News & Events
Saudi Arabia has nearly doubled purchased of U.S. corn this marketing year due to a combination of favorable government policy shifts, competitive prices and market development work by the U.S. Grains Council (USGC).
Thus far in 2016/2017 (September-June), Saudi Arabia has purchased 2.07 million metric tons of U.S. corn (81.5 million bushels), up significantly compared to the prior five-year average of 861,000 tons (33.89 million bushels). Saudi Arabia has also ramped up purchases of U.S. ethanol substantially over the last two marketing years, with 2.5 million gallons sold in 2016/2017 plus more than 25,600 tons of U.S. distiller's dried grains with solubles (DDGS), an ethanol co-product.
Changes to local policy have helped spur these shifts. In 2011, the Saudi government added 14 new feed ingredients to the national animal feed subsidy scheme, the major driving force between what types of feed grains, co-products and forages are imported by the Saudi feed, livestock and poultry industries. That new list includes U.S. DDGS and corn gluten feed/meal (CGF), opening the door for increased exports.
A second policy shift in 2016 began the phase out of domestic wheat production, which had been utilized primarily for feed, in order to help conserve Saudi Arabia’s water resources. The policy ends a 30-year program for irrigating domestic wheat production and bodes well for increased U.S. exports of corn and co-products.
This demand potential is huge, but requires extensive market development work. The Saudi dairy industry is one of the most modern in the world and the country’s large poultry industry processes fresh product for domestic use as well as sales to neighboring Gulf countries. While these industries are quick to adopt new technology and ideas, they are still relatively unfamiliar with U.S. co-products. In 2016, Saudi Arabia imported less than 1,000 tons of U.S. CGF and DDGS.
“There is a constant need for market education and customer servicing to address grain quality complaints and the limited knowledge of the U.S. grain marketing and handling system, with key Saudi feed grain importers, end-users and government officials,” said Ramy Taieb, USGC regional director for the Middle East and North Africa.
To accomplish this goal, the Council sponsored a Saudi buyer team to the Council’s biannual Export Exchange in 2016, timed perfectly with the U.S. corn harvest. As a result, the participants reported buying 76,000 tons of corn and DDGS valued at $13 million.
In 2017, the Council continued these efforts with a team in August that brought key feed grain importers and end-users to Illinois, Virginia and and Louisiana to see firsthand U.S. feed grain production as well as meet face-to-face with U.S. suppliers and exporters. The team also learned more about how grain moves through the logistics channels for export markets, quality preservation throughout the supply chain, quality assurance by FGIS, best buying practices and contract specifications.
“Through these activities, the Council is building not just a short-term market, but long-term Saudi confidence in food security through trade,” Taieb said. “We are reassuring this growing market that U.S. corn and corn co-products will be available in abundant quantities at a reasonable price to sustain Saudi meat, milk and egg industries.”