Required Report - public distribution

**Date:** 3/19/2006

**GAIN Report Number:** SA6002

SA6002

**Saudi Arabia**

**Grain and Feed**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Kurt Seifarth

U.S. Embassy, Cairo, Egypt

**Prepared by:**

Hussein Mousa

**Report Highlights:**

Saudi Arabia's barley imports are expected to increase by three percent
this Marketing Year due to poor pasture conditions this year compared to
last year. Local wheat production is forecast to increase by about five
percent this marketing year compared to the last year's level. Saudi
Arabia reduced wheat import tariff from 100 percent to 25 percent last
year. Rice imports in 2006 are forecast to increase by 4 percent
compared to 2005 import level.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Riyadh \[SA2\]

\[SA\]

Table of Content

[I. Overview of the Kingdom's Barley Market
2](#i.-overview-of-the-kingdoms-barley-market)

[1. Production, Supply and Demand Table (PSD) for Barley
2](#production-supply-and-demand-table-psd-for-barley)

[2. Barley Imports 2](#barley-imports)

[3. Barley Specifications 3](#barley-specifications)

[4. Government Subsidy on Imported Barley
3](#government-subsidy-on-imported-barley)

[5. Barley Consumption 4](#barley-consumption)

[6. Trade Matrix 5](#trade-matrix)

[Calendar Year 2005 Saudi Arabian Barley Imports by Supplying Countries
(Jan-Dec)
5](#calendar-year-2005-saudi-arabian-barley-imports-by-supplying-countries-jan-dec)

[Calendar Year 2004 Saudi Arabian Barley Imports by Supplying Countries
(Jan-Dec)
5](#calendar-year-2004-saudi-arabian-barley-imports-by-supplying-countries-jan-dec)

[Marketing Year 2004 and 2003 Saudi Arabian Barley Imports by Supplying
Countries
6](#marketing-year-2004-and-2003-saudi-arabian-barley-imports-by-supplying-countries)

[Fiscal Year 2004 and 2003 Saudi Arabian Barley Imports by Supplying
Countries (Oct-Sep)
6](#fiscal-year-2004-and-2003-saudi-arabian-barley-imports-by-supplying-countries-oct-sep)

[II. Wheat Production 7](#ii.-wheat-production)

[1. Production, Supply and Demand Table (PSD) for Wheat
7](#production-supply-and-demand-table-psd-for-wheat)

[2. Wheat Imports 8](#wheat-imports)

[III. Overview of the Kingdom's Rice Market
9](#iii.-overview-of-the-kingdoms-rice-market)

[1. Production, Supply and Demand Table (PSD) for Rice
9](#production-supply-and-demand-table-psd-for-rice)

[2. Saudi Rice Imports 9](#saudi-rice-imports)

[3. Reasons for Increased Demand for Indian Rice
10](#reasons-for-increased-demand-for-indian-rice)

[Trade Matrix 10](#trade-matrix-1)

# I. Overview of the Kingdom's Barley Market

The Saudi Government stopped its more than two decade-old barley
production subsidy program in 2003/2004-crop season, bringing an end to
the local barley production.

