Saudi poultry to soar 52% by 2018

The kingdom's agricultural industry will see average annual growth of 3.7% up to 2018, slightly behind forecast annual GPD growth of 4.3% over the same period, according to Business Monitor International's Saudi Arabia Agribusiness report.

Corn up with poultry​

Saudi farms will produce 865,000 tonnes of poultry by 2018, more than half as much again of current output, the report predicts. Poultry feed demands will also drive up corn consumption, which is forecast to grow 22.8% to reach 2.8 million tonnes.

“The government has not abandoned its strategy of self-sufficiency in poultry and has been ramping up incentives to expand capacity production. This strategy has paid off, as the three major producers in the sector [Al-Watania, Al- Fakieh and Almarai] have all started heavy investment initiatives​,” said the report.

Business Monitor International is also forecasting Saudi Arabia will still be producing nearly 400,000 tonnes of wheat by 2018, down 44% from current levels. This is despite the Saudi grain authority stating it will cease all domestic wheat production by 2016.

“Saudi Arabia will increasingly be dependent on global grain supply, as the country has decided to phase out domestic grain production in a bid to preserve the country's water supply... [the country] announced that it will diversify its sources for wheat imports and will not rely on a particular supplier​,” the report stated.

Margins at risk​

The research firm said it believes Saudi Arabia will be able to find adequate supplies of grains from the Black Sea region and European Union countries for its food production and animal feed requirements, adding that the kingdom has imported a total of 10.5 million tonnes of wheat since it resumed imports in 2008. But the report also noted this strategy will open it up to market fluctuations.  ​

“The country will remain highly vulnerable to volatile grain and feed prices. Recent spikes in feed prices have turned us more cautious on margins for dairy and livestock producers in the country, especially those that import inputs from abroad​,” it said.

“The Saudi Grain Silos and Flour Mills Organization (GSFMO) has revealed the kingdom's wheat import policy, indicating that it will hedge against fluctuations of wheat prices in the world markets and will procure its wheat requirements through transparent international tenders. Wheat will be procured through 'transparent international tenders', without relying on any particular supplier,​” the report added.