Saudi Arabia’s agricultural sector, particularly its grain production, plays a pivotal role in ensuring food security and supporting the nation’s economic diversification goals under Vision 2030. Despite the challenges posed by its arid climate and limited water resources, the Kingdom has made notable progress in boosting domestic production of certain grains while maintaining a strong reliance on imports to meet its consumption needs. Wheat, barley, and corn are the key grains cultivated within the Kingdom.

A Growing Focus on Wheat Self-Sufficiency

Wheat is a dietary staple in Saudi Arabia, commonly consumed as flatbread (pita) or the local hamburger bun known as “Samoli.” The Kingdom’s wheat industry has undergone significant transformations since the 1970s when Saudi Arabia embarked on an ambitious project to become one of the world’s top ten wheat producers. However, in 2015, concerns over depleting aquifers led to a phase-out of wheat production. By 2018, the government reintroduced support for wheat cultivation, offering forage producers an alternative to the more water-intensive alfalfa, the primary green fodder crop.

The process of wheat cultivation, harvesting, and delivery in Saudi Arabia is highly organized. Planting begins at the end of November and continues through the second week of January, with the harvest occurring from June to October. The harvested wheat is delivered to the General Food Security Authority (GFSA), a key agency under the Ministry of Environment, Water, and Agriculture (MEWA). The GFSA plays a critical role in regulating and managing the country’s wheat supply chain as the sole purchaser of both domestically grown and imported wheat.

Since MY 2020/21, MEWA has actively encouraged local farmers to produce up to 1.5 million metric tons (MMT) of wheat annually for delivery to the GFSA. To incentivize domestic production, the GFSA purchases all locally produced wheat at a government-set premium price, which is determined annually after planting.

For MY 2023/24, the GFSA offered US$467 per metric ton (MT) for domestically produced wheat, significantly higher than the average price of US$394.74 per MT for imported wheat. This price differential aims to influence farmers’ planting decisions, encouraging them to prioritize wheat and alfalfa cultivation based on the government’s purchase price.

Looking ahead to the 2024/25 marketing year, Saudi Arabia’s wheat production is projected to reach 1.5 MMT, a 25% increase from the previous year. This growth is part of the Saudi government’s broader strategy to enhance food security by boosting local agricultural output. The wheat production area is estimated at 250,000 hectares, with an average yield of 6 MT per hectare, signaling a promising future for wheat production in the Kingdom. However, despite these efforts, the Kingdom remains reliant on imports from Germany, Canada, and Australia to ensure a stable supply of high-quality wheat that complements domestic production.

A Growing Appetite Amid Health Consciousness

In MY 2023/24, Saudi Arabia’s annual per capita wheat consumption reached approximately 129.43 kg, with white flour remaining the dominant choice among consumers. According to the GFSA, all wheat in Saudi Arabia is allocated exclusively for human consumption. The government strictly prohibits the use of subsidized wheat for animal feed, ensuring that livestock farmers receive monthly payments to cover their feed expenses.

As the nation modernizes, a noticeable shift in consumer preferences toward healthier food options is emerging. The rising demand for whole-wheat flour reflects this trend, particularly among health-conscious consumers and those managing conditions such as diabetes and obesity. Saudi Arabia ranks among the countries with the highest rates of diabetes and obesity worldwide, prompting increased awareness of the benefits of whole grains. In response, the Kingdom’s four flour mills have ramped up whole-wheat flour production to meet this growing demand.

For MY 2024/25, total wheat consumption in Saudi Arabia is projected to reach 4.75 MMT, a 5% increase from the previous year. This growth is largely driven by the expanding food service sector, which is experiencing heightened demand due to the development of labor camps for multibillion-dollar mega projects, including the construction of luxury resorts and other attractions along the Red Sea coast. These projects, aligned with Saudi Arabia’s Vision 2030 initiative, aim to attract over 150 million visitors annually, significantly boosting demand for bread and other food products in the catering and food service industries.

Moreover, the Saudi government’s emphasis on food security and self-sufficiency continues to shape wheat consumption patterns. The Kingdom’s strategic initiatives to diversify its economy and reduce reliance on oil revenue have created a robust environment for the growth of the food and agriculture sectors, further reinforcing wheat’s importance in the Saudi diet.

Reshaping Saudi Arabia’s Flour Milling Industry: The Strategic Privatization of the Sector

Saudi Arabia’s flour milling industry is a cornerstone of the nation’s food security, ensuring a steady supply of bread, a dietary staple. Initially, the country had nine government-owned mills crucial in maintaining this supply. However, in line with the Saudi government’s Vision 2030 initiative, these mills were consolidated into four companies and sold to private investors through a competitive bidding process.