## 

## 1. Production, Supply and Demand Table (PSD) for Barley 

## 

+-----------------+--------+-------+------+-------+--------+--------+
| PSD Table       |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| **Country**     | *      |       |      |       |        |        |
|                 | *Saudi |       |      |       |        |        |
|                 | Ar     |       |      |       |        |        |
|                 | abia** |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| **Commodity**   | **Ba   |       |      |       |        |        |
|                 | rley** |       |      |       |        |        |
|                 |        |       |      |       |        |        |
|                 | *      |       |      |       |        |        |
|                 | *(1000 |       |      |       |        |        |
|                 | MT)**  |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
|                 | 2004   | Re    | 2005 | Est   | 2006   | Fo     |
|                 |        | vised |      | imate |        | recast |
+-----------------+--------+-------+------+-------+--------+--------+
|                 | USDA   | Post  | USDA | Post  | USDA   | Post   |
|                 | Of     | Estim | Offi | Estim | Of     | Es     |
|                 | ficial | ate\[ | cial | ate\[ | ficial | timate |
|                 | \      | New\] | \[O  | New\] | \      |        |
|                 | [Old\] |       | ld\] |       | [Old\] | \      |
|                 |        |       |      |       |        | [New\] |
+-----------------+--------+-------+------+-------+--------+--------+
| Market Year     |        | 07    |      | 07    |        | 0      |
| Begin           |        | /2004 |      | /2005 |        | 7/2006 |
+-----------------+--------+-------+------+-------+--------+--------+
| Beginning       | 2399   | 2877  | 2689 | 2750  | 2679   | 2750   |
| Stocks          |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| Production      | 0      | 0     | 0    | 0     | 0      | 0      |
+-----------------+--------+-------+------+-------+--------+--------+
| TOTAL Mkt. Yr.  | 5700   | 5873  | 6000 | 6100  | 0      | 6150   |
| Imports         |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| Oct-Sep Imports | 6500   | 6463  | 6500 | 6500  | 0      | 0      |
+-----------------+--------+-------+------+-------+--------+--------+
| Oct-Sep Import  | 0      | 0     | 0    | 0     | 0      | 0      |
| U.S.            |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| **TOTAL         | **     | **8   | **86 | **8   | **     | **     |
| SUPPLY**        | 8099** | 750** | 89** | 850** | 2679** | 8900** |
+-----------------+--------+-------+------+-------+--------+--------+
| Oct-Sep Exports | 0      | 0     | 0    | 0     | 0      | 0      |
+-----------------+--------+-------+------+-------+--------+--------+
| Feed Dom.       | 5400   | 6000  | 6000 | 6100  | 0      | 6140   |
| Consumption     |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| TOTAL Dom.      | 5410   | 6000  | 6010 | 6100  | 0      | 6140   |
| Consumption     |        |       |      |       |        |        |
+-----------------+--------+-------+------+-------+--------+--------+
| Ending Stocks   | 2689   | 2750  | 2679 | 2750  | 0      | 2760   |
+-----------------+--------+-------+------+-------+--------+--------+
| **TOTAL         | **     | **8   | **86 | **8   | **0**  | **     |
| DISTRIBUTION**  | 8099** | 750** | 89** | 850** |        | 8900** |
+-----------------+--------+-------+------+-------+--------+--------+

## 

## 2. Barley Imports

Barley imports this Marketing Year (July 2005-June 2006) is forecast to
increase by 3 percent due to below average rainfall in the Central and
Northern parts of the Kingdom, which resulted in a poor pasture
condition this year compared to last year. Livestock farmers are
expected to depend more on barley feeding this year compared to the past
few years.

The Kingdom has been importing on average about 6 million metric tons of
barley since calendar year 1995. As such, demand for imported barley is
forecast to remain strong due to lack of competitively priced
alternative feed in the Kingdom. About 80 percent of all available
barley is consumed by sheep and goats raised by traditional farmers. The
demand for other feed alternatives such as alfalfa and feed concentrates
is expected to remain very low as long as the Saudi Government keeps on
subsidizing imported barley. It is the policy of the Government to
eliminate or sharply reduce alfalfa production due to its high usage of
non-renewable aquifer water. Since the Government's ban on alfalfa
exports four years ago, a large number of farmers have stopped alfalfa
and other forage production. Nowadays, the main growers and users of
alfalfa are dairy farmers.

Barley imports for the first six months of marketing year (MY) 2005
(July 2005-December 2005) increased by 33 percent compared to the same
period last MY (3,191,386 mt vs. 2,397,643 mt). MY 2004 barley imports
totaled about 5.9 million metric tons (a decrease of 15 percent compared
to MY 2003 import level).

In calendar year 2005, the Kingdom imported 6,667,035 metric tons of
barley, an increase of 25 percent compared to same period in 2004
(5,298,877 mt). Ukraine supplied 31 percent of the total barley imports,
followed by Australia (20 percent), Germany (18 percent), Russia (14
percent), Canada (7 percent), France (5 percent) and the remaining 5
percent was supplied by the Netherlands and Romania.

