Saudi Arabia – Agricultural Sector November 2015

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Saudi Arabia – Agricultural SectorNovember 2015

Saudi Arabia – Agricultrual Sector Report, 2015

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Executive Summary 03

Introduction 04

Grain and Feed 05

– Wheat 05

– Corn 07

– Barley 08

Livestock 10

– Poultry, Meat, and Broiler 10

Dates 13

Fishery 14

SWOT Analysis 15

– Strength 15

– Weakness 15

– Opportunities 15

– Threat 15

Gulf Cooperation Council (GCC) 16

Conclusion 20

References 21

Glossary 22

TABLE OF CONTENTS

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• Saudi Arabia implemented various policies, which support agriculture and encouraged private players, thereby witnessed overall improvement

of their agricultural sector

• The prime crops cultivated are wheat, corn, and barley. Wheat is produced in large quantities, with the nation having a per capita consumption

of 85.7 kg/annum

• Cultivated corn is primarily used for animal feed in the poultry segment. Apart from local production, the Kingdom also imports large quantities.

The government provides subsidies for those who export corn to the Kingdom

• Consumption of poultry-based products is heavy in the Kingdom. Saudi Arabia produces, exports, and imports beef, broiler, etc., from other

countries. The government has enforced many policies to ensure quality meat is imported

• Production in fisheries, primarily shrimps, caviar eggs, etc., is also carried out in the Kingdom. The fishery is carried by two methods:

• Saudi Arabia is very strong in efficient cultivation by the use of much technological advancement in water resource management and greenhouse

cultivation. Thus, the Kingdom uses their water resources efficiently to ensure high quality production

• Saudi Arabia is a member of the Gulf Cooperation Council (GCC). The Kingdom’s land area and cultivation methods are more advanced that other

member countries, thereby making them as a market leader among the GCC

Executive Summary

Wild capture Aquaculture

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Over the past decades, the agricultural development in the Kingdom has significantly witnessed changes with new policies, aiming toward food security.

Although the Kingdom’s primary land area is a desert, it has regions where the climate supports agriculture. The government, in particular, has aided

with this process by converting large areas of desert into agricultural fields. This was possible by implementing major irrigation projects and adopting

large-scale mechanization. Presently, agriculture in Saudi Arabia is focused on the production of wheat, dates, fish, poultry, etc., and exporting some of

these volumes to neighboring countries and also to global players. The government has implemented many policies to ensure constant development.

The Ministry of Agriculture’s (MOAs) primary goal is to frame agricultural policies, which will help both foreign and local suppliers. The Kingdom’s other

agencies include the Saudi Arabian Agricultural Bank (SAAB) – disbursement of subsidies and granting of interest free loans, and the Grain Silos and

Flour Mills Organization (GSFMO), who are responsible for purchase and storage of wheat, construction of flourmills, and animal feed production. The

government offers land distribution, reclamation programs, and fund research projects.

The private sector has played a major role in the Kingdom’s agricultural development. This is primarily due to the government programs that offered long

term, interest free loans, technical and support services, and incentives, such as free seeds and fertilizers, low-cost water, fuel and electricity, and duty-

free imports of raw materials and machinery. Foreign joint-venture partners of the Kingdom’s individuals or companies have been exempt from paying

taxes up to 10 years. Saudi Arabia has allocated substantial financial resources for improving roads, linking producing areas with consumer markets.

Such programs encouraged the participation of private players in the market.

Water is a key resource for agriculture. The Kingdom had successfully implemented a multi-faceted program to provide the vast supply of water

necessary to achieve the tremendous growth of the agricultural sector. This was possible by constructing dams in strategic location to utilize the seasonal

flood for irrigation. However, the scarcity of water has been increasing for the past few years, which thereby impacted the production of few crops.

Introduction

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Wheat

Production, Supply and Demand

In Saudi Arabia, wheat is generally planted during September–November and harvested between April and August each year. The marketing

season is generally considered between July and June, known as the Market Year (MY).

During MY 2014/2015, the Kingdom had 71,000 Hectare (HA) of land where wheat was harvested, out of which, 425,000 Metric Ton (MT) was

produced. Wheat is an important item in Saudi Arabian’s diet. The average per capita consumption of wheat is currently estimated at about 235

grams/day or about 85.7 kg annually.

