Trade policy review report by the secretariat
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- Bu səhifədəki naviqasiya:
- 4.2.2 Trade
- 4.2.3 Policies
- 4.2.3.1 Trade policies
- 4.2.3.2 Domestic policies
- 4.2.3.3 WTO notifications
4.2 Agriculture4.2.1 Features1.1. Agriculture, forestry, and fishing contributed nearly SAR 54 billion, or 1.9%, to GDP in Saudi Arabia in 2014. Although agriculture GDP increased in nominal and real terms from 2009 to 2014, its contribution to GDP declined from 2.8% in 2009 to 1.9% in 2014. Agriculture, animal husbandry, and fishing account for about 4% of total employment. 1.2. Agricultural production in Saudi Arabia faces several challenges related to the harsh desert climate, very limited water resources, and poor quality soils. Historically, production was limited to dates and small-scale production for subsistence and nomadic livestock. Under government programmes that began in the 1970s: irrigation, transport, and storage facilities were constructed; research and training programmes were started; and land was allocated to farmers. 1.3. Over the past few years, land use has changed as crop production has declined significantly. The change in land use reflects the change in policy under the Eighth Development Plan (2005-2009) and the Ninth Development Plan (2010-2014). These plans emphasized improving the use of water and rationalizing production and export of water-intensive products. As a result, the total area under crop production has declined from nearly 1 million ha in 2008 to less than 700,000 ha in 2013. Furthermore the crop mix has changed as the area under grain production has declined by an average of over 18% per year from 2008 to 2013 while production of green fodder and dates increased (Saudi Arabia is the third biggest producer of dates in the world134) (Table 4 .21). Table 4.21 Crop production, 2008-13 (Production in '000 tonnes, area in '000 ha)
Source: Saudi authorities. 1.4. In 2009-13, production of some livestock products increased considerably, particularly eggs and poultry. Although total production of red meat (beef, sheep meat, goat meat, and camel meat) remained stable in this period, there were slight increases in the numbers of camels, cows, and sheep but a decline in the number of goats (Table 4 .22). Table 4.22 Livestock and animal products, 2008-13
Source: Saudi authorities. 4.2.2 Trade1.1. With domestic production limited to relatively few products and with a surplus of production over consumption only in milk and dates, Saudi Arabia is a net importer of agricultural products (WTO definition135). Exports of agricultural products fell to US$0.6 billion in 2008 but recovered quickly to stabilize at about US$3.6 billion in 2012. The main exports are fruit juices, and products made from cereals and milk (Table 4 .23). Dates have been a traditional export, although the value and volume has fluctuated considerably. The main destination for exports is other Arab countries, particularly other GCC member States. Table 4.23 Exports of agricultural products, 2007-14 (US$ million)
.. Zero or negligible. Source: UNSD Comtrade and Saudi authorities. 1.2. Imports of agricultural products fell in 2009 but then increased steadily from US$10.6 billion in 2009 to US$24.4 billion in 2014. (Table 4 .24). The most important import is barley for animal feed, mostly from Argentina, Germany, Ukraine, Australia, and the Russian Federation. After barley, poultry meat (mostly from Brazil and France), and rice (mostly from India) are the next biggest imports. Imports of wheat have increased in tandem with the reduction in domestic production and an increase in the strategic reserve, from negligible levels in 2007 to US$1.02 billion in 2014 (mostly from Germany, Australia, and Lithuania). Table 4.24 Imports of agricultural products, 2007-14 (US$ million)
Source: UNSD Comtrade and Saudi authorities. 4.2.3 Policies1.1. The Ministry of Agriculture is responsible for developing and implementing agricultural policy. In addition to the Ministry, the Agricultural Development Fund (ADF) (formerly the Saudi Arabia Agricultural Bank (SAAB)) provides low interest loans and loan repayment subsidies, and the Saudi Grain Organization (SAGO) (which replaced the Grain Silos and Flourmills Organization (GSFMO) in November 2015) purchases and stores wheat, mills wheat for human consumption, and is responsible for the strategic stockpile of 6 months' consumption. It also produces wheat-based animal feeds. 1.2. Historically, agriculture in Saudi Arabia had focused on small-scale production of vegetables and fruits and nomadic stock raising. Starting in the 1970s, government programmes to develop the sector and significant investment in infrastructure, particularly irrigation, increased production and, by 1992, Saudi Arabia had become a major exporter of wheat with 2.4 million tonnes exported in that year.136 However, production at this level required high levels of inputs, particularly water, much of which was from non-renewing aquifers. 1.3. Under the Eighth Development Plan (2005-2009), and the Council of Ministers Resolution No. 335 of November 2007, agricultural policy underwent a marked reform away from emphasizing domestic production and the pursuit of self-sufficiency in several key products towards greater emphasis on sustainable production, particularly more efficient use of water. To improve food security, the Government also began to encourage investment in agriculture abroad through the King Abdullah Agricultural Initiative. 1.4. Under the general policy of economic diversification in the Ninth Development Plan (2010 2014), the overall objective for agriculture policy is "modern agriculture that focuses on high value added, used advanced water saving techniques, and which improves efficiency of natural resource utilization". The objective is based on the vision of putting the sector on a path to sustainable development, promoting scientific research for high-yielding salinity-resistant varieties, and diversifying the production base of the economy through water-efficient crops. The plan includes five specific objectives:
