The Kingdom of Saudi Arabia has been able to overcome the natural obstacles that stand in the way of achieving food security for its people. It adopted integrated strategies and plans that bring together farming abroad with the use of modern technology in the poultry and animal industry, resulting from an increasing interest in food industries. Today, Saudi has become one of the major players in the Middle East markets.
The great development in the Kingdom’s food security appeared during the COVID-19 crisis, during which many food-exporting countries tended to impose protectionist policies and reduce the volume of their exports. Unlike many developed countries, the Kingdom did not face any shortage of food supplies. Its stores did not witness a rush of citizens, and its shelves were not emptied of goods, owing to people’s certainty of the abundance of products.
The Saudi experience is remarkable. How can a primarily desert country with 35 million inhabitants not suffer from the lack of food? However, the wise leadership has been keen to address this issue by taking innovative measures to provide the well-being of all its citizens.
Saudi Arabia currently has the largest storage capacity in the Middle East for wheat and flour, exceeding 3.3 million tons, with a daily milling capacity of more than 15,000 tons. In June, the Kingdom received the first shipment of Saudi Agricultural Investment and Livestock Production Company (SALIC)-produced Australian wheat, weighing 60,000 tons. The shipment was part of the Saudi Grains Organization’s tender to purchase 355,000 tons of wheat.
The Gulf country has wide options for wheat sources, through either international tenders that are launched abroad or the tenders launched abroad exclusively for the Saudi investors, for which 10% of wheat purchases are allocated annually. It also purchases local quantities from farmers according to the rules of green fodder cultivation, which determines the area of cultivation according to the size of each investment. Small farmers are allowed 50 hectares or less, medium-sized farmers are allowed between 50 and 100 hectares, while companies and large farmers who are project owners are allowed 10 hectares (1 hectare is equivalent to 10,000 square meters).
The Kingdom has developed 11 programs in its five-year strategy for food security. These programs include achieving a sustainable local food industry system by improving levels of self-sufficiency in ecological goods, enhancing productivity and adopting sustainable practices in the local industry, supporting small farmers, developing rural agriculture, and supporting the local development of the strategic food industry sector while minimizing food loss and waste.
Some of the means used to achieve food security in the Arab countries are related to reducing the quantities of wasted food by changing the prevailing popular mentality of preparing large quantities of food and throwing out the leftovers, said the Professor of Management Accounting at Ain Shams University in Egypt, Dr. Abdul Rahman al-Olayan. He stressed that the costs of food wastage are substantial, especially in the Arab world where it amounts to about 40 million tons.
According to official statistics, food wastage in the Kingdom amounts to 4,066,000 tons at a cost equivalent to 40 billion riyals annually. This has major negative effects on the environment, health, and economy and requires people to balance the purchase of food in a way that meets their needs without causing this massive food waste.
The development of food transport and storage processes was one of the main means for achieving food security, Olayan told Majalla. These processes, he added, increase the shelf life of products and prevent them from being exposed to rapid damage, especially in hot areas that depend mainly on imports to get most of their needs. This forces the economy to bear the burden of import and waste as well.
The Kingdom’s strategy also included achieving diversity and stability of external food sources. For this purpose, it established mechanisms and frameworks for commercial partnerships to be transferred into a regional hub for food trade. It also initiated cooperative procedures in the field of food security between the Gulf Cooperation Council states at the regional and international levels, enhanced its participation in the international organizations and agreements related to food security, and prepared and launched its overseas agricultural investment plan.
In addition, Olayan stressed the need to carry out awareness campaigns for citizens and add explanations to school curricula on the burden of food wastage as well as the cost incurred by the economy to achieve food security. He pointed out that the Kingdom has already achieved this goal by developing an institutional work model at the national level and preparing training and awareness programs to enhance the capability of national cadres to understand the various concepts, policies, and operations related to food security which are reflected by infrastructure investment.
