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Wheat and Feed Market In Saudi Arabia

Grain Silos & Flour Mills Organization Kingdom of Saudi Arabia. Wheat and Feed Market In Saudi Arabia. By H.E Eng. Waleed El Khereiji Director General of Grain Silos & Flour mills Organization. June 2012. International Grains Council. What is GSFMO ?.

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Wheat and Feed Market In Saudi Arabia

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  1. Grain Silos & Flour Mills Organization Kingdom of Saudi Arabia Wheat and Feed Market In Saudi Arabia By H.E Eng. Waleed El Khereiji Director General of Grain Silos & Flour mills Organization June 2012 International Grains Council

  2. What is GSFMO ? GSFMO was established in 1972, its main function is to ensure the steady supply of wheat flour to the entire population of the Kingdom through a well-regulated mechanism and a careful monitoring system in place. To achieve this, GSFMO set up wheat storage and wheat grinding facilities at different locations of the Kingdom. The objectives of GSFMO were: To form an integral industry of grain storage, flour production and processing of animal feed. 1 To establish any other relevant food industries. 2 3 To market its products. To purchase grains and create a convenient reserve stock to face emergency circumstances. 4 To meet the goals of the approved agricultural policy. 5 2

  3. Wheat and Wheat Flour Markets in Saudi Arabia GSFMO is the authorized buyer of wheat and the only flour producer in Saudi Arabia. Imported Wheat Local Wheat 1.97 mt in 2011 1.11 mt in 2011 Capacity of storage: 2.52 m.t - Located in all GSFMO’s branches (11 branches) which cover most of the kingdom Grains Silos Capacity of production: 11,280 ton /day (2.28 m.t in 2011) - Located in 9 branches of GSFMO Flour Mills Number of Flour Clients : 8200 Hyper and Mini Markets :16% Desserts, Pastries and Restaurants :12% Bakeries :58% (Subsidized Bread) Food Industry : 14% 3

  4. GSFMO’s Products ( Flour & Other Wheat Derivatives) Flour Products • GSFMO produces many varieties of flour as follows: • Powder flour (75-80% Extraction) • Fine flour (70-74% Extraction) • Ordinary Flour (85% Extraction) • Whole Wheat Flour (95% Extraction) Flour is marketed according to customer as follows: - For commercial customer in bulk / in 45 Kg bags - For domestic customers in small bags of 10, 5, 2 & 1 Kg Other Wheat Derivatives • GSFMO produces many wheat derivatives like : • Jareesh • Harees • Bran for Human consumption 4

  5. Wheat Purchase & Flour Sales In 20 Years MT The gap represents wheat storage & Extraction rate of flour Graph shows that between 1991 and 2011, wheat demand and flour sales have doubled, the reason being increase in population, per capita income and number of pilgrams of two holy places. 5

  6. Governmental Policy for Wheat Purchases In 2008 , Saudi government adopted a new policy based on gradual reduction in growing wheat domestically because of the scarcity of water. The new policy envisaged replacement of local procurement by imports from abroad and there is plan that by 2016 all wheat requirement will be meet by imports. following table shows expected local and imported wheat demand: 6

  7. Replacement Trend of Local Wheat by Imported Wheat Imported Wheat GSFMO started applying the new policy in 2008 by importing 303 thousand ton of wheat. Thereafter this quantity was increased six fold in 2009 to 1.92 mt and around 2 mt in the last 2 years. On the other hand, the local procurement of wheat was decreased from 1.72 mt in 2008 to around one million ton in the last 3 years. 7

  8. Imported Wheat : Countries of origins 2011 In the last year, GSFMO imported about 1.97 mt and the countries of origins were EU (36%) , Canada (26%), USA (14%), Australia (12%), Argentina(6%) and Brazil (6%). 8

  9. Structure of Feed Market in Saudi Arabia Manufactured Feed Feed Barley Saudi Arabia is the largest importer of feed barley in the world (7,2 mt) represents a half of world feed trade. Private sector GSFMO Bran Private sector The Saudi government subsidies barley which is imported by private sector and it is sold to domestic distributors at a government subsidized price. (SR 40 =USD 10,7/ Bage 40 KG) Manufactured Feed Manufactured Feed The ministry of finance decided to import and distribute feed grade wheat in order to reduce the demand for barley. So Saudi Arabia’s barley imports for 2012/2013 is forecasted to decrease by 9 percent to 6,5 million MT compared to 7,2 million MT in 2011/2012. 9

  10. GSFMO’s Production of Bran & manufactured Feed Graph shows that between 1991 and 2011, the production of Bran & manufactured feed have doubled as a result of : - Increase Flour production - New Plans for producing manufactured feed 10

  11. Challenges & Future Expan.& New plans 2.5 Mt 710 th. ton th.ton New Plans Expansions Currently, Saudi Arabia has a storage capacity of 2.5 million tons of wheat, which can meet the consumption for 10 months. Therefore, work is underway to construct new silos some of which are at main Saudi ports with total storage capacity of 710,000 tons. So, the total storage capacity will reach 3.2 million tons that will be enough for annual wheat consumption. • 1st Challenge : Increasing of storage capacity to cover annual consumption 11

  12. Challenges & Future • 2nd Challenge : • Privatization of Flour Mills Market GSFMO has started the preparation work for the privatization through an elaborate program that passes through different stages: 1- working for separating the processes of milling from wheat storage silos. 2- establish flour groups of milling companies. Saudi Arabia seeks to privatize flour mills industry by selling flour mills to the private sector in a step to attract and encourage investments to this sector and strengthen competition. 12

  13. Thank You http://www.gsfmo.gov.sa/

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