1.5. To achieve these objectives and targets, the Ninth Development Plan includes programmes to increase production of water-efficient crops; improve agricultural markets; improve farm extension services, and research and development; and improve sustainable management of rangelands and forests. Financial allocations to the Ministry of Agriculture and the GSFMO were SAR 8,944.4 million, and SAR 13,824.0 million respectively under the Eighth and Ninth Development Plans.137 According to the authorities, most of these amounts were for food security. 4.2.3.1 Trade policies1.1. According to the notifications to the WTO Committee on Agriculture, Saudi Arabia does not provide export subsidies for agricultural products.138 1.2. Bound tariffs on agricultural goods vary from as low as 5% to as high as 20% – with some tobacco-related lines at 200%. Imports of some products are prohibited (any product containing alcohol, and pig products). Applied tariffs vary from duty free to 100% with some compound tariffs for tobacco products (Section 3.1.4). 4.2.3.2 Domestic policies1.1. Lack of water is the biggest constraint to production in Saudi Arabia. In 2009, agriculture accounted for about 15 billion m3 of the total water consumption of 18 billion m3 per year in Saudi Arabia. Water for agriculture is mostly from ground wells tapping aquifers, as well as dams to collect runoff, and recycled wastewater which is distributed through of irrigation canals.139 Under the Ninth Development Plan (2010-2014), water for agricultural purposes was to be reduced by 3.7% annually, dam storage capacity was to increase by 85% to 2.5 billion m3, and greater use was to be made of treated wastewater. 1.2. Until November 2015, the GSFMO was responsible for importing and purchasing domestically produced wheat, and milling wheat in Saudi Arabia. Under the Government Decree No. 335 of 2008, the GSFMO began reducing purchases of domestically produced wheat by 12.5% per year and replacing them with imports. The final purchases of domestic wheat were to have taken place in 2015. The SAGO buys domestically produced wheat at SAR 1,000 per tonne. In 2013, it bought 626,496 tonnes of domestically produced wheat – down from 1,724,733 tonnes in 2008 when it started importing. In 2013, it imported 2.54 million tonnes at an average price of US$318.8 per tonne.140 1.3. At end-2014, GSFMO owned silos with total capacity of 2.7 million tonnes. As part of planned future expansion, several projects are being implemented to increase silo storage capacity to 3.2 million tonnes. The GSFMO also operated flour mills with total capacity of 12,630 tonnes per day, and feed mills with total capacity of 2,900 tonnes per day. In August 2011, the Supreme Economic Council agreed to the privatization of GSFMO's flour mills and some silos. In line with this decision, in late-2015, the Council of Ministers issued a decision which approved the regulatory arrangements for the privatization of the GSFMO. The Saudi Grains Organization (SAGO) was created and replaced the GSFMO. Four flour mill companies are to be established, and a regulation issued for the flour production, with the intention of selling them to the private sector after a trial period. 1.4. Saudi Arabia has not provided price support for barley production since 2003 and imports nearly all its requirements. In 2014, it imported 10.5 million tonnes, nearly all for animal feed and much of which was not processed but fed raw to livestock which resulted in high levels of waste. Barley for feed is bought at international prices and distributed to farmers at a fixed price of SAR 800 per tonne. To encourage better quality animal feed, the Government provides subsidies for soya bean and maize-based animal feeds for poultry producers. The subsidy is based on the energy and protein levels of the feed. 1.5. The Agricultural Development Fund provides interest-free loans for agricultural investment and a repayment subsidy of up to 25% of the loan value. Since 2006, the number and value of short-term loans has declined as medium-term loans have increased (Table 4 .25). Table 4.25 Agricultural Development Fund lending, 2006-14 (Number of loans, and SAR million)
Source: Saudi authorities. 1.6. The ADF also launched the Agricultural Information Centre (AIC) in 2013, which is to provide data and information to stakeholders to help them identify opportunities in the agricultural sector through the provision of market data and economic analysis. The AIC is currently engaged in preparing a project to collect and monitor wholesale and retail prices for fruits and vegetables in Riyadh. The development plan for the AIC includes the development of an agricultural information system to support decision-making by the public and private sectors, and the establishment of AIC branches throughout the Kingdom to collect information. 1.7. Under King Abdullah's Initiative for Saudi Agricultural Investment Abroad, the private sector has been encouraged to invest in production of targeted products (wheat, barley, maize, sorghum, soya beans, rice, sugar, oil seeds, green fodder, livestock, fisheries, and other staple food products).141
1.2. In the 2006-12 period, support notified as Green Box increased to a maximum of SAR 1,338 million in 2010 before declining sharply to SAR 690 million in 2011 due almost entirely to a decline in spending on infrastructural services (irrigation-related works) (Chart 4 .6). 1.3. Support notified under the Amber Box (including de minimis) has been declining steadily since 2008 as input subsidies for livestock and poultry declined and purchases of wheat by GSFMO were being phased out (Chart 4 .5 and Chart 4 .7).142 Chart 4.5 Support for agriculture in Saudi Arabia, 2006-12 (SAR million)
Source: WTO notifications. Chart 4.6 Green Box support for agriculture in Saudi Arabia, 2006-12 (SAR million) 
Source: WTO notifications. Chart 4.7 Amber Box support for agriculture in Saudi Arabia, 2006-12 (SAR million) 
Note: For the year 2012, no notification as of end-December 2015. Source: WTO notifications.
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