Production, Supply and Demand Statistics

Wheat 2013/2014 2014/2015

Market Year July 2013–June 2014 July 2014–June 2015 (Estimated)

Area harvested (1,000 HA) 110 71

Beginning stocks (1,000 MT) 2,153 2,749

Production (1,000 MT) 660 425

Total imports (1,000 MT) 3,450 3,560

Total supply (1,000 MT) 6,194 6,674

Total exports (1,000 MT) 145 150

Total consumption (1,000 MT) 3,300 3,405

Ending stocks (1,000 MT) 2,749 3,119

Total distribution (1,000 MT) 6,194 6,674

Source: GAIN Report

GSFMO is the key agency in Saudi Arabia, which ensures stocking wheat for emergency in reserve. This agency always has more than 2.5 million bags of wheat as emergency reserves (which is close to 40% of the annual consumption), which would be released into the market in case of any unexpected shortages. While industry sources proclaim that there were instances of wheat and wheat flour shortages reported in few parts, particularly in the cities of Jeddah and Makkah in the Kingdom, these are predominantly arising out of artificial in-equilibrium created in the system by a few traders and distributors to make financial gains.

Alternately, some of such instances that have been reported in the past two years relating to the shortage of wheat flour supplies in some parts of the Kingdom, particularly in the cities of Jeddah and Makkah, has seasonal factors as the prime reasons. These shortages typically have been reported during the “back-to-school” season as well as during the holy month of Ramadan (Islamic month of fasting when large numbers of foreign pilgrims land in the holy region of Saudi Arabia to perform Umrah rituals).

Saudi Arabia’s wheat production in MY 2014/2015 is projected at 425,000 MT, which is about 36% lower than the production recorded in the previous year. There has been a continuous decline in the domestic production with the government gradually lowering their purchase from farmers. GSFMO has proposed a decree during 2008, which stipulated that GSFMO will reduce the wheat production quotas for registered farmers by 12.5% annually to end the wheat cultivation by 2016. The main reason for this policy change was a strong concern over the depletion of country’s scarce water reserves, as the wheat crop is 100% irrigated. Accordingly, GSFMO has been lowering their purchase every year, and current season would pave way for clearing the final wheat purchase from the registered farmers.

Grain and Feed

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Sources: GSFMO and MOA

Supplying Country2012–2013 2013–2014

July–June Market Share July–June Market Share

Australia 409,134 21.8% 376,562 11.1%

Lithuania 372,734 19.8% 450,492 13.3%

Canada 178,500 9.5% 253,172 7.5%

US 169,140 9.0% 68,401 2.0%

Poland 164,326 8.7% 524,249 15.5%

Germany 120,745 6.4% 1,347,089 39.8%

India 94,142 5.0% 45,244 1.3%

Latvia 63,000 3.3% 106,000 3.1%

France 0 0.0% 206,852 6.1%

Others 309,094 16.4% 3,398 0.1%

Total imports 1,880,815 100% 3,381,459 100%

Source: Global Trade Atlas

2.4 1.7 1.0 1.3 1.2 0.7 0.7 0.4

450

326

196220

193

117 110

71

0

50

100

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250

300

350

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0.0

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2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015

Area

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Prod

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Wheat Produced vs. Wheat Area Planted

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GSFMO is the exclusive importer of food grade wheat in Saudi Arabia. The organization imports both hard and soft wheat directly through public tender, open to registered international exporters, and it does not buy through grain brokers. In MY 2013/2014, Saudi Arabia imported 3.38 million MT of milling wheat, an increase of about 80% over imports in MY 2012/2013. The main reasons for this increase in 2013/2014 imports include a decline in domestic wheat production in MY 2012/2013 by more than 40% (due to the domestic decree of reduced governmental purchases from registered farmers) and increase the emergency reserve availability of wheat at GSFMO.

In MY 2013/2014, the European exporting countries, such as Germany, Poland, Lithuania, Canada, France, and Latvia, were the leading suppliers of wheat to the Kingdom, who constituted more than 80% of the nation’s total import. The US and India reduced their export to the Kingdom significantly in MY 2013/2014 as compared to MY 2012/2013. Saudi Arabia imports about 10% of wheat from the total European Union exports each year. The European Union maintains more than 10 million MT of wheat as a closing stock year. The Kingdom has a huge potential to import wheat from the European Union whenever necessary, which is better than stocking huge inventories for emergency purposes.

CornThe corn crop is planted in spring and summer. This spring crop is planted in March and harvested in August, while the summer crop is planted in the last week of June and harvested from mid-November until the end of December. About 60% of corn production is planted in summer.

Domestic dairy farmers plant significant acreage of corn silage as a source of digestible fiber and readily fermentable energy for their cattle. The area planted to corn in MY 2014/2015 was estimated at 14,300 HA, with an average yield of 5.6 MT/HA. Saudi Arabia produces about 80,000 MT of corn each year.

