Reference Date: 28-January-2014
FOOD SECURITY SNAPSHOT
Further reduction in wheat production is forecast in line with Government’s policy
Cereal import requirements forecast at high levels in 2013/14
Wheat production gradually phasing out
Planting of the winter crops to be harvested from April 2014 is completed. In line with the adoption of the 2008 decree that aims at phasing out domestic wheat production annually and completely terminating wheat production by 2016, lower planted area is expected.
The 2013 wheat crop, estimated at 600 000 tonnes, is some 23 percent lower than in 2012. The government intends to maintain the guaranteed purchase price for locally grown wheat at USD 267 per tonne until 2016.
Saudi Arabia plans to raise the storage capacity of its grain silos by some 30 percent over the next three years from the current 2.52 million tonnes of wheat (an equivalent of ten months of consumption although a six months equivalent is actually maintained).
In light of decreasing domestic production, strong domestic demand and environmental concerns, Saudi Arabia is encouraging agricultural investments abroad and re-exporting products to Saudi Arabia. This initiative targets wheat, rice, barley, yellow corn and green forage.
Cereal imports to remain high in 2013/14
Cereal import requirements in 2013/14 (July/June) are forecast at 14.3 million tonnes, about 5 percent less than the previous year, but well above average. Similarly, wheat imports would also remain high at 3 million tonnes to maintain current milling demand levels and to expand the use of feed quality wheat as a substitute for barley and yellow maize in animal rations.
Reports indicate that the Saudi Grain Silos and Flour Mills Organization (GSFMO) announced it will diversify its sources for importing wheat and will not rely on a particular supplier to guard against shortages of wheat supply in the world markets and provide its wheat import needs at best prices. Responding to growing demand for biscuits and other sweet foods, in addition to the usual hard wheat varieties with higher protein and gluten levels, Saudi Arabia started tenders for soft wheat. The first shipment of 60 000 tonnes arrived from France, the first time a large amount of French wheat to be imported to the country.
Imports of barley and maize, mainly used for feed, are forecast at 7.6 million tonnes and 2.3 million tonnes, respectively. Import requirements of rice, a basic staple food which is totally imported, are forecast at an above average level of about 1.3 million tonnes.
Subsidies maintain stable food prices
Owing to the Government’s maintenance of price subsidies on a range of basic goods, such as food and electricity, the overall inflation rate remains relatively modest at a level of about 3.7 percent in the first three quarters of 2013 (base year of 2007). Food and beverages prices in the second quarter of 2013 increased by 1.5 percent (latest data available) compared to the first quarter of 2013, and by 6.2 percent compared to the corresponding quarter of 2012.