Saudi Arabia Table of Contents
Modern cultivation techniques have substantially increased crop production beginning in the 1980s.
Courtesy Saudi Aramco
Fish market, Jizan
Courtesy Aramco World
Pastoral nomadism declined as a result of several political and economic forces. Sedenterization was a means of imposing political control over various tribal groupings in the Arabian Peninsula. New legal structures such as the 1968 Public Lands Distribution Ordinance created novel land relations and spurred the dissolution of the beduin way of life. The establishment of an activist modern state provided incentives for large numbers of Saudi citizens to enter the regular, wage-based, or urban commercial employment. Moreover, modern technology and new transport networks undermined the primitive services that the beduin offered the rest of the economy.
Until the 1970s, sedentary agriculture saw few changes and declined in the face of foreign imports, urban drift, and lack of investment. The use of modern inputs remained relatively limited. Introduction of mechanical pumping in certain areas led to a modest level of commercial production, usually in locations close to urban centers. Nevertheless, regional distribution of agricultural activity remained relatively unchanged, as did the average holding size and patterns of cultivation.
During the late 1970s and early 1980s, the government undertook a multifaceted program to modernize and commercialize agriculture. Indirect support involved substantial expenditures on infrastructure, which included electricity supply, irrigation, drainage, secondary road systems, and other transportation facilities for distributing and marketing produce. Land distribution was also an integral part of the program. The 1968 Public Lands Distribution Ordinance allocated 5 to 100 hectares of fallow land to individuals at no cost, up to 400 hectares to companies and organizations, and a limit of 4,000 hectares for special projects. The beneficiaries were required to develop a minimum of 25 percent of the land within a set period of time (usually two to five years); thereafter, full ownership was transferred. In FY 1989, the total area distributed stood at more than 1.5 million hectares. Of this total area 7,273 special agricultural projects accounted for just under 860,000 hectares, or 56.5 percent; 67,686 individuals received just under 400,000 hectares or 26.3 percent; 17 agricultural companies received slightly over 260,000 hectares, or 17.2 percent. Judging from these statistics, the average fallow land plot given to individuals was 5.9 hectares, 118 hectares to projects, and 15,375 hectares to companies, the latter being well over the limit of 400 hectares specified in the original plans.
The government also mobilized substantial financial resources to support the raising of crops and livestock during the 1970s and 1980s. The main institutions involved were the Ministry of Agriculture and Water, the Saudi Arabian Agricultural Bank (SAAB) and the Grain Silos and Flour Mills Organization (GSFMO). SAAB provided interest-free loans to farmers; during FY 1989, for example, 26.6 percent of loans were for well drilling and casing, 23 percent for agricultural projects, and the balance for the purchase of farm machinery, pumps, and irrigation equipment. SAAB also provided subsidies for buying other capital inputs.
GSFMO implemented the official procurement program, purchasing locally produced wheat and barley at guaranteed prices for domestic sales and exports. The procurement price was steadily reduced during the 1980s because of massive overproduction and for budgetary reasons, but it was substantially higher than international prices. By the late 1980s, the procurement price for wheat, for example, was three times the international price. Although quantity restrictions were implemented to limit procurement, pressures from a growing farm lobby led to ceiling-price waivers. Moreover, the government encountered considerable fraud with imports being passed off as domestic production. To control this situation, the government has granted import monopolies for some agricultural products to the GSFMO, while procurement and import subsidies on certain crops have been shifted to encourage a more diversified production program. Finally, agricultural and water authorities provided massive subsidies in the form of low-cost desalinated water, and electric companies were required to supply power at reduced charges.
The program prompted a huge response from the private sector, with average annual growth rates well above those programmed. These growth rates were underpinned by a rapid increase in land brought under cultivation and agricultural production (see table 9, Appendix). Private investments went mainly into expanding the area planted for wheat. Between 1983 and 1990, the average annual increase of new land brought under wheat cultivation rose by 14 percent. A 35 percent increase in yields per ton during this period further boosted wheat output; total production rose from 1.4 million tons per year in FY 1983 to 3.5 million tons in FY 1989. Other food grains also benefited from private investment. For example, output growth rates for sorghum and barley accelerated even faster than wheat during the 1980s, although the overall amount produced was much smaller. During the 1980s, farmers also experimented with new varieties of vegetables and fruits but with only modest success. More traditional crops, like onions and dates, did not fare as well and their output declined or remained flat.
In the 1970s, increasing incomes in urban areas stimulated the demand for meat and dairy products, but by the early 1980s government programs were only partially successful in increasing domestic production. Beduin continued to raise a large number of sheep and goats. Payments for increased flocks, however, had not resulted in a proportionate increase of animals for slaughter. Some commercial feedlots for sheep and cattle had been established as well as a few modern ranches, but by the early 1980s much of the meat consumed was imported. Although the meat supply was still largely imported in the early 1990s, domestic production of meat had grown by 33 percent between 1984 and 1990, from 101,000 tons to 134,000 tons. This increase, however, masked the dominant role of traditional farms in supplying meat. Although new projects accounted for some of the rapid growth during the 1980s, a sharp decline of roughly 74 percent in beef stock production by specialized projects during 1989 resulted in only a 15 percent fall in meat output. This reversal also highlighted the problems in introducing modern commercial livestock-rearing techniques to the kingdom.
Commercial poultry farms, however, greatly benefited from government incentives and grew rapidly during the 1980s. Chickens were usually raised in controlled climatic conditions. Despite the doubling of output, as a result of the rapid rise in chicken consumption, which had become a major staple of the Saudi diet, domestic production constituted less than half of total demand. Egg production also increased rapidly during the 1980s. The numbers of broiler chickens increased from 143 million in 1984 to 270 million in 1990, while production of eggs increased from 1,852 million in 1984 to 2,059 million in 1990.
Fishing, however, was an underdeveloped aspect of the Saudi economy despite the abundance of fish and shellfish in coastal waters. The major reasons for the small size of this sector were the limited demand for fish and the comparative lack of fish marketing and processing facilities. Iraqi actions in releasing oil into the Persian Gulf during the Persian Gulf War caused appreciable damage to fish and wildlife in the gulf. Data concerning postwar catches were not available in late 1992, but in 1989 the Food and Agriculture Organization of the United Nations estimated Saudi Arabia's total catch at more than 53,000 tons.
Data as of December 1992
Saudi Arabia Table of Contents