GCC is rethinking food security in face of global disruption and tariffs
A serious convergence of global economic disruption and inherent food security vulnerabilities has forced a reckoning for the Gulf Cooperation Council (GCC) nations. We spoke with Mohammed Ferdous, Partner in the Agriculture & Environment practice of Palladium, about the escalating global tariff war and how it is fundamentally reshaping the economics of the world’s food supply.
In the past year, global trade practices have been upended with an intensified environment of high tariffs and unpredictable shifts in trade relationships. Now the GCC, which is heavily reliant on imports, needs to find ways to recalibrate its decades-old import-dependent strategies in order to attain better food security.
From trade wars to food security crisis
The GCC countries have seen food price inflation of 1.3% in 2024 and are now facing 10% universal tariffs on exports. Overall, global tariffs have driven food prices up 2.8% on average, with fresh produce seeing 4% increases. These increases are linked to supply chain disruption, currency effects through dollar-pegged rates, and trade route redirection straining regional food infrastructure.
“The path forward requires sophisticated risk management balancing immediate price mitigation with long-term transformation,” says Ferdous. “Success demands enhanced domestic production, diversified supply chains, and innovative financing shielding consumers from volatility while building resilience.”
With some GCC states depending on imports for up to 85% of their food supply, their exposure to tariff-induced volatility is critically high.
Any potential solution would require sophisticated risk management that must balance immediate price mitigation with long-term, structural transformation. Success hinges on a multi-pronged approach: Enhancing domestic production, diversifying supply chains, and employing innovative financing methods to shield consumers from volatility while aggressively building national resilience.
Emergency assessment and response
To develop a coordinated strategy, governments must first undertake an immediate and comprehensive assessment of their tariff exposure. This crucial step is meant to pinpoint direct tariff costs on food imports and re-export operations, analyze currency transmission effects that push imported US inflation into domestic price levels, and identify supply chain disruption patterns that necessitate costly route and supplier optimization.
Ultimately, the assessment must analyze consumer welfare impacts across different income levels to inform targeted protection measures.
Based on these findings, an Emergency Response Framework is being called for to address critical challenges:
The first pillar should focus on price stabilization and consumer protection. This involves establishing targeted measures to protect vulnerable populations while preserving market incentives. Consumer price protection programs must strike a delicate balance: Targeted subsidies for essential foods can protect the poor without resorting to broad controls that distort investment signals for domestic production. There should also be a systematic mapping of alternative suppliers to reduce tariff-affected exposure.
Furthermore, strategic commodity reserves must be expanded beyond bulk staples to include fresh and processed foods, which face the highest tariff pressures. That would require more climate-controlled storage to buffer against price volatility.
“Supply chain finance programs support importers managing higher working capital from elevated inventory and diversification requirements. Government-backed facilities reduce adaptation costs while ensuring financial constraints don’t prevent necessary adjustments,” adds Ferdous.
Accelerating transformation and resilience
Another part of the solution is to increase domestic food production. The tariff challenge is being reframed as a domestic production opportunity through strategic investment. This calls for the rapid scaling of controlled-environment agriculture programs to achieve meaningful import substitution while maintaining cost-competitiveness.
This development should be aided by technology transfer to accelerate growth and build long-term capabilities. Additionally, the creation of regional production networks will optimize resource utilization across GCC states, fostering complementary specialization and reducing collective vulnerability.
GCC countries also need to consider financial innovation and risk management. New, sophisticated instruments are needed to protect against tariff-induced volatility. These would include commodity risk management tools tailored for Gulf markets, such as futures and structured products, to enable long-term planning despite trade uncertainty.
Another part of the puzzle is strengthening regional coordination and integration. Leveraging collective resources will reduce individual country vulnerabilities. Joint procurement programs across GCC states can achieve economies of scale and provide greater negotiating leverage. For example, developing regional food processing hubs and cross-border agricultural initiatives would add value to imports and help create supply chain flexibility.
Implementation and strategic positioning
The implementation roadmap envisions a three-phase approach:
- Phase 1 (2025-2026) focuses on emergency stabilization through price monitoring, diversification, and consumer protection.
- Phase 2 (2026-2028) pivots to structural transformation, scaling domestic production and regional integration.
- Phase 3 (2028-2030) targets optimization, positioning the Gulf as a preferred global partner and a leader in adaptive food security management.
The Gulf’s response to tariff disruption will determine whether the region emerges as victim of trade fragmentation or leader in adaptive food security management.
“Countries successfully navigating crisis through enhanced production, diversified supply chains, and innovative risk management establish competitive advantages persisting beyond current policies,” says Ferdous.
“Success requires coordinated action across agricultural development, supply chain management, financial innovation, and regional integration transforming import-dependent systems into resilient networks. The window for transformation is limited by global policy pace and capacity building requirements, demanding immediate strategic action across all GCC member states,” Ferdous concludes.