## 3. Barley Specifications

Saudi importers buy barley according to Saudi government's
specifications, which are usually based on standard specifications of
the country of origin. The following specifications are used for barley
imports from the United States, the EU and Australia:

**U.S. Barley**

Sound, Loyal & Merchantable quality

Test weight per bushel 45 lbs. minimum

Moisture maximum 14.5 percent

Foreign Matter maximum 2 percent

Damaged kernels maximum 4 percent

Colored barley not less than 5 percent of total shipped quantity

Goods to be free from live weevils, insects, diseases, foreign smell and
materials.

**EU and Australia**

Sound, Loyal & Merchantable quality

Colored barley not less than 5 percent of total shipped quantity

Goods to be free from live weevils, insects, diseases, foreign smell and
materials.

1\. In case of EU or Turkish origin:

Test weight: 62/63 KG/HL, Moisture 15 percent

Foreign Matter: Max 2 percent

2\. In case of Australian origin: As per Australian Grain Board
Specifications

Saudi traders often employ brokers to buy barley. Several traders use
brokers based in Beirut.

## 

## 4. Government Subsidy on Imported Barley

In January 2005, the Saudi Government fixed the subsidy paid on imported
barley at \$66.67 per metric ton (mt) regardless of the international
barley prices. The subsidy on imported barley was fixed at \$66.67 per
mt after traditional livestock farmers complained that they were unable
to feed their herds when the retail price of 50 kg of barley exceeded
\$8 or \$160 per metric ton in the third quarter of 2004.

The Saudi government's fixed subsidy payment on animal feed is not a new
policy. It has been paying for more than two decades a rebate of \$42.67
per metric ton toward the purchase of imported yellow corn and soybean
meal. The subsidy is paid directly to the importer. The corn subsidy is
based on U.S. grain standards for number 2 yellow corn. Under the fixed
subsidy regime, importers are free to adjust their wholesale/retail
prices based on their cost and competition factors.

## 5. Barley Consumption 

Though local livestock farmers prefer barley as a feed alternative,
future barley consumption and total imports depend on the ability of
importers to supply barley at a reasonable price compared to other feed
alternatives such as forage and feed concentrates. The barley subsidy
program has made the grain the most competitive feed alternative
resulting in a drastic reduction in the demand for locally grown alfalfa
which in turn made forage production an unprofitable venture. Currently,
most alfalfa is grown and used by dairy farmers. But this situation is
expected to change if the retail price for 50 kg of barley exceeds the
price of a comparable bale of alfalfa.

## 6. Trade Matrix

## Calendar Year 2005 Saudi Arabian Barley Imports by Supplying Countries (Jan-Dec)

  ----------- --------------- --------------- --------------- ------------- ------------- ------------- ------------- ------------- ---------------
  Month       Country of                                                                                                            
              Origin                                                                                                                

              Ukraine         Australia       Germany         Russia        Canada        France        Holland       Romania       Total

                                                                                                                                     

  January     104,368         240,543         57,050          147,835       0             0             0             0             549,796

  February    264,968         236,915         118,683         103,638       0             0             60,500        0             784,704

  March       118,312         325,025         120,000         106,241       0             0             0             0             669,578

  April       106,613         156,687         54,533          85,525        0             60,455        54,040        39,904        557,757

  May         46,492          124,269         60,500          0             59,484        88,009        0             0             378,754

  June        165,461         147,012         135,297         26,790        0             60,500        0             0             535,060

  July        0               0               288,166         25,535        0             0             57,986        51,644        423,331

  August      241,699         33,000          180,648         106,210       0             0             64,627        0             626,184

  September   332,998         0               61,445          107,854       59,954        55,840        0             58,205        676,296

  October     216,577         0               0               136,598       57,880        60,422        0             0             471,477

  November    219,924         0               60,500          55,886        109,852       0             0             0             446,162

  December    257,295         77,952          38,741          0             152,618       21,330        0             0             547,936

