RESTRICTED
WORLD TRADE WT/ACC/SAU/19
23May1997
ORGANIZATION(97-2154)
Original: English
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Note onAgriculture
ThePermanentMissionoftheKingdomofSaudiArabiahastransmittedthefollowinginformation
onSaudi Arabia 'sagricultural policy withtherequest thatitbetransmitted tomembers oftheWorking
Party.
_______________
AGRICULTURE
Introduction
Working Party members haveposed alargenumber ofquestions onSaudi Arabia 'sagricultural
policy. Replies andother descriptive material arescattered throughout anumber ofdocuments. This
up-to-date consolidation hasbeenprepared tofacilitate discussion intheWorking Party.
1. RoleofAgriculture intheEconomy -Policy Goals
Inlinewithitsoverall primary economic goalofstructural diversification andlowered
dependence onpetroleum, Saudi Arabia hassought topromote thedevelopment ofagriculture, including
livestock andcrops. Although itremains highly dependent onimported foodstuffs, Saudi Arabia has
significantly increased agricultural production. Agriculture, forestry andfishing nowaccount forabout
4.5percentofGDP.
AsaGeneral Objective oftheSixthDevelopment Plan, Saudi Arabia willcontinue torestructure
theKingdom 'seconomy through continuing diversification oftheeconomic base, particularly through
greater emphasis onindustry andagriculture.
Fortheforeseeable future, themain agricultural crops willremain wheat andbarley which
willbemarketed primarily tosatisfy growing demand inthedomestic market.
2. Saudi Arabia -AMajor NetFood Importer
Despite development ofitsagricultural sector, Saudi Arabia remains amajor netfoodimporter.
Itsimports offoodstuffs in1994 were US$3.01 billion compared withexports ofUS$0.4 billion, a
netdeficit ofUS$2.6 billion. In1992 and1993 thedeficits were respectively US$3 billion and
US$2.6 billion.WT/ACC/SAU/19
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3. Support Measures
(a) Tariff levels
Thestructure ofduties onagricultural items iscurrently thesame asitisfortheindustrial
sector. Duties onafewitems havebeenestablished at20percent. Otherwise agricultural items fall
intothe"general" category of12percentorarepermitted entry dutyfree. Thedistribution ofmajor
items intothese categories isasfollows:
20percent: poultry meatandtableeggs
12percent: wheat, milk, butter, cheese, potatoes, beans onion andmostother vegetables
andaswellasfruits
0percent: beefandmutton (fresh, frozen andchilled), barley, maize, rice,soyacake,
coffee andtea
Theweighted average tariff foragricultural products in1994 was7.5percent.
(b) Import andexport restrictions
Toprotect atraditional domestic crop, imports ofdates arecontrolled.
Acontrol isalsomaintained onbulkpasteurized milk; thepurpose ofthisrestriction isto
prevent imported milkfrom being mixed withdomestic production andbeing soldtoconsumers in
small containers as"fresh" milk.
Otherwise, allagricultural products maybeimported without restriction. (Inthecaseofwheat
thereisarequirement thatimports be"denatured" withadyetoavoid theriskthattheimported product
willbepresented as"domestic forthepurposes ofobtaining asubsidy.)
GSFMO has,since 1995, beenobliged byaMinisterial Directive nottoexport wheat. As
amatter ofpractice, GSFMO sellsalldomestically produced barley onthedomestic market.
Private traders mayexport grainorgrainderivatives. However, anexport control ismaintained
toensure thatthere arenoexports ofwheat flourorbarley forwhich aconsumer offeedsubsidy has
beenpaid.
(c) Domestic support toagriculture
Revised tables ondomestic support toagriculture in1992 to1994 havebeencirculated in
document WT/ACC/SPEC/SAU/1 andCorrigendum 1.
These tables show thatsupport toagriculture between 1992and1994hasdeclined inabsolute
terms andrelative tototalagricultural production. In1992, domestic support toagriculture amounted
to25.14 percentoftotalagricultural production; by1994thepercentage haddeclined to18.9percent.
Over thelasteightyears theratioofagricultural support tothevalue ofproduction hasfallen
significantly; from 37.1percentin1986 to18.9percentin1994.
TheGovernmentofSaudiArabiacloselyfollowedtheUruguayRoundnegotiationsasanobserver
and,mindful ofeventual accession totheGATT/WTO, ithadalready setinmotion apolicy and
programme ofreduction indomestic support levels. Inparticular, theproducer guaranteed price forWT/ACC/SAU/19
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wheat hasbeencutfromUS$533 pertontoitscurrent levelofUS$400 perton(26percentreduction).
Asaconsequence production ofwheat hasdeclined andSaudi Arabia hasexited theexport market.
(d) Export subsidies
Saudi Arabia provides noexport subsidies intheagriculture sector. Wheat purchased bythe
GSFMO atguaranteed producer prices was,until1994, disposed ofinboththedomestic andexport
markets. However production, notexportation, wasthecondition forreceiving theguaranteed price.
Asnoted above, theGSFMO isnowunder Ministerial instruction nottoexport wheat orflour.
3. Preparing forAccession
TheKingdom ofSaudi Arabia would beprepared tobindtariffs onallagricultural products
(except certain items ofwhich theimport anddomestic production isbanned forreligious reasons).
Agricultural items willbeincluded inthegeneral tariff offer tobesubmitted shortly.
Inpreparing itsSchedule offers onbothtariffs anddomestic support, theGovernment ofSaudi
Arabia willtakeintoconsideration thatSaudi Arabia hasarelatively lowagricultural baseandthat
producers intheKingdom operate inaparticularly harsh climate andenvironment. Moreover, support
toagriculture isneeded tomaintain rural living standards soastoavoid further migration tourban
areas.