and olives have had generous yields. Such an abundant offering is all the more remarkable in the case of olives, after bad years in 2022 and 2023.

This rich harvest has helped to temper inflated food prices this year. Grain markets in particular have been hit by spikes, most sharply when Russia invaded Ukraine in 2022.  

Smart countries have taken to stockpiling food imports to shield against price shocks. China, for example, increased the amount of grain it was stockpiling by 36 percent to more than 700 million tonnes between 2014 and 2023.

Investing in grain storage facilities abroad is a more effective strategy than buying land in developing countries to grow food for the domestic market

China purchased 400 million tonnes of grains from domestic and international markets in 2023 alone, to increase its strategic reserves over and above the international grain security stock-to-use threshold of 17 to 18 percent. 

Beijing’s strategy is a clever one. Not only do grain stockpiles keep a grip on future prices, they also help bolster food security in an increasingly volatile global trade environment. 

China is well aware that it could be a prime target for sanctions if Donald Trump is re-elected president in November. In addition, climate change could hurt crop harvests at any point. Natural disasters also present a major risk. Alas, we live in uncertain times. 

Governments must proceed with caution when managing food prices. Costs can spiral out of control, jeopardising entire economies and social peace. Nowhere is this truer than in the Middle East. 

Reuters/Angus McDowall

When food prices increased in 2007-8, there was some discontent on the streets of the Arab world. However, when prices rose again in the summer of 2010, widespread protests broke out around the region. A Tunisian vegetable vendor, Mohamed Bouazizi, set himself on fire in Sidi Bouzid in December 2010 over high food prices, triggering the Arab Spring. 

By January 2011 in Egypt, people were chanting “Aish, horreya, adala egtema’eya” (bread, freedom, social justice) to call for the end of President Hosni Mubarak’s regime. 

China’s approach is relevant here. The GCC states may be among the world’s most advanced economies but the region is also vulnerable in terms of food imports. 

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Despite the launch of many well-meaning regional agricultural initiatives, field crops such as grains must still be imported. Buying grain may be economically viable in normal times, but global market uncertainty makes this strategy perilous. 

Accelerating climate change, the increased frequency of natural disasters and wars in production centres are all contributing to volatile global dynamics. Against this backdrop, it makes sense for the GCC to copy China’s approach and invest considerably more in strategic food supplies such as grain stockpiles. Currently, the UAE holds food reserves for just three months. 

Even a decentralised approach, such as investing in grain storage facilities abroad, could provide more national and regional food security. This is, by far, a more effective strategy than buying agricultural land in developing countries to grow food for the domestic market. 

The next six months provide a good window of opportunity for GCC governments on the food security frontier. Prices are good and supply is strong. However, this sweet spot could soon vanish should another geopolitical crisis hit in 2025.  

Martin Keulertz is a lecturer in environmental management at the University of the West of England, Bristol