  **Total**   **2,074,707**   **1,341,403**   **1,175,563**   **902,112**   **439,788**   **346,556**   **237,153**   **149,753**   **6,667,035**
  ----------- --------------- --------------- --------------- ------------- ------------- ------------- ------------- ------------- ---------------

**Source: Trade Contacts and Saudi Arabian Customs Data**

## Calendar Year 2004 Saudi Arabian Barley Imports by Supplying Countries (Jan-Dec)

  ----------- --------------- --------------- ------------- ------------- ------------- ------------- ------------- ---------------
  **Month**   **Australia**   **Ukraine**     **Canada**    **Russia**    **Holland**   **Romania**   **Germany**   **Total**

  January     420,842         102,490         105,006       29,372        0             0             10,931        668,641

  February    318,102         126,999         0             0             0             0             0             445,101

  March       443,860         78,133          47,840        51,447        0             0             0             621,280

  April       145,815         26,463          166,217       41,445        0             0             0             379,940

  May         341,348         0               53,964        60,447        0             0             0             455,759

  June        256,089         74,424          0             0             0             0             0             330,513

  July        227,333         35,090          60,500        0             0             0             0             322,923

  August      265,479         41,729          0             0             0             0             0             307,208

  September   247,428         258,119         0             0             0             0             0             505,547

  October     118,870         233,885         0             0             0             0             0             352,755

  November    54,460          91,797          0             0             0             0             0             146,257

  December    279,739         271,271         0             96,880        61,815        53,248        0             762,953

  **Total**   **3,119,365**   **1,340,400**   **433,527**   **279,591**   **61,815**    **53,248**    **10,931**    **5,298,877**
  ----------- --------------- --------------- ------------- ------------- ------------- ------------- ------------- ---------------

**Source: Trade Contacts and Saudi Arabian Customs Data**

## Marketing Year 2004 and 2003 Saudi Arabian Barley Imports by Supplying Countries 

**(JULY 2004-JUNE 2005)**

  ----------- ------------------------------ -------------------------------
  Month       MY 2004 (JULY 2004-JUNE 2005   MY 2003 (JULY 2003-JUNE 2004)

              Quantity in Metric Tons        

                                             

  July        322,923                        420,368

  August      307,208                        893,116

  September   505,547                        788,528

  October     352,755                        602,447

  November    146,257                        884,114

  December    762,953                        452,036

  January     549,796                        668,641

  February    784,704                        445,101

  March       669,578                        621,280

  April       557,757                        379,940

  May         378,754                        455,759

  June        535,060                        330,513

  **Total**   **5,873,292**                  **6,941,843**
  ----------- ------------------------------ -------------------------------

**Source: Trade Contacts and Saudi Arabian Customs Data**

## Fiscal Year 2004 and 2003 Saudi Arabian Barley Imports by Supplying Countries (Oct-Sep) 

**J**

  ---------------- ------------------------ ------------------------------------
  **FY 2004                                 **FY 2003 (OCTOBER 2003-SEPTEMBER
  (OCTOBER                                  2004)**
  2004-SEPTEMBER                            
  2005)**                                   

  **Quantity in                             
  Metric Tons**                             

  October          352,755                  602,447

  November         146,257                  884,114

  December         762,953                  452,036

  January          549,796                  668,641

  February         784,704                  445,101

  March            669,578                  621,280

  April            557,754                  379,940

  May              378,754                  395,312

  June             535,060                  390,960

  July             423,331                  322,923

  August           626,184                  307,208

  September        676,296                  505,547

  **TOTAL**        **6,463,422**            **5,975,509**
  ---------------- ------------------------ ------------------------------------

**Source: Trade Contacts and Saudi Arabian Customs Data**

# II. Wheat Production

The Grain Silos and Flour Mills Organization (GSFMO), the Saudi Ministry
of Agriculture's agency, is responsible for procuring locally grown
wheat, milling and selling wheat flour to end users in the Kingdom
through private wholesalers and retailers. The Saudi Government policy
is for farmers to produce (according to established individual
production quotas) only enough wheat to meet domestic needs, which is
currently fixed at 2.1 million mt annually.