The strategy also included building capacities to face the risks related to food security, in addition to designing and establishing an effective information and risk management system. Moreover, it covered developing mandatory protocols, systems, and capabilities, managing and examining the crises and emergencies, and formulating the appropriate mechanisms and policies for the operation and management of strategic food stocks in the country, in partnership with private sector actors.
Saudi Arabia has experience in cultivating wheat, as it began producing it in the 80s by relying on groundwater. It then enhanced its performance in the 90s to produce four million tons, making it the second-largest producer of Arab wheat after Egypt. But it later decided to reduce the cultivated areas in order to preserve the underground water reserves and adopt new strategies for agriculture.
The Kingdom eventually studied a request for the possibility of raising its productivity of wheat to 1.7 million tons annually while reconsidering an increase of the purchase price of wheat to 2,000 riyals per ton. It forced farmers not to use more than 5,500 cubic meters per hectare and not to plant any summer crops after wheat and barley in order to preserve the stock. The Ministry of Environment, Water, and Agriculture has also exploited the relative virtues of each region in terms of climate and water availability, which created growth in production. This led to achieving high sufficiency rates in many agricultural products, accompanied by an improvement in quality, and lower consumption of groundwater for agricultural purposes.
The Kingdom’s agricultural output amounted to 61.4 billion riyals, representing 2.33% of the gross domestic product. Its self-sufficiency rate for dates exceeded 125%, while the self-sufficiency rate for vegetables and poultry reached 60%, eggs 116%, fresh milk and its derivatives 109%, and fish 55 %, raising its rank in the Global Food Security Index (GFSI) to 30th out of 113 countries in 2019.
The local production of fruits (excluding dates) amounted to 800.4 tons, with watermelon topping the crops at a sufficiency rate of 98%, 81% for melons, 59% for grapes, 52% for mangoes, 28% for pomegranates, and 25% for lemons. Many other fruit crops were also produced throughout the year and contributed to achieving food security in the Kingdom, according to local official data.
The organic agriculture sector is also witnessing significant growth after its capacity reached 270,000 dunams (1 dunam is equivalent to 1000 meters) and the amount of local organic agricultural production during one year reached 98 million kilos. The turnover of the local food market amounted to more than 752 million riyals. Meanwhile, the government showed great interest consistent with deeming the organic agriculture sector to be the fastest growing and most in-demand in the global food industry.
The Kingdom is currently highly interested in agricultural industrialization. It is in the process of launching a giant agricultural holding that produces dates and all palm tree products and is working hard to market them abroad. It is worth mentioning that it has about 30 million palm trees that produced about 1.6 million tons in 2020.
The fruit and vegetable canning factories top the list of food factories in the Kingdom with about 296 plants, followed by “bakeries” with about 240 plants. While investment in the food industry amounts to 87 billion riyals, which constitutes eight percent of the total investments in the industrial sector, food product factories account for 11% of the total number of factories and provide more than 82,000 jobs.
In this regard, a report issued by the National Center for Industrial Information showed that the number of food factories in the Kingdom amounted to about 1,121 until Q1 2021, with an activity growth of nine percent. The report also revealed an increase of 61% in the number of industrial licenses issued in 2020 compared to the year 2019, noting that food product factories are producing more than 1,582 products.
It is worth noting that the Kingdom’s food exports reached 13.5 billion riyals in 2018 when the sector ranked fourth in the list of non-oil manufactured exports. Dairy products topped the list with 4 billion riyals of exports, followed by the pastry sector with about 2.2 billion riyals, fruits and vegetables with about 1.2 billion riyals, and cereals with 578 million riyals.
In 2017, Saudi Arabia launched three initiatives within the National Transformation Program aimed at enhancing animal and food production to meet the needs of the local market. Red meat constituted 30% of the market’s needs which required an increase in the poultry production sector to about 48%.
