Riyadh to end domestic wheat purchases

JEDDAH, Saudi Arabia — Saudi Arabia will stop buying domestically-grown wheat in two years' time and rely completely on imports of the grain, the water-short kingdom's new agriculture minister said on Wednesday.

By investing tens of billions of dollars, the desert nation's output grew through the 1980s until it ironically became one of the world's largest wheat exporters.

But since a surge in global food prices in 2008, Saudi Arabia and other Gulf states have looked abroad to nearby Sudan and other countries to secure food supplies through agricultural investment, including land acquisition.

"The kingdom has decreased domestic wheat production since 2008 by 12.5 per cent annually," Agriculture Minister Waleed Al Khuraiji told the London-based International Grains Council, which met in the Red Sea city of Jeddah for a twice-yearly forum.

"The state will cease to purchase locally-produced wheat by 2016 and depend entirely on wheat imported from abroad," the minister said in his first major address since being appointed in a Cabinet shuffle on Monday.

"This initiative is based on mutual benefit which helps to provide food supplies to the kingdom while at the same time developing and modernising agriculture in the investor countries, especially local communities," Khuraiji added.

Imports of wheat to Saudi Arabia rose tenfold from 300,000 tonnes (272,100 tonnes) in 2008 to three million tonnes this year, ranking the country as the world's sixth-largest wheat importer, the minister indicated.

Dramatic growth in Saudi Arabia's wheat output pushed production to more than four million tonnes by 1992, an amount that overwhelmed domestic demand, the historian Toby Craig Jones wrote in "Desert Kingdom”.

But farmers were heavily subsidised and the crop required two or three times more water than in more moderate climates, he said, adding that between 1980 and 2005 the country spent 18 per cent of its oil revenue on growing wheat.

Ross Kingwell, chief economist at the Australian Export Grains Innovation Centre, a public company supporting the trade, said Saudi Arabia and other Gulf states will need "strategic partnerships" to benefit from their food security programmes.

Australia, Canada and the United States, for example, "will be able to provide a steady supply of grains”, he added.

The International Grains Council oversees a global convention governing trade in wheat, rice and other grains.