Saudi Arabia to Raise Silo Capacity by 550,000 Tons

Saudi Arabia plans to increase its grains storage capacity by 550,000 metric tons within three years to protect the Arab world’s largest economy from higher food prices.

The kingdom has storage capacity of 2.5 million tons, Walid al-Khariji, the head of the Grain Silos and Flour Mills Organization, told reporters in Riyadh today. It imported 1.98 million tons of wheat in 2010, and this year’s imports depend on the “local production shortage,” he said.

Saudi Arabia, the world’s largest barley importer, wants to limit the impact of rising global food costs on its economy by expanding strategic reserves and investing abroad to secure supplies. Food prices climbed to a record in December, the United Nations’ Food and Agricultural Organization said earlier this month.

The kingdom plans to double its wheat-storage capacity to cover demand for one year, the Saudi Press Agency reported Jan. 10. “Hopefully, within three years, we will reach the one-year strategic reserves,” al-Khariji said.

The Grain Silos and Flour Mills Organization plans to add wheat-storage capacity at ports in King Abdullah Economic City, Yanbu and Dhiba, the news service reported. Each addition will increase capacity by 120,000 tons. The kingdom maintains 1.4 million tons of stocks.

Barley Demand

Saudi Arabia’s annual wheat consumption will increase to 3.3 million tons by 2015 from 2.9 million tons in 2009, Abdullah al-Obeid, a deputy minister at the Saudi Ministry of Agriculture, said in Riyadh today during a presentation at a food security conference. Barley demand will decline by 46 percent to 3.8 million tons over the same period, he said.

Saudi rice consumption will rise 25 percent to 1.25 million tons by 2015, and sugar demand 39 percent to 780,000 tons, both from 2009 levels, al-Obeid said.

Saudi Arabia plans to increase imports of grains as it phases out water-intensive food crops by 2016 in response to a 2008 royal decree. Food ranked as the biggest import in November at the kingdom’s eight ports, according to data on the website of the Saudi Ports Authority.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editors responsible for this story: Louis Meixler at lmeixler@bloomberg.net; Philip Sanders at psanders@bloomberg.net.

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