Production, Supply and Demand Statistics

Corn 2013/2014 2014/2015

Market Year October 2013–September 2014October 2014–September 2015

(Estimated)


Beginning stocks (1,000 MT) 380 515


Total imports (1,000 MT) 2,684 3,500

Total supply (1,000 MT) 3,144 4,096



Ending stocks (1,000 MT) 514 644


Source: USDA Report

In MY 2013/2014, the total corn consumption was estimated at 2.63 million MT and projected to an increase by about 31% in MY 2014/2015 to 3.45 million MT. Corn is an important ingredient in animal feed, wherein it accounts for about 60% of the total ingredients used in poultry feed formulations, mostly by commercial feed processors and domestic dairy farms. The government has been providing subsidies for feed corn, as they constitute more than 70% of the total cost of feed, thereby an initiative to help in reducing production costs of poultry, meat, table eggs, dairy, and livestock meat products.

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Saudi Arabian Corn Imports Split (MT)


October–September Market Share October–September Market Share

Brazil 702,653 34.1% 990,616 36.9%

US 347,233 16.8% 1,033,014 38.5%

Argentina 1,011,878 49.1% 599,694 22.4%

Other countries 895 0.001% 60,122 2.2%

Total import 2,062,659 100% 2,683,716 100%


Feed corn is one of the 31 feed processing inputs that receive import subsidies by the government. Currently, Saudi Arabia pays USD 120/MT subsidy for imported feed corn to help in reducing compound feed production costs. Dried Distillers Grain with Soluble (DDGS) and Corn Gluten Feed (CGF) are two of the 31 animal feed ingredients that are eligible to receive the Kingdom’s import subsidies. Importers of DDGS and CGF receive about USD 134.67 and 125.87/MT as import subsidies, respectively.

In MY 2013/2014, the Saudi Arabian corn imports reached about 2.7 million MT (about a 30% increase over imports in the previous year). During this period, the US became the leading corn supplier to Saudi Arabia, with a total export of 1.3 million MT, which is 38.5% of the total of the Kingdom’s corn import market. Brazil and Argentina are two other primary exports of corn to the Kingdom.

BarleyIn Saudi Arabia, barley is the minor cereal, which is abundant in consumption, and hence barley is the cultivation next to corn and wheat in the Kingdom. Barley also had farmer encouragement from the government in the form of subsidies, which lasted until 2003. During 2003, the government terminated their domestic barley subsidy program after 20 years of domestic commercial barley production. This was initiated primarily to conserve the Kingdom’s water resources, as barley is a crop, which is 100% irrigated. The Kingdom currently produces 15,000 MT of barley each year, which are consumed locally.

Production, Supply and Demand StatisticsDomestic barley consumption in MY 2014/2015 is forecasted to decline by 8% to 7.1 million MT compared to about 7.7 million MT in MY 2013/2014. The decline is mainly due to increased utilization of animal feed products as a result of various government incentives, aimed at reducing direct barley usage. The Kingdom has 2,000 HA of the barley harvest area, which is capable of producing 15,000 MT each year.

Barley 2013/2014 2014/2015

Market Year July 2013–June 2014 July 2014–June 2015 (Estimated)


Beginning stocks (1,000 MT) 2,712 3,855


Total imports (1,000 MT) 8,843 7,000

Total supply (1,000 MT) 11,570 10,870



Ending stocks (1,000 MT) 3,855 3,755


Source: USDA Report

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In 2008, MOA granted monopoly right to Saudi Grain and Fodder Company (SGFC) to import and distribute barley within the Kingdom. The company was also responsible to keep track of current barley consumptions and stock them in case of any emergency situations or shortages. The Kingdom maintains reserves of more than 2.5 million MT of barley to satisfy any unforeseen deficits in the markets.

