Saudi to raise wheat reserves, boost storage
Riyadh, January 16, 2011
Top Opec exporter Saudi Arabia hopes to double wheat reserves to a year's worth within three years, aiming to create a buffer against the impact of a spike in global food prices and serve its fast-rising population.
Saudi Arabia, which has emerged as a major buyer of wheat, wants to build up reserves of basic commodities such as wheat, rice, oils and sugar as its economy benefits from high oil prices and attracts more expatriates.
The arid desert kingdom needs around 3.3 million tonnes of wheat annually by 2015, according to official figures published at an industry conference in the Saudi capital on Sunday -- an increase from 2 million tonnes imported last year.
To help build reserves to last it a year instead of six months, the Gulf state is adding 550,000 tonnes storage in four cities within three years on top of its existing capacity of 2.52 million tonnes, said Waleed ElKheriji, head of the state Grain Silos and Flour Mills Organisation (GSFMO).
The three biggest Saudi ports would also each add 120,000 tonnes annually in storage capacity among other measures, he said.
"We're working on that ... Within three years we hopefully have the one year," he said, without saying what other storage would be added to reach the new target.
Currently, reserves stand at 1.4 million tonnes of wheat after Saudi Arabia imported 1.98 million tonnes in 2010, ElKheriji said, declining to give a forecast for this year.
The United Nations' food agency (FAO) said earlier this month food prices had hit a record high last month.
Saudi Arabia's annual inflation eased in December to 5.4 percent -- well below the record 11.1 percent in July 2008 -- but rising global prices will keep inflation above historic levels, economists say.
The kingdom has been stepping up imports and is seeking farmland investments abroad after abandoning a 30-year wheat cultivation programme to save water.
"Global food prices have risen, things might get worse this year," said Agricultural Minister Fahad Balghunaim, calling on a public and private partnership to tackle food security.
Last week, chamber of commerce officials and industry players asked the government to go ahead with a plan to build up reserves for nine commodities to offset price rises.
By 2015, the kingdom will need around 3.3 million tonnes of wheat, said Abdullah Al-Abid, assistant minister at the agricultural ministry.
It will then also need 3.8 million tonnes of barley, 1.6 million tonnes of poultry, 780,000 tonnes of sugar and 1.25 million tonnes of rice.
Authorities have been buying 12.5 percent less locally produced wheat every year and plan to end local purchases in 2016, ElKheriji said. Local output in 2010 was 1.26 million tonnes, down from 2.35 million in 2007.
The government has urged companies to invest in farm projects abroad, but diplomats say progress has been slow over ownership rights to farmland. - Reuters