10/02/2020 – Country Focus / Food Production / Food Security / Saudi Arabia
Vision 2030: KSA’s food security in focus
Alongside reducing the Kingdom’s dependence on oil and diversifying its economy, Saudi Arabia’s Vision 2030 earmarks significant funding towards dramatically bolstering the country’s food production and processing power.
Spanning 2.15 million square kilometres, Saudi Arabia is geographically the largest sovereign state in Western Asia, and the largest in the Gulf region. Despite such a sprawling landmass, the arid desert that covers much of it means that the Kingdom has long imported the lion’s share of its food (over 80 per cent, according to 2014 World Bank figures) to feed its residents – 29 million and rising.
Indeed, Saudi Arabia already boasts the largest population in the GCC, and the number of people in the Kingdom is expanding at a rate of 3.3 per cent per annum, meaning demand for food products is only set to rise in the years ahead. All of this poses a challenge for Saudi Arabia’s rulers, alongside a golden opportunity: As the country strives to diversify its economy away from oil, the potential to scale up local food production and processing would serve two purposes – both dramatically driving down the cost of food by reducing imports, and creating a thriving F&B sector in its own right, to generate the non-oil revenues and in-Kingdom value-add that are so integral to meeting Saudi Arabia’s Vision 2030 goals.
According to data from Foodex Saudi, total consumption of organic, gourmet and health products were expected to total more than US$27 billion in the Kingdom in 2019. And in response to this growing demand in the high-value organic segment, last year the Ministry of Environment, Water and Agriculture signed a 12-month contract to support small farmers in switching to organic farming as well as to produce safe high-quality food, preserve the environment and natural resources, streamline consumption and irrigation water, and promote and support organic production.
Through a new investment – worth SAR 750 million (US$200m) – the Ministry aims to increase organic production by 300 per cent, along with other objectives including providing safe food and sustainable, highly profitable farming as an important resource for the national economy. The Saudi Organic Farming Society has said that it will implement guided field visits, qualify farms that wish to convert to organic agriculture, and prepare them for inspection and certification.
In line with the plan, it has been just over a year since King Salman inaugurated the Sustainable Agricultural Rural Development Program at Al-Yamamah Palace in Riyadh. The programme aims to boost production, processing and marketing of fruit, fish, livestock, Arabic coffee and cultivation of rain-fed crops, with a focus on helping small producers across the country, alongside enhancing food security and sustainable development.
The initiative will support farmers in various regions of the Kingdom, with financial allocations amounting to SAR 7.35 billion (US$1.78bn) for a period of seven years, in addition to SAR 1.5 billion (US$360m) as the capital cost for the project. In addition, the government’s Agricultural Development Fund (ADF) has allocated SAR 3 billion (US$730m) to finance the programme though soft loans to SME farmers.
Expected not only to boost investment in the agriculture sector, the programme is also projected to diversify the sector, improve the incomes of small farmers, create job opportunities and contribute to food security and sustainable development. Such developments would also significantly support the Kingdom’s food security initiatives by fulfilling an estimated 43 per cent of the total food required in target areas, as well as a forecasted 19 per cent of the total food needs of the country as a whole.
Currently, aquaculture in Saudi Arabia – along the shores of the Red Sea – produces roughly 77,000 metric tons per year, accounting for just over half of Saudi Arabia’s total current seafood production (140,000t). Yet there is expected to be a significant market deficit of 800,000t in 12 years, according to state estimates.
In response, the country’s National Fisheries Development Program (NFDP) – a division of the Ministry of Environment, Water and Agriculture – is investing US$400m to develop the necessary infrastructure, support and development of the country’s seafood sector in order to boost its total aquaculture output to 600,000t over the next five years, with shrimp set to account for one-third of the volume by 2025.
This capacity boost should reduce the need for imports, says Mosleh Fayez Alzobidi, Vice CEO of the NFDP, which aims to have successfully localised 65 per cent of the Kingdom’s total seafood production requirements by 2030. In accordance with such ambitions, in September the NFDP selected 16 potential greenfield sites along the country's western shores that it said are on “a fast track for investment” – with no special prioritisation for either international or local investors.
The country is also seen as ideal for establishing recirculating aquaculture systems (RAS) farms, according to Muhammad Basil Mughal, NFDP’s Business Development Manager, who told us that “huge areas” are available in the Kingdom for land-based developments. Indeed, in August last year Vikings Label – a Norwegian startup specialising in RAS technology – announced plans for a salmon farm in Saudi Arabia. The US$90m project would be KSA’s first salmon farm, with a target to supply Saudi consumers with as much as 5,000t of the cold-water fish each year by 2023.
Given that value-adding is a key tenet of Vision 2030, it follows that the government is also attempting to turn six of the Kingdom’s cities into hubs for fish processing and infrastructure. Top priority will be the port of Jeddah, although Yanbu, Jazan, Sudair Industrial City, Dammam and Jubail will also form part of the national development scheme.
And at the other end of the value chain, the Saudi government plans to develop new feed mills to supply specialised hatcheries. One such company, Riyadh-based ARASCO, is already one of the largest shrimp feed producers in the world, according to Mr Mughal. “The goal is to localise the value chain,” he added.
A destiny with dates
One key crop that has long been a focus for the Kingdom is dates. Holding deep cultural connotations, these holy fruits of the Middle East continue to gain popularity worldwide – particularly given the growing momentum of the health-conscious consumer, with dates viewed as a more virtuous sweet snack and also increasingly used as an alternative natural sweetener in a wide array of products.
According to the National Palms and Dates Center (NCPD), Saudi Arabia produces an estimated 1.1 million tons of dates per year – around 15 per cent of the world’s date production – and export of dates from Saudi Arabia grew by 11.7 per cent in 2018, marking this out as a promising market segment for further development and investment.
As such, the so-called ‘Palm Tree of the Homeland’ (Nakhlat Watan) programme was launched last year to establish specialised centres for serving the needs of the dates and palm sector. It seeks to improve agricultural practices and enhance the quality of dates to increase exports to new global markets with competitive prices. In January this year SABIC and the National Center for Palm and Dates (NCPD) laid the foundation stone for the first comprehensive service centre in Madinah – aimed at promoting date crops in the local market, raising production quality and increasing exports.
Part of SABIC’s national initiative Nusaned to support and develop palm trees, dates and agricultural innovation, as well as enhance co-operation between public and private sectors, and in-line with the objectives of Vision 2030, the programme aims to make the Kingdom the top exporter of dates in the world.
Waste not, want not
While farming initiatives, major infrastructural developments and value-adding projects will undoubtedly prove instrumental when it comes to augmenting Saudi Arabia’s food production and processing capabilities, there is one other area where the Kingdom could make significant strides towards improving its food security – and without the need for multi-million (or billion)-dollar projects. That area is waste. This is particularly true when it comes to water – an obviously key component to growing the Kingdom’s agricultural activities. Saudi Arabia currently consumes 263 litres of water per capita per day – double the daily world average – and KSA’s government aims to reduce that figure to 150 litres by 2030.
Regrettably, when it comes to food the country’s record on waste is even worse: In the Kingdom – and indeed, across much of the GCC – lavish displays of food are considered a cultural totem of generosity and hospitality. Yet much of what’s offered ends up as trash: The average Saudi wastes up to 250kg of food annually, compared to a global average of 115kg – and according to the Ministry of Environment, Water and Agriculture, this costs the country approximately US$13 billion a year. In many ways, food waste is seen as a relic of the oil boom era – as the world edges away from oil dependence, and the Kingdom transforms its economy in tandem, driving down conspicuous consumption could become a crucial (and cost-effective) piece in the food security puzzle.