Agricultural production in Kuwait decreases, yet values escalate due to increasing inflation
In a surprising turn of events, the value of Kuwaiti agricultural output has witnessed a significant increase in the first quarter of 2025, reaching KD 13.893 million, marking a 25.8% rise compared to KD 11.04 million during the same period in 2024. This increase, however, contrasts with a 6.55% decrease in the production volume, which fell from 109.6 thousand tons to 102.4 thousand tons.
According to data from the General Administration of Statistics, local production in Q1 2024 stood at 98.85 thousand tons, valued at KD 9.143 million. The increase in value, therefore, can be primarily attributed to rising prices of cereals and agricultural commodities rather than an increase in physical production.
Key factors contributing to this price rise include regional climatic impacts and global market dynamics. Adverse weather conditions in neighbouring countries like Jordan, Iraq, and Syria have led to a reduction in grain production, thereby increasing demand and prices for cereals and related products in the region. This regional price inflation can elevate the value of Kuwaiti output even if actual production volume declines.
On a broader scale, global market trends also play a significant role. Forecasts by the FAO show a rise in cereal utilization and stocks globally for 2025/26. However, localized supply-demand imbalances and cost pressures can lead to higher prices at the country level, including Kuwait.
Climate change effects and a decline in global agricultural output have also contributed to the inflation of food prices. This inflation has further contributed to worldwide inflation and commodity price hikes.
In Kuwait, the food and beverage category recorded a 4.6% increase, driven by higher prices of fresh, frozen, and dried fruits and vegetables. Other food categories such as meat, fish, dairy, oils, and fats also experienced rising costs. The overall inflation rate in Kuwait over these four months was 2.25%, with the food and beverage category inflation rate being 4.6%.
Despite a lower volume of production in Q1 2025, the value increased compared to Q1 2024. Local production in Q1 2025 reached 74.6 thousand tons. However, the inflation rate for food prices within Kuwait was not specified in the provided data.
Global military conflicts in the Red Sea, Gaza, and Ukraine, as well as regional instability in the Middle East, have caused supply chain disruptions, further impacting the prices of agricultural products. These disruptions have contributed to the inflation of food prices within Kuwait.
In conclusion, the increased value of Kuwaiti agricultural output is driven by higher market prices of cereals and agricultural commodities amid relatively stagnant or declining production volumes, influenced by regional climatic impacts and global market dynamics.
The increase in value of Kuwaiti agricultural output can be linked to the rise in prices of cereals and agricultural commodities within the finance sector, as reported in Q1 2025. Global market trends, such as the anticipated increase in cereal utilization and stocks globally for 2025/26, as well as localized supply-demand imbalances and cost pressures in the industry, contribute to the elevated prices of these commodities in Kuwait.
