Anis Alam, a key player in Saudi Arabia’s grain supply sector, gives an exclusive interview to us, outlining the country’s changing food security strategies. In this in-depth conversation, he discusses the challenges and opportunities facing the grain industry, how Saudi Arabia is adapting to global trends, and the critical steps being taken to ensure sustainable supply chains for the future.
Saudi Arabia plays a pivotal role in the grain markets of the Middle East due to its strategic position as a key importer and distributor of essential agricultural commodities. With its growing population and limited arable land and water resources, the country is heavily reliant on grain imports to meet its food and feed needs. As a result, grain trade has become a central element of Saudi Arabia’s food security strategy.
Anis Alam
One of the leading companies shaping this vital sector is ARASCO (Arabian Agricultural Services Company). Established as a major player in the region’s agricultural landscape, ARASCO is dedicated to securing the supply of grains and other essential food ingredients for Saudi Arabia. In this first issue of the new year, we interviewed Anis Alam, the Chief of Grain Procurement at ARASCO, to discuss the developments in Saudi Arabia’s grain industry and the country’s food policies. Mr. Alam, with nearly 40 years of experience in the grain industry, has been instrumental in shaping the Kingdom’s procurement strategies. In our conversation, he highlighted the challenges Saudi Arabia faces in the global grain market, particularly regarding price volatility and geopolitical risks. Despite these challenges, Alam emphasized how the country has successfully managed its grain procurement through strong relationships with key global suppliers and investments in logistics infrastructure. As Saudi Arabia’s population continues to grow and food demand rises, Alam believes that the country’s food security strategy must evolve to address these emerging needs.
Mr. Alam, could you share a brief overview of ARASCO’s core operations and its role in the country’s agricultural sector? What are the key capacities and capabilities?
ARASCO is a leading food security enabler in Saudi Arabia and serving as a major national food company in the GCC region. We are one of the largest animal feed producers in the Middle East, with a production capacity of approximately 4.5 million metric tons (MMT) annually. Through its subsidiary, MEFSCO, ARASCO provides high-quality food ingredients and solutions, including glucose and starch, to the Middle Eastern market. We are one of the fastest-growing chicken producers in Saudi Arabia, processing about 600,000 birds to meet the country’s poultry demand. ARASCO boasts a grain storage facility with a capacity of about 500,000 metric tons (KMT) at Dammam Port, ensuring the secure handling and storage of imported agricultural commodities. And ARASCO Logistics handles and transports over 5 million metric tons of agri-bulk commodities annually. The company’s feed mills are strategically connected by rail, enhancing distribution efficiency across the region.
ARASCO plays a vital role in Saudi Arabia’s food and feed industries. How would you describe the company’s market position in the grain supply chain both locally and regionally?
ARASCO plays a pivotal role in enhancing Saudi Arabia’s food security by integrating various aspects of the agricultural supply chain—from production and processing to storage and logistics. Locally, we are a key player, importing a minimum of 3.5 million metric tons (MMT) of various grains and meals annually to support the country’s needs.
We are a pioneer in feed and food security within Saudi Arabia and by far the largest player in the MENA region. In addition to meeting domestic demands, we export fish feed, as well as vitamins and mineral premixes, to other countries. Our glucose syrup and starch are also exported to a wide range of international markets, further solidifying our position as a leader in the region’s grain supply chain.
ARASCO’S VISION FOR GROWTH AND EXPANSION
ARASCO has a strong presence in the Middle East. Are there any plans for further expansion or partnerships in regional or international markets?
Certainly, ARASCO enjoys a dominant market share in the Middle East, and we are committed to building on this strong foundation. As part of our forward-looking strategy, we are actively exploring opportunities for expansion and partnerships in both regional and international markets.
SAUDI ARABIA’S GRAIN PRODUCTION AND IMPORT OUTLOOK
Can you provide insights into Saudi Arabia’s wheat, barley, and corn production, consumption, and imports outlook? What are the expectations for domestic wheat production in the next season?
Saudi Arabia is heavily reliant on imports to meet its grain and feed demand due to limited domestic production capabilities, primarily caused by water scarcity. The country’s annual import requirements include approximately 5 million metric tons (MMT) of corn, 3.5 MMT of milling wheat, 4 MMT of barley, 2 MMT of soybean meal and 6 MMT of various types of fibers in different forms.
Saudi Arabia’s focus continues to be on securing its grain supply through strategic imports, ensuring food and feed security. This includes maintaining robust infrastructure, such as advanced grain storage facilities, and fostering international trade partnerships to ensure a stable and reliable supply chain.