Saudi Arabian Barley Imports Split (MT)


July–June Market Share July–June Market Share

Argentina 2,137,593 25.80% 1,289,554 14.60%

Ukraine 1,457,433 17.60% 1,631,268 18.40%

Australia 1,148,203 13.90% 1,272,039 14.40%

Russia 1,028,160 12.40% 1,489,910 16.80%

Germany 749,098 9.00% 950,310 10.70%

France 686,439 8.30% 686,997 7.80%

Romania 428,870 5.20% 751,625 8.50%

Canada 109,780 1.30% 126,501 1.40%

Estonia 77,515 0.90% 132,000 1.50%

Latvia 74,718 0.90% 13,500 0.20%

US 58,696 0.70% 0 0.00%

UK 42,000 0.50% 93,678 1.10%

Lithuania 28,061 0.30% 116,864 1.30%

Other countries 257,852 3.10% 289,063 3.30%

Total import 8,284,418 100% 8,843,309 100%


With reference to the Saudi Arabian Barley Imports Split (MT), during MY 2013/2014, barley imports from countries, such as Ukraine, Russia, Australia, Germany, and Romania, constituted to more than 68% of the total imports. Argentina was the leading exporter of barley in MY 2012/2013; however, their contribution to Saudi Arabia’s barley had reduced by 40% in MY 2013/2014 compared to the previous year. Barley is imported to Saudi Arabia, primarily through five ports, Jeddah, Dammam, Yanbu, Diba, and Jazan. These activities are primarily taken care by the SGFC barley bagging facilities. Distribution of barley is managed by the Al Shamil Company throughout the Kingdom. The Saudi Arabian barley contribution to global trade is limited, as most of the production is used for internal consumption.

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Poultry, Meat, and BroilerPoultry, meat, and broiler are considered as the most important staple food in Saudi Arabia’s human consumption. The Kingdom’s poultry sector has been undergoing major expansion projects in the recent past that will enhance the long-term production goals, which are directly intertwined with the food security goals of the nation. In 2014, the local broiler meat production was estimated at 650,000 MT, recording an increase by 8% as compared to 2013.

Source: USDA Reports

Production, Supply and Demand StatisticsThe Kingdom’s primary goal is to increase their self-sufficiency ratio. Currently, Saudi Arabia requires 1.4 million MT of broiler meat for local consumption. In 2014, the Kingdom imported about 793,000 MT of broiler, and 650,000 MT of broiler was contributed from local production, which is 46% of the total consumption.

Market Year 2014 2015

Production 650 700

Total imports (1,000 MT) 793 900

Total supply (1,000 MT) 1,443 1,600


Human consumption 1,393 1,540

Total domestic consumption 1,393 1,540

Total distribution 1,443 1,600

Source: USDA Report

Apart from the consumption, the Kingdom also manages to export a small quantity of broiler (close to 50,000 MT) each year to neighboring Gulf countries. Saudi Arabia’s broiler supply is concentrated in 10 different vertically integrated companies, of which three are large players and remaining seven are medium farms.

Livestock

509566

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2011 2012 2013 2014E

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Saudi Arabian Broiler Meat Production

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Major Broiler Players

Al-Watania Poultry Farm (Al-Watania)Al-Watania is the largest poultry producer in Saudi Arabia, accounting for more than one-third of the Kingdom’s broiler meat production. The company’s facilities are located in Buraydah, Qassim Province. The company is capable of producing 180,000 MT of broiler meat/annum. They are currently constructing a mega poultry farm in Bisaita in Al-Jouf Province. This facility will have a total production capacity of 1 million broilers/day, which is expected to be operational by 2020.

About 80% of Al-Watania’s broiler meat production is sold fresh/chilled, while 20% is sold frozen. The company is also planning to increase their egg production to about 3 million eggs/day. The company sells about 150 different fresh and frozen products, such as marinated chicken, sausages, hot dogs, chicken popcorn, neat balls, etc. Al-Watania also runs a chain of fast food restaurants since 1996, which has about 14 outlets spread across different locations in the Kingdom.

Fakieh Poultry Farms (Fakieh)The Fakieh poultry farm is the second largest poultry producer in the country. This company currently has the capacity to produce about 430,000 broilers/day or 124,000 MT/year and expects to increase their capacity to 550,000 broilers/day by 2015. The company has invested about USD 800 million to increase their production to about 1 million broilers/day or 288,000 MT/year by 2020.

Fakieh operates about 230 farms, of which 102 farms are owned by Fakeih and 128 farms are contract farms. These farms are spread across the Kingdom unlink Al-Watania, which is a huge advantage, in terms of distribution for local consumption. Fakeih also sells about 80% of their broiler meat fresh/chilled, and 20% of the meat is sold as frozen products.

Almarai Poultry Farm (Almarai)Almarai poultry farm is owned by the Almarai Food Company, a leading food processing company in Saudi Arabia. The parent company deals with dairy, bakery, and baby food production. Almarai ventured into the poultry sector upon the acquisition of the Hail Agricultural Development Company (HADCO) in 2009.