Fresh milk and its derivatives provide the individual with about 135 calories, which represent 4.7% of the total calories consumed in the daily diet, in addition to 7.4 grams of protein, which constitutes about 28.2% of the total daily nutritional requirement and is equivalent to the world average.
There are more than 17.5 million sheep, 6.1 million goats, 1.4 million camels, and 354,000 cows across the Kingdom, according to the 2016 agricultural census issued by the General Authority for Statistics.
By the end of 2020, the number of companies specialized in the production of fresh milk and its derivatives reached about 12 national companies producing seven million liters with a daily filling capacity of 18 million containers, including 35 different products of fresh milk and its derivatives. This covers the total local consumption for the Kingdom, which usually exports to the Gulf markets about 25% of its dairy products, with milk exports amounting to about 56.4%.
Saudi Arabia has adopted the latest means of industrial livestock production in farms relying on technology after the traditional system of production ended decades ago in the 80s. It started to follow the vertical expansion in agriculture by using foreign breeds, cattle genetic improvement, and providing the appropriate environmental atmosphere for increased production.
The poultry industry witnessed record growth in the Kingdom. In fact, production increased from 7,000 tons per year in 1971 to 425,000 tons in 2000, and 535,000 tons in 2006, before attaining approximately 670,000 tons in 2016 and 750,000 tons in 2019, with a self-sufficiency rate that exceeds 60% for broiler chickens and more than 106% for table egg production.
Saudi recorded the highest consumption of chicken in the world with a per capita consumption average of 50 kg annually. The country consumes about 1.5 million tons per year, which is a very high rate per capita compared to similar countries. Therefore, the Kingdom needs to import the remaining quantities for its local market, especially from Brazil, which ranks first among exporters.
The number of birds and poultry in the non-specialized holdings is more than 5.6 million, along with 1.8 million birds that breed at home. There are nine types of breeding in the farms specialized in poultry production in the Kingdom, namely, “broiler chickens, chickens, mother broiler chickens, mother chickens, grandmother broiler chickens, grandmother chickens, quails, and ostriches.”
The Saudi government has taken several measures to develop the sector, mainly redirecting direct financial support according to the type of product. Contrary to the previous methods of support, this redirection would maximize the benefits by enhancing production and improving the quality of local products in all the poultry production projects. Moreover, it would contribute to the stability of the poultry prices for the final consumer. It is worth noting that the Kingdom also launched the “Sajjel” (Register) program a few years ago to encourage hundreds of informal farms to become registered.
The number of farms specialized in fish production reached about 55 holdings, containing more than 13 types of fish in aquaculture farms. Fish production increased at a rapid pace, so that the Kingdom’s exports of farmed fish products in 2019 amounted to about 60,000 tons, with revenues of more than one billion riyals.
The experience of fish farming in the Kingdom dates back to 1982 when the first tilapia fish farm was licensed in the Eastern Region before the freshwater fish farms were established south of Riyadh. Fingerlings were then distributed free to farmers, so that the Kingdom’s exports of shrimp increased by 40,000 tons, with returns exceeding 800 million riyals in 2018, making the Kingdom one of the leading countries in this field.
Last April, NEOM signed a memorandum of understanding to establish a fish farm which is the largest in the Middle East and North Africa. Dubbed “Tabuk farm,” this hatchery is specialized in applying the new generation of aquaculture technologies within the NEOM region, with a production capacity of 70 million eggs. It also focuses on improving the productivity of local fish species in the Red Sea to contribute to achieving Saudi Arabia’s goal of producing 600,000 tons of fish products by 2030.
Saudi Arabia currently produces 50 types of winter vegetables on 100.7 thousand acres, led by the potato crop, which constitutes 30.6% of the total cultivated area, followed by the melon crop with 18.5%, and then tomatoes with 15.3%. The Kingdom also produces 40 types of summer vegetables on 80.4 thousand acres, in addition to 40 species on 1.5 thousand acres of 66,529 greenhouses, and 19 types of cut flowers on 380 acres.
