Saudi Arabia Agribusiness Report Q1 2013Published by: Business Monitor International Published: Nov. 14, 2012 - 64 Pages Table of Contents
AbstractBMI View: We forecast another fall in Saudi Arabia’s wheat output for 2012/13, in line with thecountry’s strategy to phase out grains production in the next decade. We believe Saudi Arabia will findsufficient grain supply from the Black Sea region and the EU to supply its food processing industry in thecoming years. Recent spikes in feed prices turned us more cautious on margins for dairy and livestockproducers in the country, especially the ones that import inputs from abroad. A wave of new investmentsin poultry production capacity is likely to support strong growth in the coming years and reduce thecountry’s production deficit.Domestic Grain Crop Phased Out Wheat Production Balance (LHS) & Imports (‘000 tonnes) f = BMI forecast. Source: BMI, USDA Key Forecasts Wheat production growth to 2016/17: -48.5% to 574,200 tonnes. Wheat production willcontinue to decrease in the coming years on the back of the government’s programme to phaseout production. Milk production growth to 2016/17: 27.2% to 2.4mn tonnes. Milk production will accelerateon the back of high milk prices and rising demand. Poultry consumption growth to 2016/17 13.9% to 1.6mn tonnes. This growth will be linkedto high population growth and rising personal incomes. 2013 real GDP growth: 4.6% year-on-year (y-o-y), down from 5.2% in 2012. Projected toaverage 3.3% from 2012 to 2017. 2013 consumer price inflation: 5.0% average, down from 5.0% 2012. BMI universe agribusiness market value: 1.9% y-o-y increase to US$2.2bn in 2012/13,forecast to increase by 3.9% on average per year between 2011/12 and 2016/17. Key Industry Developments Saudi Arabia’s grain industry is undergoing a major shake-up. The country switched in 2008 from astrategy of self-sufficiency in wheat to the gradual elimination of all water-intensive crops, includingwheat, by 2016. Wheat production has fallen on average by 12.0% annually since 2007/08, and theproduction deficit has increased by 30.3%. We forecast output to decrease by 10.4% to 1.0mn tonnes in2012/13. As a result, wheat imports have picked up since 2008, and are expected to reach 2.3mn tonnes in2012/13, up 80.4% from the level seen in 2008/09. We expect imports to increase further, as thegovernment just announced its intention to import soft wheat in addition to the hard variety it currentlyimports, and to increase the use of feed wheat. Saudi Arabia is almost entirely dependent on imports for feed, which makes production costs fluctuatewith international grain prices. Recent spikes in grains prices could affect the country’s livestockproducers’ margins in the short term and put some downside risks to our production forecasts in 2013. Saudi Arabia’s three main poultry farms, along with other medium-size poultry farms, are planningexpansion projects for their production facilities. This is likely to increase domestic broiler meatproduction by more than 170,000 tonnes in 2012/13 and will support strong growth in the coming years.Al-Watania Poultry Farm, the largest poultry producer in the kingdom, is engaged in a major expansionplan to increase its annual broiler meat production from 161,280 tonnes in 2010 to 360,000 tonnes by2014. Get full details about this report >> |
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