## 1. Production, Supply and Demand Table (PSD) for Wheat 

+---------------+-------+----------+--------+-------+------+--------+
| PSD Table     |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| **Country**   | **    |          |        |       |      |        |
|               | Saudi |          |        |       |      |        |
|               | Ara   |          |        |       |      |        |
|               | bia** |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| **Commodity** | **    |          |        |       |      |        |
|               | Wheat |          |        |       |      |        |
|               | (1000 |          |        |       |      |        |
|               | HA)   |          |        |       |      |        |
|               | (1000 |          |        |       |      |        |
|               | M     |          |        |       |      |        |
|               | T))** |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
|               | 2004  | Revised  | 2005   | Est   | 2006 | Fo     |
|               |       |          |        | imate |      | recast |
+---------------+-------+----------+--------+-------+------+--------+
|               | USDA  | Post     | USDA   | Post  | USDA | Post   |
|               | Off   | Estimate | Of     | Est   | Offi | Es     |
|               | icial |          | ficial | imate | cial | timate |
|               | \[    | \[New\]  | \      |       | \[O  |        |
|               | Old\] |          | [Old\] | \[    | ld\] | \      |
|               |       |          |        | New\] |      | [New\] |
+---------------+-------+----------+--------+-------+------+--------+
| Market Year   |       | 07/2004  |        | 07    |      | 0      |
| Begin         |       |          |        | /2005 |      | 7/2006 |
+---------------+-------+----------+--------+-------+------+--------+
| Area          | 320   | 320      | 420    | 335   | 0    | 0      |
| Harvested     |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Beginning     | 1358  | 1100     | 908    | 1060  | 958  | 1110   |
| Stocks        |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Production    | 1600  | 2100     | 2100   | 2200  | 0    | 2250   |
+---------------+-------+----------+--------+-------+------+--------+
| TOTAL Mkt.    | 50    | 0        | 50     | 0     | 0    | 0      |
| Yr. Imports   |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Jul-Jun       | 50    | 0        | 50     | 0     | 0    | 0      |
| Imports       |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Jul-Jun       | 0     | 0        | 0      | 0     | 0    | 0      |
| Import U.S.   |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| **TOTAL       | **3   | **3200** | **     | **3   | **9  | **     |
| SUPPLY**      | 008** |          | 3058** | 260** | 58** | 3360** |
+---------------+-------+----------+--------+-------+------+--------+
| TOTAL Mkt.    | 0     | 0        | 0      | 0     | 0    | 0      |
| Yr. Exports   |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Feed Dom.     | 50    | 40       | 50     | 40    | 0    | 50     |
| Consumption   |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| TOTAL Dom.    | 2100  | 2140     | 2100   | 2150  | 0    | 2200   |
| Consumption   |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+
| Ending Stocks | 908   | 1060     | 958    | 1110  | 0    | 1160   |
+---------------+-------+----------+--------+-------+------+--------+
| **TOTAL       | **3   | **3200** | **     | **3   | *    | **     |
| D             | 008** |          | 3058** | 260** | *0** | 3360** |
| ISTRIBUTION** |       |          |        |       |      |        |
+---------------+-------+----------+--------+-------+------+--------+

The government guaranteed purchase price for locally grown wheat was
decreased from

\$400 per metric ton to \$266.67 per metric ton in July 2005. However,
the net pay to farmers is \$246.67 after accounting for Zakaah
(obligatory charity) and deductions for foreign matter.

In 2005, the government allowed six local shareholding agricultural
companies to produce 300,000 metric tons of wheat for delivery to GSFMO.
The production quota for large farmers could be increased to up to
600,000 metric tons annually in the next few years depending on the
total quantity of wheat produced by small farmers and the ability of the
large farmers to increase their wheat production area. It is worth
mentioning that large shareholding agricultural companies were excluded
from receiving government subsidies on wheat and barley production in
1993.

According to the GSFMO, local wheat production this crop season is
forecast to increase by about five percent compared to the last year's
production level of 2.1 million metric tons. The main reported reasons
for the expected increase in wheat production is the capability of both
large and small producers to meet their individually assigned GSFMO
production quotas.

