Published: September 03, 2010

Research and Markets: Saudi Arabia Agribusiness Report Q4 2010

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DUBLIN - (BUSINESS WIRE) - Research and Markets (http://www.researchandmarkets.com/research/9deff4/saudi_arabia_agrib) has announced the addition of the "Saudi Arabia Agribusiness Report Q4 2010" report to their offering.

Saudi Arabia Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Saudi Arabia's agribusiness service.

BMI View: Government support will remain the decisive factor with regards production and consumption of agricultural commodities in Saudi Arabia over our forecast period. The wheat production industry continues its collapse, following the removal of state supports in 2008. The state is also trying to end the country's dependence on barley imports - the country is by far the world's number one barley importer - by slashing import subsidies on the grain while raising them on alternative feed crops. The poultry industry should also experience healthy growth - albeit on farms located abroad and built on the back of hefty state support, of course.

Wheat production dropped to 1.0mn tonnes in 2009/10, according to latest figures. In 2010/11, we are forecasting wheat production to slip to 691,000 tonnes. By 2013/14, this is expected to have reached 333,000 tonnes, representing an 80.6% fall over our 2008/09-2013/14 outlook window.

In 2009, corn consumption is estimated at 1.70mn tonnes. With corn a popular source of poultry feed, we forecast consumption to rise to 1.88mn tonnes in 2010. Over our forecast period we expect consumption to grow to 2.19mn tonnes by 2014, representing strong growth of 29% over the five years.

Milk production in 2010 is forecast to increase marginally, by 1.6% year-on-year (y-o-y) to reach 1.36mn tonnes. To 2014 we expect an increase in production of 12.2% to reach 1.50mn tonnes. Over the same period, demand is expected to outpace supply - consumption is expected to grow 18.8% to reach 1.67mn tonnes in 2014, entailing imports of around 170,000 tonnes of milk.

Real GDP growth is expected to move from 0.1% in 2009 up to 2.2% in 2010. Population is expected to grow from 25.3mn to 26.0mn over the same

Although government loans and subsidies encourage domestic producers to expand, most major Saudi investment in poultry production is set to take place overseas in coming years, and growth over our forecast period will be modest. Between 2009 and 2014 production is forecast is increase by a relatively moderate 9.2% to 623,000 tonnes.

While there has been talk of the country axing barley import subsidies entirely, the government must perform a balancing act of sorts. If subsidies are removed too quickly, buyers may find themselves paying a heavy financial cost if they are unable to source enough cheap alternative feed in time. We nevertheless expect that the country's barley imports, and barley consumption, will decline over our forecast period as alternative feed types begin to look more price competitive against barley.

Continued foreign investment in the Saudi dairy market shows there remains much confidence in the potential for demand to grow. Most recently, Dairy Queen announced it would be opening its first store in Saudi Arabia in the first half of 2011. By 2015, the chain expects to have 15 branches in the country.

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