What is the anticipated volume of staple grain imports needed to meet next season’s demand? 5
For the upcoming season, the anticipated import volumes include approximately 5 million metric tons (MMT) of corn, 3.5 MMT of wheat, and 4 MMT of barley. In addition to these core staples, Saudi Arabia also imports significant quantities of various fibers and feed ingredients to support its livestock and poultry sectors.
THE MAJOR SHIFTS IN THE GRAIN AND FEED INDUSTRY
You have been in the grain and feed industry for almost 40 years. What significant changes have you observed during your professional career? What trends stand out in the industry?
When I started, we were handling business manually. Then, over the years, we saw the introduction of fax machines, emails, WhatsApp, and other forms of digital communication, including social media. This transformation in communication has been one of the most significant changes.
The second major change is in business trends. When we launched our feed mill in Saudi Arabia around 1985-1986, many people laughed at us. However, our management and shareholders had full confidence in establishing a quality feed manufacturing system in the country. We were committed to contributing to food and feed security in the region. It wasn’t just about setting up a feed mill; it also involved creating infrastructure for food testing laboratories, grain storage, logistics, and educating customers. Over time, we’ve seen the industry mature, with concepts like futures trading and premium pricing becoming integral parts of the business. Major global players like Cargill and Bunge entered the market, bringing significant investments into the region. Consumer behavior also changed—people became more educated and started valuing quality over price. They are now willing to pay a premium for high-quality feed and food.
Today, we proudly say that we revolutionized the compound feed market. We paved the way for smaller feed manufacturers in the area, simplifying their processes and making their operations more efficient.
KEY GRAIN MARKET CHALLENGES
What are the biggest challenges Saudi Arabia faces in the current global grain market, such as price fluctuations and geopolitical tensions?
Water scarcity remains a critical concern, limiting domestic grain production and increasing dependence on imports. The biggest risk lies in supply chain disruptions caused by wars or other events. For instance, the Russia-Ukraine conflict and instability in the Red Sea region have added $25 to $50 in extra freight costs per shipment due to higher insurance premiums and war risk surcharges, increasing financial losses. Port congestion at both loading and discharge points further compounds these issues, causing delays and inefficiencies.
While global grain production has been excellent in recent years due to favorable weather conditions, the main challenge is not production but rather the increased freight costs, insurance premiums, and geopolitical risks affecting transportation. Despite these obstacles, Saudi Arabia has managed these challenges wisely through effective external policies and by maintaining strong relationships with key countries in the grain market. This strategic approach has helped mitigate the impact of these risks and maintain a stable supply of grain to meet the country’s needs.
Saudi Arabia has made efforts to increase domestic wheat production while maintaining sustainable water usage. How successful have these efforts been, and what are the key achievements so far?
Currently, the country produces approximately 1 million metric tons (MMT) of wheat, 500,000 metric tons (KMT) of barley, and 1 MMT of corn locally. A significant shift is expected in the coming years, particularly in barley imports. With the growing adoption of compound feed solutions, barley imports are projected to decrease to around 2 MMT within the next two years.
What role does government policy play in supporting local grain production? Are there specific incentives, subsidies, or initiatives aimed at boosting domestic production?
Government policy plays a crucial role in supporting local grain production. Currently, there are incentives available for end-users, though not directly for feed manufacturers anymore. However, the government actively facilitates smooth trade flows and ensures a consistent supply of raw materials at all times.
Saudi Arabia boasts one of the best agricultural policies, which is regularly improved to favor the industry. The government is fully committed to supporting the sector by offering low-interest or, in some cases, interest-free loans to establish factories and enhance logistics infrastructure. These measures aim to strengthen the country’s agricultural and grain production capabilities.
Saudi Arabia’s population growth and increasing demand for food and livestock feed are driving grain consumption. How do you see these trends evolving in the coming years?
Saudi Arabia is currently experiencing a population growth of nearly 2% annually. Along with this, there has been a significant increase in awareness regarding health and food quality. As a result, the demand for high-quality food has been rising. We expect the production of compound feed to grow by a minimum of 5% to 10%, driven by improvements in quality and increased domestic consumption.
HOW SAUDI ARABIA IS STRENGTHENING ITS GRAIN SUPPLY CHAIN
What improvements have been made to the country’s grain logistics and storage infrastructure (e.g., ports, silos) in recent years to support efficient grain imports and distribution?
Saudi Arabia has made significant improvements to its grain logistics and storage infrastructure in recent years to enhance the efficiency of grain imports and distribution. Both trucks and trains are available for transportation, and the country is planning to create a comprehensive rail network to connect all regions. This initiative will help make logistics more cost-effective and robust.
