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Recently Released Market Study: Saudi Arabia Agribusiness Report Q1 2013

New Food research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 01/10/2013 -- BMI View: We forecast another fall in Saudi Arabia's wheat output for 2012/13, in line with the country's strategy to phase out grains production in the next decade. We believe Saudi Arabia will find sufficient grain supply from the Black Sea region and the EU to supply its food processing industry in the coming years. Recent spikes in feed prices turned us more cautious on margins for dairy and livestock producers in the country, especially the ones that import inputs from abroad. A wave of new investments in poultry production capacity is likely to support strong growth in the coming years and reduce the country's production deficit.

Key Forecasts

- Wheat production growth to 2016/17: -48.5% to 574,200 tonnes. Wheat production will continue to decrease in the coming years on the back of the government's programme to phase out production.
- Milk production growth to 2016/17: 27.2% to 2.4mn tonnes. Milk production will accelerate on 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 linked to 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 to average 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.

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Key Industry Developments

Saudi Arabia's grain industry is undergoing a major shake-up. The country switched in 2008 from a strategy of self-sufficiency in wheat to the gradual elimination of all water-intensive crops, including wheat, by 2016. Wheat production has fallen on average by 12.0% annually since 2007/08, and the production deficit has increased by 30.3%. We forecast output to decrease by 10.4% to 1.0mn tonnes in 2012/13. As a result, wheat imports have picked up since 2008, and are expected to reach 2.3mn tonnes in 2012/13, up 80.4% from the level seen in 2008/09. We expect imports to increase further, as the government just announced its intention to import soft wheat in addition to the hard variety it currently imports, and to increase the use of feed wheat.

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