The International Grains Council (IGC) puts Saudi Arabia’s wheat production in 2014-15 at an unchanged 700,000 tonnes, with sorghum production at 300,000 tonnes, also unchanged.
It puts the country’s total imports of grain at 14.9 million tonnes, up from 14.6 million the year before. The forecast level includes an unchanged 3.3 million tonnes of wheat, 2.7 million tonnes of maize, up from 2.6 million, and 8.8 million tonnes of barley, up from 8.7 million. Saudi Arabia is also forecast to import 1.3 million tonnes of rice in 2014, up from 1.2 million the year before.
The unchanged IGC wheat production figure contradicts what has been a downtrend.
“In recent years, the wheat sector in Saudi Arabia has witnessed major structural and regulatory changes that have drastically impacted wheat production and trade,” the USDA attaché said in a report earlier this year. “The government continues to implement the policy initiative it launched in 2008 that aims at reducing domestic production by 12.5% annually, with the ultimate goal of completely phasing out wheat cultivation by 2016.
“This policy was a radical departure from the country’s longstanding strategy of achieving wheat self-sufficiency that has been pursued since the early 1980s. The main reason for the policy change was a strong concern over the depletion of the country’s scarce water reserves, as the wheat crop is 100% irrigated. In a recent statement in January 2014, the Minister of Agriculture reaffirmed the Saudi government policy that 2016 will be the last year for producing wheat locally, and that the government has no concern in relying on imports to satisfy the Kingdom’s wheat consumption requirements.”
The USDA report gives a picture of gradual decline, with Saudi domestic wheat production declining to 600,000 tonnes in 2013-14, from 700,000 in 2012-13 and then projected to further decline in 2014-15, to 500,000 tonnes.
“Seeding of the wheat crop in Saudi Arabia starts in mid-November to early January, and harvest begins in late April to June,” it explained. “Although the wheat crop is totally irrigated, the cooler temperatures and cloudy weather associated with rainfalls (when they occur) play an important role in affecting wheat growing conditions and, thus, the crop yield. Currently, all wheat grown in Saudi Arabia is hard-winter of ‘Yecoro Rojo,’ variety which originated from the United States.”
The attaché noted that the number of farmers has been steadily declining over a decade, starting before the government decided to phase out wheat production, with large commercial farms replacing small farmers, bringing the number of wheat farmers down to about 6,000 in 2012, compared with more than 34,000 in 1993.
“Starting in MY 2016, GSFMO will stop purchasing any locally produced wheat, bringing an end to a government program that lasted for three decades,” it said.
In a paper presented in September 2013, H.E. Eng. Waleed El Khereiji, director general of GSFMO, outlined Saudi Arabia’s plans. He explained the dominant role his organization plays. “GSFMO is a national institution that aims to supply wheat and flour to the entire population of the Kingdom of Saudi Arabia,” he said. Its role includes the purchase of wheat from local farmers according to a set price until 2015 and the import of wheat to cover the remaining demand from international suppliers. It operates all the flour mills in Saudi Arabia
He said that GSFMO operates 11 branches (nine of which he listed as having flour milling operations) with total capacity of around 11,430 tonnes a day of flour milling, 2.5 million tonnes for wheat storage and around 2,900 tonnes a day for feed. Six new mills are planned, adding a further 3,750 tonnes a day in capacity.
GSFMO faces change. It is embarking on a privatization which will take its milling, sales and some of its storage facilities out of public ownership.
“GSFMO is expected to privatize only part of its grain storage silos – the minimal capacity needed to ensure smooth milling operations of the flour mill companies; the remaining storage capacity will be retained by GSFMO (for strategic reserve purposes),” Mr. El Khereiji said. “In the future, GSFMO is expected to undertake the role of wheat-sector regulator.”
That will mean setting regulations related to food quality, inspecting flour mills to ensure compliance with quality regulations, regulating the competition among the private flour milling operators and ensuring that the market structure fosters fair competition among operators in the sector.
“Wheat is an important item in the Saudi diet,” the U.K.’s Home Grown Cereals Authority explained in a profile of the country for exporters. “It is mostly consumed in the form of flat (pita) bread or local hamburger buns known as ‘Samoli’ and other western-style bread such as French baguettes and pizza.
