Saudi Arabia: GFSA to Privatize Only a Part of Its Grain Silos
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Saudi Arabia’s GFSA (the General Food Security Authority) focuses on creating an abundant food supply in Saudi Arabia, building strategic reserves for targeted food and feed products (e.g., Wheat, Barley, cooking oil, sugar), and maintain an adequate food level. It is unclear how these objectives will be achieved, particularly if GFSA or the private sector is responsible for maintaining strategic stocks of targeted products.
Privatization of the Wheat import industry is an ongoing process. GFSA will remain the sole importer of subsidized milling Wheat and maintain ownership and operation of most Wheat silos across the country. GFSA will manage the strategic Wheat reserves and ensure the Kingdom’s food security. The authority is expected to privatize only a part of its Grain storage silos to provide a smooth transition for the new flour mills.
GFSA ’s post-flour mill privatization roles will include the following: Issue import permits for unsubsidized Wheat to interested flour mills.
– Establish regulations related to Wheat flour quality.
– Inspect flour mills to ensure compliance with quality regulations.
– Encourage and regulate competition among private flour mills.
– Ensure enough Wheat flour is produced and delivered.
Over the next several months, SALIC (the Saudi Agricultural and Livestock Investment Company) is expected to take over the responsibilities from GFSA for purchasing Wheat while operating storage silos to maintain a strategic stock level. According to AgFlow data, Saudi Arabia imported 0.9 million tons of Wheat in May-June 2023. Russia led with 0.5 million tons, followed by Romania (0.3 million tons) and Lithuania (69,250 tons).
SALIC is the agricultural arm of the PIF, which is owned by the Kingdom’s sovereign wealth fund. SALIC is the dominant Saudi firm with investments in several major producing and exporting countries, such as Australia, Brazil, Canada, and Ukraine. SALIC has been exporting Wheat to Saudi since MY 2019/2020 from overseas farms. Wheat produced in Ukraine comes from SALIC’s owned Continental Farmers Group is in the western part of the country. Unfortunately, the Russian war in Ukraine has stopped Wheat exports from that farm to Saudi Arabia. SALIC does not own farms in Canada but is a partner in the G3 Global Grain Group with Bunge.
Wheat Milling Companies in Saudi Arabia
Saudi Arabia privatized its four flour milling companies. Below is detailed information on the four privatized Wheat milling companies:
-First Mills Company: Headquartered in the Red Sea city of Jeddah, the First Mills Company has flour mills in western, central, northern, and eastern Saudi Arabia. The company was sold to the Raha Al-Safi consortium led by the Saudi company Al-Mutlaq Group. The consortium includes another two Saudi firms (Al-Safi and Abunayyan Holding) and one UAE company (Essa Al Ghurair Investment). The First Mills Company has 4,200 MT of Wheat milling and 900 MT of feed processing capacity per day.
-Second Mills Company: Headquartered in Riyadh, the Second Mills Company has mills in central, southern, and northern Saudi Arabia. This company has 4,350 MT of daily Wheat milling capacity.
-Third Mills Company: Headquartered in the southern city of Khamis Mushait, the Third Mills
The company was sold to a consortium of Al-Rajhi, a Saudi company, and two UAE companies (Al Ghurair Foods and Masafi). The company has flour mills in southern, western, and northern Saudi Arabia. The Third Mills Company has 3,451 MT of Wheat milling and 1,400 MT of animal feed processing capacity daily.
-Fourth Mills Company: The Dammam-based Fourth Mills Company has flourmills in eastern, western and central Saudi Arabia. It has a daily Wheat and animal feed milling capacity of 3,150 MT and 300 MT, respectively.
Other sources: USDA
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