Saudi Arabia has unveiled a new vision for agriculture through collaboration, which aims to deliver food security, environmental sustainability and economic opportunity.
This new vision, which stresses the need to produce more food with fewer resources and reinvigorating rural economies, was unveiled by Agriculture Minister Fahd Balghunaim to coincide with National Day celebrations..
Balghonaim, who gave an overview of the agricultural production in the Kingdom, called on leaders of business, farmers and development partners “to work together” to achieve sustainable agricultural growth.
“Saudi Arabia would like to be an effective element in increasing agricultural productivity,” said the minister, while asserting that the Kingdom would like to be an effective element in the world to increase agrarian production by improving agricultural productivity at the domestic front.
He maintained that “there are many alternatives to fulfill the domestic requirement and the ministry is working out several plans to cover the market demand.”
The minister, however, expressed concern that the Kingdom so far had not achieved self-sufficiency in poultry and vegetable segment.
“What has been achieved is only sufficiency in eggs supplies,” he said.
Saudi Arabia produces 42 percent of domestic poultry consumption and 85 percent of the vegetables consumption, Balghonaim said.
He said: “There is no shortage in vegetables, despite the political issues in Syria as we have almost achieved self-sufficiency in this field and for remaining 15 percent of the market demand, there are many alternatives to cover up the requirement.”
He said: “There is a new trend of farming in the greenhouses for the production of larger quantities of vegetables.”
Moreover, we encourage the private sector for investment in agriculture,” he added.
Referring to a shortage for tomatoes the market, he said: “We want Morocco to export tomatoes to the Kingdom to meet the shortfall in the domestic market.”
Saudi Arabia signed two deals worth SR560 million recently to build a wheat silo and a flour mill at Jazan Port to raise its storage capacity to more than three million tons of wheat from around two million tons in two years, enough to cover its annual consumption, according to the minister.
The new Jazan silo will have a capacity of 120,000 tons of wheat.
Balghonaim, who also heads the country’s state-run Grain Silos and Flour Mills Organization (GSFMO), said the second contract was to build a mill with the capacity to process 600 tons of wheat a day.
Both projects will be completed soon.
In October, Waleed El-Khereiji, director general of GSFMO said various projects were already under way to add 710,000 tons of wheat storage capacity.
Saudi Arabia plans to import more wheat this year following an increase in consumption and a planned decrease in local purchases.
The Kingdom abandoned plans for self-sufficiency in wheat in 2008 and aims to be 100 percent reliant on imports by 2016 in order to save water, said Balghonaim, adding that the country has the advantages in terms of financial experience, agricultural management.
Moreover, it maintains good relations with almost all countries to meet its agrarian requirements, the minister said.
Referring to the growth of agriculture sector and its positive impact on economy, he said Saudi Arabia’s agriculture and food sectors are expected to sustain a combined annual growth of 18.5 percent, driven by a rising population and strong consumer spending.
Food sales in the Kingdom account for around half of the domestic retail market and are expected to be worth almost $70 billion by 2016.
According to a report, Saudi Arabia’s food consumption is expected to grow by 4.2 percent between 2011 and 2015, driven by factors such as rising income levels, population growth, lifestyle shifts, and a thriving domestic economy.
The Saudi government has already allocated around $15 billion for the agricultural sector this year for projects and initiatives aimed at meeting demand.
The Saudi government is also encouraging more rapport and collaboration between the public and private sectors to ensure food security in the Kingdom, which ranks as the Middle East’s largest individual food importer and the largest market in the region for agro-food products and technologies.
The Ministry of Agriculture is heavily involved in the agriculture industry as the ministry is primarily responsible for the agricultural policies in the nation.
The private sector has been playing a major role as the Saudi government offers long-term interest free loans, along with low-cost water, fuel, electricity and duty-free imports of raw materials and machinery.
While Saudi Arabia is also the region’s largest food producer, representing 74.1 percent of total production in the GCC, it imports more than $14.2 billion worth of food and beverage products each year to meet its consumption demands.
According to BMI’s recent Q1 2013 report, this will rise to $35.2 billion by 2020.
Analysts also predict the country’s changing dietary pattern from carbohydrate-rich to protein-rich and high-value food products will create new opportunities for food companies in the Kingdom.
In order to address the growing food demands from consumers, the Saudi government plans to inject $22.1 billion into its food security initiative, said the report.
The move is aimed at reducing the country’s dependence on food imports as well as provide employment for up to 46,000 people.
A young and growing population coupled by a thriving domestic economy is changing food consumption habits, creating significant opportunities for importers and exporters. Hence, the Kingdom and its agencies have taken several initiatives to boost agriculture production, including dairy and poultry production.
The state-owned Agricultural Development Fund has launched a seven-point initiative that will change the whole face of Saudi Arabia’s agricultural sector.
The plan is now ready for implementation. It includes establishing agricultural information center, water conservation in irrigation except for wheat and fodder, establishing an entity or more for handling and marketing vegetables and fruit and another for fish, cooperative insurance for livestock sector starting with poultry, dates marketing, and cattle breeding company.
The main objective behind the launch of these initiatives is to keep up with local, regional and international variables in agriculture sector.
He pointed out that the staff in charge conducted a study on the market situation where they understood all viewpoints of related parties to the market and discussed solutions to the problems experienced by the Kingdom markets.
Among recommendations and proposals that will be included in the new initiatives, is creation of markets for farmers.
In fact, the Saudi government has been trying and supporting farmers to be more productive for the last several decades.
The government mobilized substantial financial resources to support the raising of crops and livestock during the 1970s and 1980s.
The main institutions involved were the Ministry of Agriculture and Water, the Saudi Arabian Agricultural Bank (SAAB) and the GSFMO.
SAAB provided interest-free loans to farmers in 1989 — for example, 26.6 percent of loans were for well drilling and casing, 23 percent for agricultural projects, and the balance for the purchase of farm machinery, pumps, and irrigation equipment.
SAAB also provided subsidies for buying other capital inputs.
GSFMO implemented the official procurement program, purchasing locally produced wheat and barley at guaranteed prices for domestic sales and exports.
The procurement price was steadily reduced during the 1980s because of massive overproduction and for budgetary reasons, but it was substantially higher than international prices.
By the late 1980s, the procurement price for wheat, for example, was three times the international price.
On the top of this, agricultural and water authorities provided massive subsidies in the form of low-cost desalinated water, and electric companies were required to supply power at reduced charges. The program prompted a huge response from the private sector, with average annual growth rates well above those programmed.
These growth rates were underpinned by a rapid increase in land brought under cultivation and agricultural production.