## 2. Wheat Imports

Saudi Arabia does not export or import wheat or wheat flour, with the
exception of insignificant quantities of mixed wheat flour for special
baking needs. Some Saudi based grain importers sometimes import wheat
from the U.S. for exporting to nearby countries. Last year's expectation
that a large number of small farmers would exit wheat production, due to
the 33 percent reduction in the government wheat purchase price, did not
materialize. Both small farmers and share holding companies were able to
produce their quotas, eliminating the need for imported wheat last year
and in the near future.

The Saudi government has continued to hold talks with World Bank
officials concerning privatization of the country's six flourmills. The
total combined milling capacity of the six mills is about 6,000 mt of
wheat per day. Another sign of the government's privatization intent was
its decision last year to reduce the import tariff on wheat from 100
percent to 25 percent.

# III. Overview of the Kingdom's Rice Market

No rice is produced in the Kingdom. In Calendar Year (CY) 2005 Saudi
Arabian rice imports were estimated at 1,019,138 metric tons, a decrease
of more than 2 percent compared to CY 2004. Imports in CY 2006 are
forecast to increase by 4 percent compared to same period last year
because of lower carry over stock. The huge increase in imports in
recent years compared to CY 2002 level of 852,134 mt were attributed to
a strong consumer demand mainly due to the high population growth rate
of 3.5 percent, increased number of pilgrims that come to Mecca (more
than five millions pilgrims come to Mecca each year to perform Ummra and
Hajj rituals). Also, the Saudi government procures rice locally for food
donations to nearby countries affected by natural disasters

Since rice is a staple food in the Kingdom, the Saudi government does
not impose import tariffs, providing Saudi traders the opportunity to
re-export imported rice to nearby destinations.

## 1. Production, Supply and Demand Table (PSD) for Rice

+----------------+--------+--------+--------+-------+-------+--------+
| **PSD Table**  |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| **Country**    | *      |        |        |       |       |        |
|                | *Saudi |        |        |       |       |        |
|                | Ar     |        |        |       |       |        |
|                | abia** |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| **Commodity**  | *      |        |        |       |       |        |
|                | *Rice, |        |        |       |       |        |
|                | Mi     |        |        |       |       |        |
|                | lled** |        |        |       |       |        |
|                |        |        |        |       |       |        |
|                | *      |        |        |       |       |        |
|                | *(1000 |        |        |       |       |        |
|                | MT)**  |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
|                | 2004   | R      | 2005   | Est   | 2006  | Fo     |
|                |        | evised |        | imate |       | recast |
+----------------+--------+--------+--------+-------+-------+--------+
|                | USDA   | Post   | USDA   | Post  | USDA  | Post   |
|                | Of     | Es     | Of     | Est   | Off   | Es     |
|                | ficial | timate | ficial | imate | icial | timate |
|                | \      |        | \      |       | \[    |        |
|                | [Old\] | \      | [Old\] | \[    | Old\] | \      |
|                |        | [New\] |        | New\] |       | [New\] |
+----------------+--------+--------+--------+-------+-------+--------+
| Beginning      | 150    | 300    | 515    | 325   | 555   | 284    |
| Stocks         |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| TOTAL Imports  | 1500   | 1045   | 1250   | 1019  | 0     | 1060   |
+----------------+--------+--------+--------+-------+-------+--------+
| Jan-Dec        | 1250   | 1045   | 1000   | 1019  | 0     | 0      |
| Imports        |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| Jan-Dec Import | 0      | 94     | 0      | 0     | 0     | 0      |
| U.S.           |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| **TOTAL        | **     | **     | **     | **1   | **    | **     |
| SUPPLY**       | 1650** | 1345** | 1765** | 344** | 555** | 1344** |
+----------------+--------+--------+--------+-------+-------+--------+
| TOTAL Exports  | 60     | 20     | 60     | 20    | 0     | 20     |
+----------------+--------+--------+--------+-------+-------+--------+
| Jan-Dec        | 60     | 20     | 60     | 20    | 0     | 20     |
| Exports        |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| TOTAL Dom.     | 1075   | 1000   | 1150   | 1040  | 0     | 1082   |
| Consumption    |        |        |        |       |       |        |
+----------------+--------+--------+--------+-------+-------+--------+
| Ending Stocks  | 515    | 325    | 555    | 284   | 0     | 242    |
+----------------+--------+--------+--------+-------+-------+--------+
| **TOTAL        | **     | **     | **     | **1   | **0** | **     |
| DISTRIBUTION** | 1650** | 1345** | 1765** | 344** |       | 1344** |
+----------------+--------+--------+--------+-------+-------+--------+