Upon this acquisition, the company has invested about USD 1.1 billion, which will increase broiler meat production of 20 million birds in 2009 to 150 million birds within the next few years. Almarai’s broiler meat production facility does not have any contract farmers. The broilers are sold 100% fresh/chilled, and the same is exported to the GCC countries.

Saudi Arabian Broiler Meat Imports Split (MT)In 2014, Saudi Arabia was the third largest importer of broiler meat, with an estimated quantity of 793,331 MT. The decline in imports is primarily due to the increase in local production of broiler meat during 2014.

Supplying Country2013 2014 (Estimated)

January–December Market Share January–December Market Share

Brazil 687,167 79% 645,609 81%

France 153,393 18% 122,275 15%

US 24,792 3% 17,490 2%

Argentina 6,016 1% 7,010 1%

Other countries 1,268 0.001% 947 0.001%

Total import 872,696 100% 793,331 100%


For the previous two decades, Brazil has been the largest supplier of broiler meat to Saudi Arabia. In 2014, Brazil supplied 645,609 MT of frozen chicken, about 81% of the Kingdom’s total imports. France and the US are two other stable suppliers of broiler to Saudi Arabia.

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Saudi Arabian Meat Import RegulationsThe Kingdom has six main regulations for importing meat into their country, which are drawn by Saudi Arabian Food and Drug Authority (SFDA):

Hormone free certification: SFDA requires the exporting country to test the poultry meat for any hormone presence and to enclose a health certificate with proof of hormone-free-meat during shipment

01

Quality standards: All imported meat is expected to meet the Gulf Standards Organization’s (GSO) poultrymeat quality standards and specifications

03

Certificate of Islamic slaughter: A certificate of Islamic slaughter must be issued for all poultry meat and products entering the Kingdom. This certificate is issued by “Islamic Centers” in the US, approved and attested by the Saudi Arabian Embassy or Consulates prior to shipment

05

Ban on animal ruminant feeding: SFDA regulations require the health certificate to clearly indicate that the slaughtered birds have not been fed with animal protein, animal fats or any animal by-products

02

Halal certificate: Poultry slaughtering has to be performed only in licensed slaughter houses, which have to comply with “Animal slaughtering Requirements according to Islamic Law”

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Laboratory Test: All poultry meat and products imported will be tested at Kingdom’s ports of entry to ascertain that they meet all of the above requirements

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Saudi Arabia is the home land of the Date Palm Tree, and it is considered to be one of the most national products, as it is considered as a part of the Kingdom’s heritage. The Kingdom has the world’s highest number of date palm trees. Saudi Arabia produces about 35 varieties of dates with various qualities and exports the same to generate billions of USD each year.

Source: FAO Stat

Date palm has become an important and heritage fruit in Saudi Arabia. In 2013, the Kingdom produced 1.06 million MT of dates within 170,000 HA. The average yield, in 2013, was 6.30 MT/HA. Al-Qassim and Al-Ahsa are the most productive date regions in the Kingdom and known for producing the finest varieties in the world. Al-Qassim region (North West) alone has more than 6 million palm trees planted and produce more than 200,000 tons of dates each year.

Source: Internal Database

Saudi Arabia is the second largest producer of dates globally, with a market share of 15%. Egypt is the largest producer of dates, with a total market share of 18%. The Saudi Arabian date production, as a result of improving pest control initiatives and increasing acreage expansions for date palms, has increased at an average annual rate of 2.82% between 2006 and 2011.

Dates

0.99 0.99 1.01 1.05 1.07

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Dates Production vs. Dates Area Harvested

18%

15%

14%12%

9%

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Date Production Share by Region (2012)

Egypt

Saudi Arabia

Iran

UAE

Algeria

Iraq

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Other

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Saudi Arabia occupies 80% of the Arabian Peninsula and is bordered on the west by the Red Sea and on the east by the Gulf that lies between Iran and the Arabian Peninsula. Water around the Kingdom is predominantly used for fishing activities and also serves as tourist attractions, due to the presence of numerous varieties of fish and fine coral reefs. Fishing in Saudi Arabia has become increasingly favorable to the Kingdom’s agricultural economy.

Source: FAO Stat

In 2011, Saudi Arabian fisheries produced about 80,000 MT and have been steadily growing. In 2013, the Kingdom’s fisheries sector produced more than 97,000 MT, indicating a strong growth of 18% compared to 2011. Despite the abundance presence of fish and shellfish along the coastline, fishing concept is quite underdeveloped.

