JEDDAH: Saudi Arabia's dairy industry has been transformed over the past decade, with production rising dramatically. The Kingdom is now home to some of the most advanced dairy farms in the world. Fresh milk output in 1998 stood at 581,000 tons, yet just 10 years later this had grown by almost 75 percent to 1.01 million tons. However, with a growing population, rising incomes and agricultural deficit neighbors, Saudi Arabia will remain vulnerable to higher import costs over the short term, which the country will be able to finance due to its massive current account surplus, "Saudi Arabia Agribusiness Report Q2 2011" by researchandmarkets.com said. Long-term solutions will be needed, however, to prevent the kind of food price inflation, the report said. Milk production will grow 13 percent to 1.53 million tons by 2014/15. BMI expect demand for dairy products in Saudi Arabia to remain strong, as they form a core element of the local diet. Even with high levels of food price inflation, BMI do not expect consumers to drop dairy products from their daily diet. Indeed, the Kingdom is expected to remain the highest consumer of dairy products in the region (ahead of the UAE), largely because of a larger population. In December 2009, Fonterra announced that it had bought out its partner Saudi Dairy & Foodstuff (Sadafco). Moreover, poultry consumption will grow 11 percent to 623,000 tons by 2014/15. Demand is forecast to experience steady growth in coming years, in line with population growth and rising personal incomes. An expected surge in foreign labor and tourists will also help boost demand. However, wheat production will fall -74 percent to 257,000 tons in the same timeframe. Following a major change in government policy, wheat production in Saudi Arabia is declining sharply, with output expected to collapse in coming years. Meanwhile, the US Department of Agriculture's Riyadh attache said Friday the Kingdom's barley imports increased 11 percent on year in the final three months of 2010 to 1.72 million metric tons. The Kingdom is the world's largest barley importer. Of this, Ukraine provided 381,000 tons, or 31 percent, while Germany and Scandinavian countries supplied 16 percent and 11 percent respectively, the USDA said. Like many countries in the Middle East, the Kingdom has been moving to boost its grain imports this year in order to dampen domestic food inflation and ensure political stability. Business Monitor International forecast that the country's barley imports and barley consumption will decline as alternative feed types begin to look more price-competitive against barley. World barley trade projected for 2010/11 is reduced 1.1 million tons this month to 16.0 million. Saudi Arabia's barley imports are cut 0.6 million tons to 6.7 million. However, Saudi Arabia's corn import prospects are increased 0.1 million tons to 1.9 million, reflecting higher imports and feed use.