## 2. Saudi Rice Imports

India accounted for 70 percent of all rice imports to Saudi Arabia in CY
2005, distantly followed by the U.S., Pakistan and Thailand. Basmati
(white and parboiled) and Parimal rice are the leading Indian varieties
imported. Based on data from Indian customs, Indian rice exports to
Saudi Arabia in CY 2005 decreased by 19 percent compared to the CY 2004
import figure. According to local importers, the main reasons for the
decline in Indian rice exports last year were an adequate stock
carryover from CY 2004, increase in U.S. rice exports and reduction in
rice re-exports to nearby countries mainly Iraq and Kuwait. Basmati is
still the dominant Indian rice variety in the Kingdom. However, its
market share went down significantly in recent years in favor of a less
expensive and marginal quality Parimal variety.

U.S. rice exports to the Kingdom in CY 2005 increased by 12 percent
compared to CY 2004. Local rice importers attribute the increase in the
U.S. rice exports to price competitiveness of U.S. rice last year.
Importers expect U.S. rice imports to farther increase this year if the
price competitiveness is maintained.

## 3. Reasons for Increased Demand for Indian Rice

Saudi rice importers anticipate that Indian rice exports continue to
benefit from the growing Saudi rice market. A significant percentage of
Saudis and expatriates with low incomes have shifted from U.S. rice to
Indian Parimal rice (PR 106). Indian Parimal parboiled rice was
introduced in the Kingdom 12 years ago and has rapidly gained in
popularity. Parimal rice is by far the least expensive parboiled rice
available in the Kingdom. Retail price of 45 kg of Parimal rice as of
March 2005 was \$15 compared to up to \$25 per 45 kg for a dominant U.S.
brand parboiled rice sold in the Kingdom. Parboiled Indian basmati rice
(sella basmati rice) is sold for up to \$41.50 per 45 kg.

The Saudi rice trade acknowledges the superior quality of U.S. rice
compared to Parimal but concedes that the vast majority of consumers are
unable to ascertain the difference between the two varieties. Sources
allege that illicit traders often pass off Indian rice as American rice,
by bagging Indian rice in bags associated with U.S.- origin rice. This
practice, according to the trade, has been going on for several years,
but is virtually impossible to stop.

The availability of dozens of brands of Basmati and non-Basmati rice,
mainly from India, on the Saudi market has greatly increased competition
at the expense of U.S. brands. It appears that there are less than 10
different U.S. brands on the Saudi market.

While Indian and other rice are perceived as \"natural\" rice, U.S. rice
has been frequently perceived as \"manufactured,\" according to the
Saudi rice trade. U.S. rice companies should work hard to dispel this
myth.

## 

## Trade Matrix

The table below shows exports of rice to Saudi Arabia from leading
suppliers for calendar years 2005 to 2002 based on supplying countries
export data. The figures are in metric tons.

  ---------------------- --------------- --------------- --------------- -------------
  **Supplying Country**  **CY 2005**     **CY 2004**     **CY 2003**     **CY 2002**

  India                  715,000         754,456         820,000         600,000

  US                     105,825         94,002          110,012         93,398

  Pakistan               95,000\*        85,501          80,739          70,427

  Thailand               53,313          70,720          45,427          58,309

  Other \*               50,000          40,000          30,000          30,000

  **Total**              **1,019,138**   **1,044,679**   **1,086,178**   **852,134**
  ---------------------- --------------- --------------- --------------- -------------

**Sources: \*Trade Estimates**