Production:

In 2003, the Saudi government terminated its domestic barley production subsidy program which brought to an end a two decades domestic commercial barley production. Currently, 15,000 metric tons of barley is produced domestically for human consumption. The government stopped feed barley production in order to conserve scarce water resources, as the Saudi barley crop is 100 percent irrigated.

Consumption:

Domestic barley consumption in 2014/2015 is forecasted to decline by 8 percent to 7.1 million MT compared to about 7.7 million in 2013/2014. The decline is mainly due to increased utilization of processed competitively priced animal feed products as a result of various government incentives aimed at reducing direct barley usage. In addition, abundant stocks from previous years and the availability of green forage supplies led to the reduction in barley consumption. Traditionally, white barley has been the preferred animal feed for domestic Bedouins and approximately 80 percent of imported barley is used in feeding sheep, camels, and goats. Bedouins feed raw barley to their livestock with a large percentage being wasted. The MOA reports that more than 30 percent of the raw barley fed to livestock is discharged without being digested, thereby providing no benefit in terms of weight gain or nutrition to the animals.

For the past several years, the Saudi government has been subsidizing the imports of 31 feed grains and feed ingredients to encourage increased local processed feed production to offer domestic livestock farmers with adequate quantities of more nutritional processed feed formulas at competitive prices. This, the MOA says, will significantly reduce the country's dependence on large quantities of imported feed barley. The MOA points out that livestock use of more feed concentrates, mixed with barley, are necessary to reduce barley wastage, increase weight gain and reduce production costs. Various government supports to the domestic feed processors have helping in increased supplies of compound feeds at competitive prices. The Arabian Agricultural Services Company (ARASCO), the largest Saudi animal feed processor, has kept its wholesale price of the 50 kg-bag of "Wafi" compound feed at ex-factory price of $9.07, which is equal to the price that the Saudi government charges for unprocessed barley of the same weight. Historically, the demand for barley has fluctuated based on its price compared to the prices of processed compound feed and green forage.

Locally produced compound feed has become more price-competitive in recent years, due to the strong incentives offered by the Saudi government to encourage compound feed production. The Saudi government offers interest free loans and provides import subsidies for thirty-one feed ingredients, including yellow corn, soybean meal and barley, to boost the expansion of feed processing facilities and help reduce the country's heavy reliance on huge barley imports. According to industry analysts, the MOA has an ambitious strategy that aims at reducing the Kingdom's barley imports to 1.5 million MT by 2020. Hence, imported barley would be used only as an ingredient to produce compound feed, and not be offered for direct livestock feeding when the strategy is fully implemented.

Several domestic feed processors are currently expanding their production facilities to increase compound feed output in the next few years. ARASCO, the country's leading feed processor, will increase its processed feed output from an estimated production of 650,000 MT in 2014 to about 3 million MT by the end of 2016 given a kilo of Wafi compound feed replaces 1.5 kilos of grain barley, ARASCO's expected 2.35 million MT of additional compound feed production is expected to decrease barley imports by 3.325 million MT if the company achieves full production as planned.

The local barley production, which is estimated at 15,000 MT, is mostly used in preparing specialty food items such as soups and some traditional Saudi dishes during the fasting month of Ramadan. Barley is also used in bread making and/or mixed with whole wheat flour. Currently, local food barley is sold for $1.87 per kilogram in small neighborhood shops and flour mills.

The other factor that contributed to the estimated decline in Saudi barely consumption this marketing year is the increased use of locally produced green forage by livestock farmers. Cultivation of green forage in Saudi Arabia has been rising since the government started to implement its policy seven years ago to phase out wheat production by 2016. Many farmers who stopped their wheat production have switched to green forage cultivation. Green forage production in 2014 was estimated at 4 million MT, an increase of 60 percent compared to production level in 2007.

Trade:

The total Saudi barely imports in MY2014/15 is forecast at 7 million MT, a decline of 20 percent compared to imports of 8.8 million MT in MY2013/14. However, actual levels of Saudi barley imports will be depend on barley prices in world markets in the coming periods. It should be noted that ever since the Saudi Ministry of Finance (MOF) started controlling barley imports in 2011, by granting a market monopoly to the Saudi Grain and Fodder Company (SGFC) to import and distribute barley shipments, information on barley imports and stock levels has not been readily available.

In MY2013/14, Ukraine was the top exporter with 1,631,268 MT of barley, accounting for 18.4 percent of the total Saudi barley imports. Ukraine exported about 12 percent more barley to Saudi Arabia in MY2013/14 compared to MY2012/13. Russia was the second leading exporter with 16.8 percent, followed by Argentina with 14.6 percent, Australia (14 percent), Germany (10.7 percent), and Romania (8.5 percent). While all suppliers gained significantly in MY2013/14 compared to the year earlier, Argentina lost about 40 percent of its exported quantity (1,289,554 MT vs. 2,137,593 MT). U.S. did not export barley to Saudi Arabia in MY2013/14.

