The wheat production is gradually increased since 2015 in Saudi Arabia owing to natural & geographic conditions.
In May 2020, the Saudi Grains Organization (SAGO), the only purchaser of wheat, was purchasing it at SAR 1140 (USD 304) per tones. Well above the international price of USD 220 per tones.
With the strong domestic demand for food & feed, the government is encouraging agricultural investments abroad to produce commodities to be then imported. This initiative targets Wheat, Rice, Barley, Yellow Maize, Soybean & Green Forage.
The cereal import requirements in MY 2020-2021 (July/June) are forecasted at an average level of 16 million tons.
The imports of Barley & Maize are forecasted at 7 million tones & 4.5 million tones.
Wheat imports are expected at a level of 3.2 million tons, while rice imports are forecasted at an average of about 1.3 million tons.
The food price inflation has increased from 2-4% percent in the first quarter of 2020 to 13-14% in the third quarter.
The increased value-added tax from 5 to 15% is estimated to be the cause of the increased inflation.