December 29, 2010
Challenges confront Saudi animal feed market
Saudi Arabia is seeing challenges as it needs to import 500,000 tonnes of animal feed to meet the country''s demand.
It is less costly for Saudi to import water-intensive crops rather than growing them locally. Hence, it is intending to obtain crops from Europe, US and Canada as it is impossible to grow the fodder in Saudi due to water shortages.
In order to overcome the problem of shrinking water resources and global food shortages, the government decided to develop a few methods to face the challenges.
The Agricultural Initiative by the government took effect in January 2009. Supported by a SAR3 billion (US$799 million) government-sponsored investment fund, the initiative aims to enhance long term food security by allowing private Saudi businesses to invest in agricultural projects in countries better suited for crop cultivation.
The Rashied Al Balllaa Establishments in Saudi Arabia is a successful Muyang overseas turnkey project which includes a multi-purpose feed mill complex that will help to cover some of the demand of animal feed market in Saudi Arabia.
The fact that the Saudi Arabian government announced a decision to decrease import subsidies on barley, feed corn and other animal feed ingredients in response to declining world grain and feed prices aggravates the situation.
According to the new decree, the import subsidy on barley was reduced from SAR320 (US$85.33) to SAR200 (US$53.33) per tonne. As a result, animal feed companies in Saudi Arabia are willing to spend up to SAR200 million (US$53.3 million) in order to secure fodder supplies this year.
The government initiative was also unveiled to decrease wheat production by 12.5% per year and it will be stopped completely by 2016.
The move will definitely affect some of the main animal feed producers such as Grain Silos and Flour Mills Org, ARASCO Head Office, Rashed Establishment for Trading and Agriculture, Saudi Arabian Feed Company, United Feed Co. and Arabian Integral Ministration Company in Saudi Arabia.