Diesel prices for trucks remain stable, contributing to consistent transportation costs. Additionally, private companies are actively investing in building sufficient storage facilities at ports and within the country to meet growing demands. The government is also making substantial investments abroad to support the agricultural sector and ensure a steady supply of agricultural products.
WHAT IS STRATEGY FOR RESILIENT GRAIN SUPPLY CHAINS
Considering the dominance of suppliers like Russia and the EU, what strategies does Saudi Arabia employ to diversify its supplier base to mitigate risks associated with geopolitical tensions or market fluctuations? Are there new regions you are exploring to ensure a resilient supply chain?
Saudi Arabia employs a diversified approach to mitigate risks associated with geopolitical tensions and market fluctuations, enabling it to source grains from a wide range of suppliers. The country imports from China, Russia, Ukraine, Europe, and other regions, thanks to its open and friendly policies towards all farming nations. This strategy is supported by the government’s excellent policies that ensure the stability of the feed and food grain supply chain.
Moreover, Saudi Arabia believes that African countries possess significant agricultural potential, and there is a keen interest in exploring these markets. Countries like Nigeria, Zimbabwe, Somalia, and others in East and West Africa have fertile lands and favorable climates. The main challenge, however, is political instability. For example, Sudan showed promise when it became relatively stable for a period. We were even offered 10,000 hectares of land for cultivation. Unfortunately, the lack of long-term political stability prevented further development. If African nations can achieve stability and attract investments, they have the potential to become the breadbasket for the Middle East and Gulf regions.
Saudi Arabia is investing in grain production outside its borders. Which countries are you investing in?
We’ve made substantial investments in countries like Sudan. Additionally, Saudi investors have acquired farmland in Ukraine, Kazakhstan, Russia, Australia, and various parts of Europe, including Romania and Italy. There are also significant holdings in Argentina. This diversification ensures that investments are spread across different regions and weather conditions.
Is Saudi Arabia pursuing a long-term vision for partial self-sufficiency in key grains, or will import dependency remain a cornerstone of its food security strategy? What is the long-term vision for local grain production?
Saudi Arabia faces a significant water scarcity issue, which means that the country will remain dependent on imports. Despite this, the government is committed to ensuring food security by pursuing growth in collaboration with other nations. Efforts to support food security include substantial investments both domestically and internationally, with partnerships involving both the government and the private sector. While full self-sufficiency in key grains may not be feasible due to water constraints, the focus remains on maintaining steady growth and securing a resilient food supply.
Saudi Arabia has invested heavily in modern milling and processing facilities. What is the country’s current processing capacity, and are there plans for further expansion?
More than 5MMT of milling capacity and have been privatized now for better efficiency of production. The plan is to open up this sector to private completely and thus we can compete in the market for better quality of food and feed as well. New ports are being developed to avoid congestions at the old ports and improving efficiency of discharging materials. Old ports are also being well equipped with modern discharging/storage facilities
THE STATE OF SAUDI ARABIA’S FEED INDUSTRY
Saudi Arabia has one of the largest feed markets in the Middle East. Can you provide an overview of the current state and scale of the feed industry? Are there any notable trends or challenges that stand out for the industry?
The feed industry in Saudi Arabia is well-established and protected, with extensive experience in the sector. The primary focus remains on serving the nation and community, irrespective of profit or loss, a sentiment strongly supported by the government. Saudi Arabia has a compound feed production capacity of around 8 million tons. This sector is also growing steadily.
The total feed market is approximately 22 million metric tons, catering to a diverse livestock population, including 1.8 million camels, 1.5 million sheep, 1.2 million goats, 500,000 milking cows, and around 1.2 billion birds annually. This sector is highly consolidated, and there has been a noticeable shift in the livestock sector as it increasingly moves toward professional private farming, a significant departure from the previous practice of more transient farming methods.
How does ARASCO ensure the quality and safety of imported grains, especially when sourcing from multiple international suppliers with varying standards?
ARASCO ensures the quality and safety of imported grains through a rigorous process of checks at both the loading and discharge ports. The government authorities also work diligently to guarantee that only the best quality materials are entering the country. Any substandard materials are promptly rejected. ARASCO operates a sophisticated lab, IDAC LAB, which plays a crucial role in analyzing raw materials at various borders. We take great pride in saying, “In your plate of food, ARASCO is available by any means,” reflecting our commitment to quality and safety throughout the supply chain.
Last question: What changes have you observed in food consumption habits in Saudi Arabia?
The younger generation is very health-conscious and selective about their diets. They focus on balanced nutrition, choosing quality meat, fish, and other proteins. Additionally, family sizes are shrinking as younger couples opt to have fewer children compared to previous generations. These shifts reflect a broader trend seen in other educated societies, with increased awareness about health and food quality.