It seemed somewhat bizarre that the desert kingdom of Saudi Arabia grew enough wheat to feed its 28 million citizens.
Even more bizarre was that it could produce a surplus big enough to join the ranks of world wheat exporters in the 1990s.
That’s what production subsidies of $933 a tonne will do.
But now the government has decided to get out of irrigated wheat production in a bid to preserve shrinking underground water reserves.
It will start reducing purchases from farmers by 12.5 percent annually beginning this year, a policy that will drive down Saudi prices and production.
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The goal is to rely almost entirely on imports by 2016, while maintaining a small base of production for emergencies.
Among the beneficiaries of that decision are western Canadian wheat growers.
In recent published reports, officials with Saudi Arabia’s grain authority said it has bought more than 500,000 tonnes of wheat from Canada for delivery over the next few months.
The Canadian Wheat Board, following its usual practice, declined to confirm or deny specific sales.
However, Bruce Burnett, director of market analysis for the board, acknowledged the CWB is anxious to do business with the Saudis.
“I certainly think it’s a market that we’re very interested in,” he said.
“We feel they will be looking for some higher quality wheat and that’s probably a niche we can fill over the next few years.”
Saudi Arabia began subsidizing wheat production in the 1970s in an effort to achieve wheat self-sufficiency in 30 years.
At that time, production was 25,000 tonnes. By 1993 it had peaked at 4.5 million tonnes, with yields of 3.5 tonnes per acre, and the country began exporting to a number of countries, including the former Soviet Union.
Annual production settled in at around 2.5 million tonnes in recent years, enough to meet domestic demand.
Burnett said he expects the Saudis will import up to two million tonnes of wheat and durum annually and that it will be a competitive market, with wheat sellers from around the globe jockeying for a share.
“I think their millers will be evaluating different qualities from suppliers and trying to figure out what best meets their requirements,” he said. “Hopefully there will be an opportunity for us.”
The U.S. Department of Agriculture has projected the Saudis will import 750,000 tonnes of wheat in 2008-09. The previous 10-year average is 62,000 tonnes.
Two separate reports of Canadian sales were published in March.
On March 16 the head of the Saudi grains authority was reported to confirm that the kingdom had bought 385,000 tonnes of Canadian wheat in January.
In late March Saudi Arabia tendered to buy 500,000 tonnes of wheat and on March 31 confirmed it bought 495,000 tonnes of durum, 14 percent protein, mostly from Canada, but a small amount from Germany.
