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Agriculture and FoodFulfilling demand through importsKSA is one of the largest importers of agricultural and food products in the world. The Kingdomimports agricultural products from Ukraine, Syria, Brazil, India, the US, European Union (EU),and Australia. KSA imported over SR25.5bn of agriculture products in 2008, up sharply 40%YoY. The agriculture sector in KSA contributed 3% of the GDP and employed around 12% ofthe total workforce in 2007. The prime reason for dependence on imports is the paucity of freshwater and arable land.Demand for agricultural, food, and food-related products continues to remain high, led by thegrowing population, making KSA the leading market in the Middle East for agricultural products.The Saudi Government is planning various initiatives ranging from loan and subsidy policies toboost agriculture activity in the region, while paying special attention to technological upgrading.In the recent 2009 state budget, the agriculture and water sectors were allocated SR35.4bn,which was the third largest amount of the total budget. Major portions of this amount areexpected to be spent on improving agricultural productivity, irrigation, silos, mills, desalination,roads, drainage, and provision of other incentives to farmers. Several water conservationprojects have also been flagged off.These Government initiatives and support have spurred private sector interest in the sector withinvestments expected to reach SR181bn in 2009, after sharply surging in 2008. A total of about23% of this investment is mainly focused on agriculture related projects alone.As a result of the limited arableland and depleting fossil watersources, KSA is expected toincrease its dependence onfood importsAlthough, of the total land area of 2,149,690 sq km in KSA, only a very small portion is arable,thousands of hectares of desert have now been transformed into arable land using moderntechnology and equipment. However, of the total water required for agriculture, majority issourced from non-renewable aquifers. The Saudi Arabian Ministry of Agriculture (MOA)announced 12.5% per annum cut in wheat production from the spring of 2009 until the spring of2016, because of depleting fossil water within KSA. As a result, from 2009–2016, the Kingdomis expected to fulfill its wheat requirements by importing a similar percentage of wheat from theinternational market every year.Moreover, the US Department of Agriculture Foreign Agricultural Service expects the demandfor rice to increase in 2009 due to a rise in population and higher number of pilgrims visitingMecca. The Kingdom, the largest importer of rice from India, faced supply pressures in 2008,due to the ban on non-basmati rice exports from India. Furthermore, the Saudi Governmentimplemented a new rice subsidy program on 5 Jan 08, under which, it subsidized rice imports atthe rate of USD266.67 per metric ton and this is expected to help lower retail prices of highquality rice by up to 20% in KSA.Population growth, higherconsumer spending changes inlife style and eating habits arekey growth driversThe growing population base of Saudi Arabia and higher consumer spending are expected todrive demand for food. With increased focus on urbanization and industrialization and thegrowing influence of western lifestyles in KSA, the eating and living habits of the people havechanged dramatically. As a result, the number of supermarkets and fast food chains areexpected to rise in major urban areas of KSA. In the past ten years, majority of the US quickservicerestaurant franchises such as McDonald’s, Pizza Hut, Subway and KFC, as well asWestern-style supermarkets have entered the Kingdom. Local players in the fast food businessJUNE 2009SAUDI ARABIA FACTBOOK61