Source: FAO Stat

Saudi Arabian fisheries are contributed by two methods:

1. Capture (wild fishing, mostly, in sea around the Kingdom)

2. Aquaculture (commercial fishing, which involves cultivating freshwater and saltwater under controlled environments)

Shrimp aquaculture, one of the developing methods of prawn production, has been developing since 2000. In 2013, Saudi Arabia produced 74% of fishes through the Wild Capture Fishing and 26% through Aquaculture. Currently, technological advancements and breeding methods are prioritized to produce shrimps in large scales and favorable export quality. Shrimps produced in the Kingdom are also exported to Japan, Europe, and North America.

Fishery

Saudi Arabian Fisheries Production (Thousand MTs) – 2011–2013

80.232011

89.132012

97.352013

Saudi Arabian Fisheries Split-up – 2013

Capture

74%Aquaculture

26%

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Strength

Technology Advancements in AgricultureSaudi Arabia is a land of opportunity and one of the leading crude oil suppliers in the world. The nation has also upgraded in their technological advancements in various sectors. Technology used in the Kingdom’s agricultural sector has substantially developed in the past few decades. The Kingdom is primarily a desert land, with limited access to water resources, like rivers or streams, for any kind of irrigation. With the help of modern technology, several regions across the Saudi Arabia have been identified for the presence of ground water wells and natural springs, which are close to the surface. Advanced technologies, like drip irrigation, greenhouse cultivation, have been encouraged by the government to enhance the food security of the nation.

The MOA has converted large areas of desert into agricultural land for cultivation. During 1975, Saudi Arabia had only 15,000 HA of cultivated area; however, the Kingdom, according to 2011, has more than 1.2 million HA. The Kingdom has now found various breeding methods in aquaculture to increase the production of fisheries. These aquaculture farms are equipped with the latest technology to monitor the farms on a regular basis.

Weakness

Full Dependency of Rice on ImportsSaudi Arabia has no rice fields, thereby total dependence of rice on imports to meet the Kingdom’s demand. Rice is one of the staple foods next to wheat, which is served for lunch and dinner as a part of the daily diet. During MY 2013/2014, rice consumption was estimated at about 1.33 million MT, with a per capita consumption of 43 kg/year (which is almost half of the per capita consumption of wheat). Saudi Arabia imports rice, primarily from India, Pakistan, and the US who constitute to more than 90% of their total rice imports each year. India exports parboiled and basmathi rice to the Kingdom. Saudi Arabia also re-exports less quantity of rice, mostly to Yemen and some African countries, like Djibouti, Somalia, and Sudan.

Opportunities

Profitable Trade Agreements with the European Union for WheatWheat, one of the Kingdom’s most consumed foods, has been more encouraged to rely on imports rather than domestic production, due to the limitation of water resources. Wheat imports to the Kingdom from the European countries constitutes to about 78–80% of the total import in MY 2013/2014. Saudi Arabia maintains about 2.8–3.1 million MT of wheat as reserves or emergency back-up supply for unforeseen circumstances during any season. Saudi Arabia constitutes to nearly 10% of the total European Union wheat trade each year. Moving forward with the Kingdom, increasing its dependence on wheat imports, amid rising concerns of water reserves, the European Union can be considered as a reliable and sustainable sourcing partner with surplus volume.

Threat

Depleting Water ResourcesThe Kingdom’s agricultural sector has been developing for nearly four decades, but Saudi Arabian water resources have been an increasing concern. The Kingdom cultivates crops, such as wheat, barley, corn, etc., which requires 100% irrigation for healthy crops. In 2008, wheat was cultivated across 450,000 HA of agricultural land; however, in 2014, area of cultivation has significantly lowered to 71,000 HA. This is primarily due to limited availability of water resources. The Kingdom has been importing about 3.5 million MT of wheat to satisfy the local consumption. Limited natural resources are likely to slowdown the local cultivation and availability of domestic supplies, increasing the nation’s dependency on higher imports of these products.

SWOT ANALYSIS

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GCC is a regional inter-governmental political and economic union, consisting of the Arab states of the Persian Gulf. The countries include Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the UAE. The primary objectives of the GCC are:

1. Formulating regulations in various fields, such as religion, finance, trade, customs, etc.

2. Fostering scientific and technical progress in industry, mining, agriculture, water, and animal resources

3. Establishing scientific research centers and setting up joint ventures

4. Encouraging cooperation of the private sectors

5. Unified military

6. Establishing a common currency

GCC Current Goals: Steps for Sustainable AgricultureThe GCC has numerous goals where they have to ensure that the member countries are able to satisfy the necessary consumption for each commodity:

Gulf Cooperation Council (GCC)