“Licensed bakeries, industrial users and supermarkets get their flour needs from designated GSFMO flour mills located in their cities or from assigned agents in their respective areas,” it said. “The wholesalers provide the packaged flour to retail outlets, neighborhood stores and supermarkets, where consumers have the choices to purchase 1, 2, 5, or 10-kg flour packages.”
Saudi Arabia’s massive barley imports make it by far the biggest barley importer in the world. “Traditionally, barley has been the preferred animal feed for the Saudi Bedouins because it is easier to store and feed their animals with than other processed feed,” the HGCA explained. “About 98% of imported barley in Saudi Arabia is used in its grain form (no further processing) mostly to feed sheep, camels and goats. The remainder is used in feed processing, particularly by dairy farmers. Sheep are the largest barley consumers, followed by goats and camels.”
All imported barley is used for animal feed, as there is no beer production in Saudi Arabia, the HGCA said.
Saudi Arabia does import some grain from genetically modified varieties, although there are concerns over consumer acceptance of biotech products.
“Currently, there are no ongoing GE plant development activities in Saudi Arabia,” the USDA attaché said in a report on the subject late last year. “Although Saudi Arabia has adopted the Gulf Standardization Organization (GSO) biotech regulations which allow the importation and planting of biotech seeds under some strict conditions, Saudi farmers have not shown any interest in importing and planting biotech seeds.”
Since Saudi Arabia’s implementation of its processed food biotech labeling regulations in 2001, no retail packed food products with positive biotech labeling have been imported into the Kingdom to date,” the report said. “Saudi retail food importers do not import biotech foods due to concerns that biotech labeling could jeopardize their product image and result in their losing market shares, given that Saudi consumers have limited knowledge about agricultural biotechnology.
“On the other hand, Saudi Arabia has been importing biotech feed grains such as corn and soybean meal from the U.S. and other suppliers for a long time. In 2013, the U.S. exported about $1.2 billion worth of food and agricultural products to Saudi Arabia. These imports included soybeans, soybean meal, corn and corn oil that were valued at $113 million, $28 million, $95 million and $115 million, respectively.”
Religions: Muslim (official; citizens are 85-90% Sunni and 10-15% Shia), other (includes Eastern Orthodox, Protestant, Roman Catholic, Jewish, Hindu, Buddhist, and Sikh) (2012 est.). note: despite having a large expatriate community of various faiths (more than 30% of the population), most forms of public religious expression inconsistent with the government-sanctioned interpretation of Sunni Islam are restricted; non-Muslims are not allowed to have Saudi citizenship and non-Muslim places of worship are not permitted.
Location: Middle East, bordering the Persian Gulf and the Red Sea, north of Yemen.
Government: Riyadh. Chief of state and head of government: King and Prime Minister Abdallah bin Abd al-Aziz Al Saud (since Aug. 1, 2005).
Economy: Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 16% of the world’s proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Over 6 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors, while Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population, which generally lacks the education and technical skills the private sector needs. Riyadh has substantially boosted spending on job training and education, most recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia’s first co-educational university. As part of its effort to attract foreign investment, Saudi Arabia acceded to the WTO in 2005. The government has begun establishing six “economic cities” in different regions of the country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social development and infrastructure projects to advance Saudi Arabia’s economic development.
GDP per capita: $31,300 (2013 est.); inflation: 3.7% (2013 est.); unemployment: 10.5% (2013 est.).
Currency: Saudi riyals (SAR): 3.7505 riyals equals 1 U.S. dollar (Aug. 19, 2014).
Exports: $376.3 billion (2013 est.): petroleum and petroleum products 90%.
Imports: $147 billion (2013 est.): machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles.
Major crops/agricultural products: Wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk.
Agriculture: 2% of GDP and 6.7% of the labor force.
Internet: Code: .sa; 145,941 (2012) hosts and 9.774 million (2009) users.
Source: CIA World Factbook
Chris Lyddon is World Grain’s European editor. He may be contacted at: firstname.lastname@example.org.