June 24, 2010

 

Saudi expands silo capacity for wheat imports
 

 

Saudi Arabia's grains authority plans to increase the capacity of its silos by 21% before the end of 2012 as the kingdom prepares for growing reliance on wheat imports.

 

Since 2008 the desert country's authorities have sought to save water by reducing the amount of wheat they buy from local farmers by 12.5% a year, abandoning a 30-year wheat cultivation plan that had helped the country cover its domestic needs.

 

The policy has turned Saudi Arabia's state-run Grain Silos and Flour Mills Organisation (GSFMO) into one of the biggest new buyers in the international grains market.

 

Meanwhile wheat farmers have been abandoning cultivation of the crop at a faster rate than the annual purchasing decline the authorities had targeted.

 

Waleed Al-Khariji, GSFMO's managing director, said Saudi Arabia's grain silos now have a capacity of around 2.5 million tonnes.

 

Within a month the organisation would award tenders to expand this capacity by 530,000 tonnes, Khariji said.

 

"We have a project in Mecca for 250,000 tonnes and two others in Jeddah and Dammam that will add 140,000 tonnes at each of the two locations.

 

"Such projects take 26 months to be executed. We expect to start construction works within a month," he said.

 

The expansion follows a recommendation by the advisory Shura Council - a quasi-parliament in the absolute monarchy - to raise storage capacity to ensure smooth domestic supplies, Khariji said.

 

Jeddah, on the Red Sea coast, and Dammam on the eastern coast, are already Saudi Arabia's main shipping hubs. The new silos being built in Mecca aim to cater to the needs of a region that attracts at least four million pilgrims each year.

 

GSFMO also plans to add a third shipping hub for grains in the southern city of Jazan, Khariji said. "It will have a 120,000-tonne capacity. We will soon tender for the execution of the silos project in Jazan, which will be our third hub".

 

Saudi Arabia needs an estimated three million tonnes of wheat annually. GSFMO's policy is to keep wheat stocks that cover at least six months, with three weeks' supplies of flour, Khariji added.

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