Reference Date: 09-October-2015
FOOD SECURITY SNAPSHOT
Phasing out of wheat production completed
Cereal import requirements forecast at high levels in 2015/16
Wheat production phased out
In Saudi Arabia, harvesting of winter grains concluded in May. The Saudi Grain Silos and Flour Mills Organization, implementing the 2008 Government decree to completely terminate its cultivation by 2016, reaffirmed that the 2014 crop was the last locally grown crop purchased. The measure reflects strong concern over the depletion of local water reserves which are used to irrigate wheat production. Some farmers reportedly switched from wheat to forage crops which consume more water than wheat. The Government is considering a decree to phase out local green forage production.
No penalties were announced for farmers who continue growing wheat after 2015. A small crop of about 30 000 tonnes for traditional specialty bakery products is expected to prevail. Wheat farmers are encouraged to engage in alternative sustainable production activities such as greenhouse farming or production of fruits and vegetables using advanced drip irrigation techniques.
Elsewhere, the GSFMO received a Government approval to privatize its nine flour mills and some of its storage facilities while maintaining the exclusive authority of the Government agency to import subsidized milling wheat, as well as to own and operate wheat silos in the country. The new mills could import wheat to produce non-subsidized specialty flours.
In light of decreasing domestic production, strong domestic demand and environmental concerns, Saudi Arabia is encouraging agricultural investments and production abroad for re-export to Saudi Arabia. This initiative targets wheat, rice, barley, yellow maize and green forage.
Cereal imports to remain high in 2015/16
Cereal import requirements in the 2015/16 marketing year (July/June) are forecast at 17.4 million tonnes, about 1 million tonnes more than in the previous year and well above average. Imports of barley and maize, mainly used for feed, constitute the bulk of the cereal imports and are forecast at 8.5 million tonnes and 3.6 million tonnes, respectively. The Government has been encouraging the use of processed feed instead of raw barley to reduce barley imports by 1.5 million tonnes by 2020. Wheat imports are also expected to remain high at 3.8 million tonnes, while rice imports are forecast at an above-average level of almost 1.5 million tonnes.
Subsidies maintain stable food prices
Owing to the Government’s price subsidies on a range of basic goods, such as food and electricity, the overall inflation rate remains relatively low at about 2.1 percent in August 2015 (year-on-year). Food and beverages prices in the second quarter of 2015 remained stable compared to the first quarter of 2015 and increased by 1.6 percent compared to the corresponding quarter of 2014.