Improving productivity of existing irrigation networks – GCC’s primary goal is to ensure to get the best out of available resources and also to identify the untapped resources and to ensure that these resources are utilized for maximum return

Ensuring the supply of irrigation water – Water scarcity is a key constraint in today’s GCC agriculture sector. The council should ensure that the wastewater treatment initiative is launched by each country and the same is followed for irrigation of crops

Encouraging private capital for the agricultural sector – The GCC has encouraged the participation of the private sector for raising capital. The GCC should ensure every country simplifies the bureaucratic process of investmentfrom both private and foreign players, by offering attractive financial incentives.The Saudi Arabian government has currently simplified their process with this regard

Adoption of dry farming – Greenhouse farming requires comparatively less water for irrigation and improves the productivity compared to traditional farming. Saudi Arabia also follows greenhouse and currently has deployed them across 3,200 HA within the Kingdom

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The agricultural comparison among each of the GCC member countries is as follows:

GCC Agricultural Comparison

Bahrain Kuwait Saudi Arabia Oman Qatar UAE

Land

Cultivated area (‘000 HA) 4 7 1,214 59 6 255

Cultivated area (%) 6 0.4 1 0 1 3

Area under permanent crops (‘000 HA)

3 1 201 46 3 190

Area under permanent crops (%) 76 20 17 78 54 75

Greenhouse cultivation (HA) NA NA 3,214 NA 67 25

Agriculture Water Use

Agricultural water use (m cu m/year) 4 7 1,730 59 13 227

Area actually irrigated (% equipped) 100 100 69 NA 47 NA

Traditional irrigation (%) 84 63 34 79 75 12

Modern irrigation (%) 16 37 66 21 25 88

Drip, bubbler, and other localized (%) 74 66 3 45 44 98

Sprinkler (%) 26 34 97 55 56 2

Drained area as a percentage of cultivated area

41 0.04 0.98 Nil NA NA

Regulator MMAA MAAFR MOA MMAA MAF MOEW

Financing

Specialized credit institutions NAIndustrial

Bank of Kuwait

AgriculturalDevelopment

Fund

OmanAgriculture& Fisheries

Bank

AgriculturalDevelopmentDepartment

NA

Sources: ICARDA, NCBC Research

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Comparison of Agricultural Commodities among the GCC Members Production of Meat, Beef, and Veal (1,000 MT)

Country 2013 2014

Kuwait 3 3

Oman 21 22

Saudi Arabia 52 54

UAE 16 16

Source: USDA

1. Saudi Arabia is the leading producer of meat, beef, and veal. During 2014, the production increased by 3.7% compared to 2013. Oman is the next largest producer

2. Kuwait is the smallest producer among the countries

Production of Poultry, Meat, and Broiler Production (1,000 MT)

Country 2013 2014

Bahrain 6 6

Kuwait 41 44

Oman 6 6

Qatar 10 10

Saudi Arabia 600 650

UAE 41 43

Source: USDA

1. Saudi Arabia is the leading producer of poultry, meat, and broiler. During 2014, the production increased by 7.8% compared to 2013. Oman and the UAE are the next largest producers. Bahrain and Oman are the smallest producers among the countries

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Production of Dates (MT)

Country 2012 2013

Bahrain 15,000 15,041

Kuwait 34,600 36,978

Oman 270,000 269,000

Qatar 21,843 22,100

Saudi Arabia 1,050,000 1,065,032

UAE 250,000 245,000

Source: FAO Stat

1. Saudi Arabia is the leading producer of dates. During 2013, the production increased by 1.5% compared to 2012. The Kingdom has more than 168,000 HA of date farms

2. Oman and the UAE are the next largest producers of dates among these countries

Production of Fishery (MT)

Country 2012 2013

Bahrain 27,091 14,978

Kuwait 4,339 4,934

Oman 191,731 206,522

Qatar 11,311 12,062

Saudi Arabia 89,130 97,348

UAE 73,148 72,780

Source: FAO Stat

1. Oman is the leading producer of fisheries. During 2013, the production increased by 7.2% compared to 2012. Saudi Arabia has been developing their aquaculture methods and technology to increase the efficiency and overall production

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With the help of technological advancement and proper utilization of water resources, agriculture in Saudi Arabia has improved substantially. The

government introduced various policies, like low-cost water, fuel and electricity, duty-free imports, connecting farms with consumers, with the

proper road network. These policies had encouraged the involvement of private player into the market. The Kingdom produces and exports wheat,

poultry, fisheries, dates to other countries. The Kingdom has a good technology framework, which will help with the constant improvement of

cultivation methods. However, the Kingdom lacks in the production of rice, despite being a staple food. The Kingdom imports many commodities

for local consumption, primarily from the European countries. Both in terms of acreage availability and technological advancements, Saudi Arabia’s

agricultural sector is performing well compared to other GCC countries.