The privatization of these milling companies marked a significant industry shift. The journey toward privatization in Saudi Arabia’s flour milling industry began in earnest in 2020, spearheaded by the Saudi Grains Organization (SAGO) and the National Center for Privatization (NCP). The First Milling Company was sold to AlRaha AlSafi Foods for SAR 2.027 billion (US$547.29 million). The Second Milling Company was acquired by a consortium that includes Abdulaziz AlAjlan Sons Co., Sulaiman Abdulaziz AlRajhi International Co., NADEC, and Olam International for SAR 2.138 billion (US$577.26 million). The Third Milling Company was purchased by a consortium of Mada and AlGhurair Ltd. for SAR 750 million (US$202.5 million). Lastly, the Fourth Milling Company was acquired by a consortium led by Allana International and Abdullah Al Othaim Markets for SAR 859 million (US$231.93 million).

Despite these ownership changes, SAGO remains the primary regulator of the industry and the main importer and supplier of wheat. SAGO’s role is vital in ensuring a stable wheat supply to the mills and regulating wheat prices, which helps maintain the affordability of flour products for consumers. Through these measures, the government continues to control wheat prices and provide subsidies to ensure that flour remains accessible to all, even under private ownership.

Barley: A Staple for Animal Feed

Barley is a staple crop in the Kingdom, integral to the livestock sector, which is a crucial component of the nation’s food security strategy. The Kingdom’s livestock sector, which includes over 10 million sheep, goats, and camels, relies heavily on barley, especially during the dry season when natural forage is scarce.

According to MEWA, about 85% of the barley consumed in Saudi Arabia is used for animal feed, amounting to approximately 7 MMT annually. Locally grown barley is primarily used in specialty food items, such as soups and traditional Saudi dishes during Ramadan. Imported barley is used exclusively for animal feed, as there is no beer production in Saudi Arabia.

The total area under barley cultivation in Saudi Arabia has fluctuated over the years. As of 2022, about 150,000 hectares were dedicated to barley cultivation. However, this area has been shrinking due to water conservation efforts and a shift towards more economically viable, less water-intensive crops.

The Saudi government has introduced several policies to support barley production, including subsidies for irrigation infrastructure, research into drought-resistant barley varieties, and financial incentives for farmers who choose to cultivate barley. Additionally, the government has invested in modern farming techniques, such as precision agriculture, to improve yields and reduce water usage. Total Saudi feed barley consumption for MY 2023/24 is estimated at 3.2 MMT, down by approximately 16% from MY 2022/23 due to higher local barley prices compared to domestically produced processed animal feed. Low international barley prices are projected to increase barley demand by approximately 9% to 3.5 MMT in 2024/25 as local market prices become more competitive.

Corn Imports Driven by Poultry and Dairy Industries

Saudi Arabia’s corn production is minimal, with the country producing approximately 15,000 to 20,000 metric tons annually, primarily used for animal feed, especially in the poultry and dairy industries. The country’s growing population and increasing demand for poultry products have led to a surge in corn consumption over the past decade. Saudi government policy discourages domestic production of water-intensive crops, including feed corn. Though the dairy sector is consistent with its corn use in feed formulations, local animal feed processors, such as ARASCO, determine their corn usage based on prevailing international prices.

When prices are competitive, as they are this marketing year, corn usage is high. Total Saudi corn imports for MY 2024/25 are projected to reach 4.5 MMT, an increase of nearly 29% from this year’s estimate of 3.5 MMT. This increase in corn imports is driven by expansive projects throughout the country to boost domestic chicken meat production.

Rice Cultivation Not Viable

Rice is a staple in Saudi cuisine, yet the Kingdom does not produce rice due to water constraints and relies on imports. Private companies freely import rice into Saudi Arabia. However, in recent years, GFSA implemented strategies with major rice importers to ensure adequate rice reserves are kept at importers’ warehouses. Rice does not face a tariff and is not subsidized. Most major Saudi rice importers purchase the new Indian rice crop by December each year and complete their imports by June.

Meanwhile, imports from other countries, such as the United States, last throughout the year. The General Food Security Authority (GFSA) ensures adequate rice reserves with major importers, and imports are projected at 1.62 MMT for MY 2024/25, a 4% increase from the previous year. Rice imports are expected to rise by approximately 5% in the coming years due to food service sector expansion.

The State of Grain Storage

Saudi Arabia has heavily invested in grain storage infrastructure to secure a stable food supply. Managed by SAGO, the country’s storage facilities can accommodate millions of metric tons of grains. In 2021, the Saudi Grains Organization (SAGO) completed construction of two new silos with storage capacity of 120,000 tonnes, lifting grain storage capacity in the country by 37%. Dubbed the Yanbu Silos Project, the US$97 million project was part of the larger National Transformation Program underway in Saudi Arabia. In 2023, the kingdom built the largest advanced grain storage capacity in the Middle East, increasing the total by 40 percent from 2.5 million tons in 2016 to 3.5 million tons. The private sector also plays a critical role in grain storage.

Recently, CESCO EPC announced a significant collaboration with United Feed Co. (UFC) on a storage and conveying project in Saudi Arabia. The development included the construction of 15 corrugated steel flat-bottom storage silos, boasting a total capacity of 205,152 tonnes. As of recent estimates, Saudi Arabia’s total grain storage capacity exceeds 6 million metric tons, including both silos and warehouse facilities.

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