The number of beehives in all agricultural holdings reached 38.8 thousand, and the total production of honey amounted to 109 tons, following government plans to develop bee pastures in order to maximize the economic returns to the industry. The country’s institutions continue to support this industry in light of the continuous growth of the number of beekeepers who practice modern methods of honey production and the ability to increase the number of highly qualified specialists in this field.
Saudi Arabia imported approximately 25,000 tons of honey annually, but the Ministry of Agriculture kept seeking to change this situation through a package of programs that improved the honey bee industry and production sector in 2018. Honey revenues are about 660 million riyals, representing 1.07% of the country’s agricultural GDP.
Agriculture Investments Abroad
Saudi agricultural investments abroad amounted to more than 10 billion riyals ($3.75 billion) during the last 10 years in several countries, including Sudan, Egypt, Ethiopia, and Morocco. These investments depend on the use of industrial intelligence as well as a digital and vital technology to sustain growth and achieve the highest economic benefit as well.
Dr. Rashad Abdo, head of the Egyptian Forum for Economic Studies, said that Saudi Arabia has been making strides over the years to vigorously address the food security issue. However, its efforts increased significantly during the past years in light of the leadership’s acknowledgment of the country’s need to import in order to face any local demand shocks.
The Kingdom has an abundance of money that qualifies it to import at any time, Abdo told Majalla. However, it is well aware that the imports may face emergency crises such as fires, floods, and epidemics, in addition to the repercussions of climate change that may affect productivity. Therefore, it sought to diversify its investments to include all continents: Asia, Africa, the Americas, Australia, and Europe, ensuring easy importing from anywhere at any time.
In 2019, SALIC, which is affiliated with the state-owned Saudi Public Investment Fund, carried out the first agricultural investment operation in Australia. It purchased Baladjie Company, which owns agricultural land of more than 494,000 acres in the wheat belt in Western Australia, along with a flock of 40,000 head of Merino sheep.
Moreover, a few years ago, SALIC acquired a large farming company “Mriya Agro Holding” in Ukraine to manage about 494,000 acres, after it purchased two Ukrainian agricultural companies operating on multiple levels and merged them together under the name of “Continental Farmers Group” to manage 195,000 hectares of agricultural land in western Ukraine.
Saudi companies also have investments in Brazil in the agricultural sector, meat, industrial and chemical products, as well as tracts of land in Los Angeles, Arizona, and Argentina. Some of this land is planted with red clover silage, which is used as a forage for cows and regularly imported to the Kingdom for dairy production companies, according to the green fodder cultivation mechanism that ensures those companies meet their needs.
This strategy ensures the regular import of agricultural requirements over a long period of time, especially since the Kingdom took into account the temporal and geographical dimensions of importing, Abdo added. It pumped investments in some neighboring countries such as Egypt, Sudan, and Ethiopia to produce basic commodities, ensuring that goods can be transported from these countries whether by land, sea, or air.
The agricultural sector in Africa is currently the most attractive to Saudi investors, as the Kingdom has been able to get a foothold in a region that will become within a few years the most attractive global area for food-related investments. Studies show that by 2030, the African agricultural sector will be able to create a trillion-dollar market with the exploitation of renewable water resources inasmuch as only two percent of it has been exploited so far.
In this regard, African economic studies indicate that Saudi Arabia is currently investing in about two million hectares in several African countries that have 60% of the world’s uncultivated lands and employ 70% of the workforce. The agricultural sector represents the fastest growing sector with future expectations of more than 31%.
Finally, Abdo noted that food security is achieved through several elements, foremost among which is the availability of sufficient quantities of appropriate food from the local or imported industries. In other words, it is fundamental to provide food and goods by all means, and to use appropriate storage practices, in line with the sustainability of its availability at all times, even in emergency situations.
Apparently, Saudi Arabia, fortunately, has all the aforementioned essential elements and has a promising future in the way of exporting food and not only producing it for the benefit of its people.