CONCLUSION

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1. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Poultry%20and%20Products%20Annual_Riyadh_Saudi%20Arabia_8-20-2015.

pdf

2. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Riyadh_Saudi%20Arabia_5-14-2015.pdf

3. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20

Standards%20-%20Narrative_Riyadh_Saudi%20Arabia_9-25-2014.pdf

4. http://www.afedonline.org/Report2014/E/p156-171%20chp6%20eng.pdf

5. http://www.ocppc.ma/ckfinder/userfiles/files/Livestock%20and%20Food%20Security%20in%20the%20Arab%20region-Policy%20

impact%20within%20the%20Euro-Mediterranean%20Framework%281%29.pdf

6. http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1304428586133/GEP2015c_commodity_Jul2015.pdf

7. http://saudiarabien.ahk.de/fileadmin/ahk_saudi_arabien/GSBM/GSBM_January_2014.pdf

8. ftp://ftp.fao.org/FI/STAT/summary/a-0a.pdf

9. https://saudiembassy.net/about/country-information/agriculture_water/

10. http://www.fao.org/fishery/countrysector/naso_saudiarabia/en#tcN7015F

11. http://apps.fas.usda.gov/psdonline/psdquery.aspx

12. http://faostat3.fao.org

13. http://sites.gcc-sg.org/Statistics/Files/1418025667.pdf

14. http://sites.gcc-sg.org/Statistics/Files/1418025830.pdf

REFERENCES

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Acronym Expansion

CGF Corn Gluten Feed

DDGS Dried Distillers Grain with Soluble

FAO Food and Agriculture Organization

GAIN Global Agricultural Information Network

GCC Gulf Cooperation Council

GSFMO Grain Silos and Flour Mills Organization

GSO Gulf Standard Organization

HA Hectare

HADCO Hail Agricultural Development Company

ICARDA International Center for Agricultural Research

MAAFR Ministry of Agriculture Affairs and Fish Resources

MAF Ministry of Agriculture and Fisheries

MMAAMinistry of Municipalities, Affairs and Agriculture (Bahrain); Ministry

of Municipal Affairs and Agriculture (Qatar)

MOA Ministry of Agriculture

MOEW Ministry of Environment and Water

MT Metric Ton

MY Market Year

NCBC NCB Capital

SAAB Saudi Arabian Agricultural Bank

SFDA Saudi Arabian Food and Drug Authority

SGFC Saudi Grain and Fodder Company

USDA United States Department of Agriculture

GLOSSARY

About Jeddah Chamber

The Jeddah Chamber of Commerce & Industry is one of the oldest business

and service organizations in the kingdom. It was established by a royal

decree, dated Safar 1365 H \ January 1946 G. Since then, with the efforts

of 20 sessions of the Board of Directors and experience extending more

than 60 years, the chamber has been serving the national economy and

business community, contributing to its development and progress.

The Jeddah Chamber has a strategic location, next to the Ministry of Trade

& Industry and the Ministry of Culture & Information, overlooking the Jeddah

Islamic Port. This location gives it a significant economic dimension, makes

it one of the significant landmarks of the Bride of the Red.

The chamber strives to take care of its members’ interests and provide

distinguished services to them to contribute to the development of the

western province’s economy. A number of administrative and organizational

developments have been devised to enhance the services provided to the

members. Among the most, the chamber now has branches in province’s

different governorates, like Al Qunfidhah, Al Lith, and Rabigh, to provide

services to the business community.

From this standpoint, the chamber launched the Jeddah Economic Gateway (JEG), which is an economic online reference point

that collects and classifies various economic and investment information under one roof. JEG includes more than 2,400 reports

and studies, 65,000 statistical tables, in addition to more than 51,000 tenders and investment opportunities, and much more. JEG

provides the business community in Jeddah in particular, and KSA in general, with the best information services and it empowers

the decision-making process through the wealth of information that it provides.

For more information, please visit www.jeg.org.sa

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JEDDAH CHAMBER

Address: P.O. Box 1264

Jeddah 21431

Kingdom of Saudi Arabia

www.jcci.org.sa

WWW.JEG.ORG.SA

Saudi Arabia – Agricultural Sector November 2015

Documents

Transcript of Saudi Arabia – Agricultural Sector November 2015