FOOD SECURITY SNAPSHOT
• Despite lifting ban on wheat cultivation, wheat production remains below quota
• Cereal import requirements forecast at below-average level in 2021/22
• Food price inflation returns to low levels
Despite lifting ban on wheat cultivation, wheat production remains below quota
Owing to natural and geographic conditions, crop production is limited to crops irrigated using underground water reserves.
Although some areas receive rainfall, the amounts are not sufficient to grow any rainfed crops. Before the decision to phase out wheat production in 2015 following concerns over depleting aquafers, the country used to harvest, on average, about 2.5 million tonnes from 500 000 hectares. In 2018, the government reintroduced the support for wheat production to provide forage producers with an alternative crop that is less water-intensive than alfalfa, the main green fodder crop. The Saudi Grains Organization (SAGO), the monopsony purchaser of wheat, announced it would purchase up to 1.5 million tonnes of domestically produced wheat yearly until 2022/23. However, despite the high procurement price of wheat, many farmers still prefer to produce high protein alfalfa as its income per hectare is higher.
The 2021 wheat crop, harvested in May, is estimated at about 600 000 tonnes. In March 2021, the SAGO set the local procurement price at SAR 1 250/tonne (equivalent to USD 333/tonne), above the international price of USD 270/tonne (without freight) prevailing at the time. However, the price differential was erased as the new purchasing price for the 2022 wheat crop, set in December 2021 at SAR 1 440/tonne (USD 383/tonne), was similar to the international price of about USD 380/tonne.