Saudi Barley Imports in Metric Tons

Supplying Country

MY2012/13

MY2013/14

Argentina

2,137,593

25.80%

1,289,554

14.60%

Ukraine

1,457,433

17.60%

1,631,268

18.40%

Australia

1,148,203

13.90%

1,272,039

14.40%

Russia

1,028,160

12.40%

1,489,910

16.80%

Germany

749,098

9.00%

950,310

10.70%

France

686,439

8.30%

686,997

7.80%

Romania

428,870

5.20%

751,625

8.50%

Canada

109,780

1.30%

126,501

1.40%

Estonia

77,515

0.90%

132,000

1.50%

Latvia

74,718

0.90%

13,500

0.20%

United States

58,696

0.70%

0

0.00%

UK

42,000

0.50%

93,678

1.10%

Lithuania

28,061

0.30%

116,864

1.30%

Other Countries

257,852

3.10%

289,063

3.30%

Total

8,284,418

100%

8,843,309

100%

Source: Global Trade Atlas

Available data from exporting countries shows that during the first five months of MY 2014/15 (July-Nov), Saudi barley imports totaled 4.537 million MT, a decline of about 26 percent when compared to the 6.107 million MT imported during the same period in MY 2013/14. The reasons for the import decline are similar to those provided in the barley Consumption Section.

In the first five months of MY2014/15, Ukraine dominated the Saudi barley market by supplying about 53 percent of the total imports, followed by Russia at 28 percent. The remaining balance was supplied by European countries (Germany, Romania, France, UK and Finland). During this period, Ukraine's market share has more than doubled, mostly at the expense of EU suppliers. Russia's market share increased by about six percent, while U.S. exports continued their absence from the Saudi barley market in MY 2014/15.

The table below shows exporting countries data for Saudi barley imports for the first five months of MY 2013/14 and MY 2014/15 by country of origin.

Saudi Barley Imports in MT

Supplying Country

July 2013-Nov 2013

July 2014-Nov 2014

Ukraine

1,424,367

23.3%

2,401,912

52.9%

Russia

1,340,523

22.0%

1,277,074

28.2%

Germany

950,310

15.6%

181,025

4.0%

Romania

751,625

12.3%

485,402

10.7%

France

686,997

11.2%

78,738

1.7%

Australia

341,202

5.6%

0

0.0%

UK

93,678

1.5%

48,800

1.1%

Other Countries

518,318

8.5%

63,711

1.4%

Total

6,107,020

100%

4,536,662

100%

Source: Global Trade Atlas

Stocks:

SGFC does not release data on Saudi strategic barley data. However, it is estimated at more than 30 percent of the total consumption.

Marketing:

Domestic Barley Price

Sufficient barley supplies have been readily available at competitive prices throughout the Kingdom. Currently, large livestock farmers and licensed wholesale barley distributors can purchase the 50 kg sack of barley at the packing facilities at the government set price of 36 Saudi Riyals (SAR) or about $9.6 per 50 kg. The government allows the barley dealers to resell the 50 kg sack at a maximum retail price of 40 SAR ($10.6).

Barley Distribution Channels

Barley shipments usually arrive through five Saudi ports: Jeddah and Dammam (the first and second largest seaports in the country) in addition to three other smaller ports in Yanbu, Diba and Jazan on the Red Sea. After the shipments are discharged at ports, they are transported by trucks to the nearest SGFC barley bagging facilities outside the port areas. The bagged barley is usually picked up by the pre-assigned dealers or large end-users from the distribution centers under the direct supervision of Alshamil Company.

Production, Supply and Demand Data Statistics:

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

July 2013

July 2014

July 2015

Saudi Arabia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2

2

2

2

0

2

Beginning Stocks

3,006

2,712

4,096

3,855

0

3,755

Production

15

15

15

15

0

15

MY Imports

9,500

8,843

8,000

7,000

0

6,800

TY Imports

8,500

8,102

7,000

7,500

0

7,200

TY Imp. from U.S.

0

55

0

55

0

55

Total Supply

12,521

11,570

12,111

10,870

0

10,570

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

8,400

7,700

8,500

7,100

0

6,800

FSI Consumption

25

15

25

15

0

15

Total Consumption

8,425

7,715

8,525

7,115

0

6,815

Ending Stocks

4,096

3,855

3,586

3,755

0

3,755

Total Distribution

12,521

11,570

12,111

10,870

0

10,570

1000 HA, 1000 MT, MT/HA