The facilities will be open by the third quarter of 2015, according to Waleed Elkhereiji, director-general of the Saudi Grain Silos and Flour Mill Organisation (GSFMO). The new silos will have a capacity of 60,000 tonnes, while the mill will be able to produce 600 tonnes of flour a day.
Shift to imports
The new silos form part of Saudi Arabia's plan to boost its wheat storage capacity and import 100% of its wheat by 2016, in order to cut back on water-intensive agriculture. GSFMO plans to add 790,000 tonnes of grain storage capacity by 2016.
The country's ongoing strategy to move to wheat imports is having an increasingly significant impact on global wheat markets. The country issued a 550,000 tonne wheat tender at the start of May, following a 715,000 tonne tender in January.
GSFMO estimates Saudi Arabia's total wheat consumption at 3.2 million tonnes a year, and is aiming to increase its wheat storage capacity to match annual consumption.
Along with the Al-Ahsa silos, GSFMO is also working on facilities in Mecca, Qassim, Jazan and Asir. In addition to raw grain storage, the grain authority is in the process of boosting Saudi Arabia's milling capacity by a third to reach 15,180 tonnes a day, and is building new mills in Jazan, Al-Kharj and Al-Jamoum.
Privatisation plan
While Saudi Arabia's current silo and mill building programme is firmly in the public sector, the long-term plan is for the private sector to manage storage and processing facilities, while the government keeps control of the overall wheat supply, according to Elkhereiji.
“Wheat mills and storage facilities were one of the major programs that the government has started to privatise... The government will keep the equipment and transportation and then it will transfer storage for milling ... and sales to the private sectors. After privatisation, the GSFMO will be the regulator of the entire market,” said Elkhereiji at a US-Saudi forum on agriculture last year.
He explained the aims of the storage and milling privatisation programme included improving efficiency and competition, encouraging ownership by Saudi citizens, increase employment, and reduce government expenditure.