Saudi Arabia barley imports to decrease, says USDA

SAUDI ARABIA – According to USDA’s report based on Saudi Arabia Grains Organization’s (SAGO) past barley purchasing contracts, Saudi Arabia’s barley imports are likely to come down from 8.5 (official USDA estimate) to 8.0 million tonnes.

The reduction in SAGO’s barley imports was mainly due to efficiency in managing storage and distribution of barely and an increase in the consumption of processed livestock feed.

USDA reported that SAGO had purchased a total of 5.325 million tonnes of feed barley to cover consumption demand and strategic reserves until the end of March 2018.

It had also imported an average of 592,000 tonnes of barley per month since the start of the current market year and the organisation was expected to issue two barley import tenders in the coming few weeks for approximately 2 million tonnes to cover April-June domestic barley consumption and reserve needs.

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Based on 2018/19 market year estimates, the country’s imports were expected to be 7.5 million tonnes, a decrease of about half a million tonnes.

“This is due to increasing availability of competitively priced processed feed and decreased availability of forage,” said the USDA statement.

“New feed processers are expected to begin operations over the coming year while existing processors are expected to expand production.

The expected reduction in forage production is important because barley is jointly fed with forage in Saudi Arabia.”

USDA also noted that SAGO would always opt for importing large quantities of grain when prices were attractive and this would likely influence projected barley import quantities if prices became more competitive.

In early 2017, USDA reported that the government had stopped feed barley production in order to conserve scarce water resources, as the Saudi barley crop is 100% irrigated.

Imported barley is used for animal feed, as there is no beer production in Saudi Arabia, with estimated feed barley consumption MY2016/17 reduced to about 8.7 million MT projected on increased demand for processed feed due to its price competiveness and perceived nutritional value.

Saudi Arabia announced changes in its grain policy putting imports of feed barley and management of local distribution under the care of SAGO instead of Saudi Grain and Fodder Company (SGFC), a move that USDA said will make subsidized imported feed barley reach all livestock farmers in all regions of the Kingdom.

As part of a plan to explore opportunities for expansion into value-added products, Saudi Arabian government announced privatization and sale of the flour milling sector, drawing interest from some of the world’s largest agribusiness companies, such as Archer Daniels Midland Co. and Bunge Limited, according to a report by Reuters.

Cargill and ARASCO, a Saudi Arabia-based food manufacturer debuted corn milling industry in Saudi Arabia through a joint venture by opening the MEFSCO corn milling facility, offering offer enhanced, market-specific solutions for Middle Eastern customers.

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