Agriculture In Saudi Arabia - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Agriculture In Saudi Arabia - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Saudi Arabian agriculture market is projected to register a CAGR of 4.5% during the forecast period (2022-2027).

The global COVID-19 pandemic had a minimal impact on the agriculture market in Saudi Arabia. The capital-intensive processing systems for staple crops have led to avoiding labor shortages and ensuring production efficiency. The Kingdom has the largest storage systems for wheat and flour, with a storage capacity of more than 3.3 million metric ton, and the efficient supply chains ensuring to meet the daily consumer needs have resulted in mitigating the COVID-19-related disruptions. Despite the pandemic and its effect on the global supply chain, the Kingdom overcame it through the strength and durability of food and agricultural security.

Saudi Arabia is the largest market for agriculture in the GCC region, and the demand for agriculture is higher at present in the country, owing to changing consumption patterns of consumers and increasing awareness. The increasing presence of superstores and hypermarkets has increased the access to high-quality agricultural products for the Saudi population. As many of these retailers adopt strategies, including optimal pricing strategies to capture the market, the demand among consumers is increasing. The urban population is gradually becoming brand conscious and is becoming aware of the origin and type of food consumed.

Agriculture in Saudi Arabia TrendsThe Push Toward Water Conservation is Driving the Market

The Saudi government has encouraged farmers to participate in alternative sustainable agricultural activities, such as greenhouse farming and implementing advanced drip irrigation practices, to produce fruits and vegetables. This promotes the cultivation of different varieties of fruits, vegetables, and grains for the sustainable development of the nation.

As per the FAO, in 2020, the total area harvested under fruits was 238,588 ha, up from 202,203 ha in 2019. Crops like dates, citrus, watermelon, grapes, tomatoes, and cabbages are majorly cultivated in the country, with dates and tomatoes holding the major share. The increased arable land year after year shows an increase in the need for government initiatives to meet the growing demand.

The progress made by the Saudi Arabian government in the fruits and vegetable sector in recent years has been largely due to an array of government programs. The Ministry of Environment, Water, and Agriculture is primarily responsible for agricultural policy in the country. Saudi Arabian Agricultural Bank (SAAB) is a government agency that offers subsidies to small and medium land holding farmers. It also credits interest-free loans and supports the growers financially.

In May 2019, the Saudi Agricultural and Livestock Investment Co. (SALIC) invested in Hummingbird Technologies, an advanced crop analytics company that is indulged in generating high-resolution maps by using artificial intelligence, satellite imagery, and drone technology that can give farmers early detection of crop stress, disease, weed issues, and early yield prediction. Such initiatives will help the country to be productive and drive the market further. Therefore, the increased focus of the government on food security initiatives in the country is anticipated to drive the growth of the agricultural sector in the country.

Shift Toward Healthy Diet

The Saudi Arabian fruit market is driven by the increasing disposable income of the Saudi population, increasing health concerns, growing awareness about the positive benefits of consuming fruits, and accelerating urbanization trends.

There is a rising trend of more and more people buying processed fruits and fruit snacks, as opposed to fresh fruit produce. The canning of fruits is the largest domestic business segment, accounting for nearly half of the local earnings concerned with the fruit market. The manufacturing of fruit juice is the second-largest source of revenue for local producers, occupying one-third of the total revenue.

Dates are among the prominent fruit in Saudi Arabia due to their use as a common ingredient in local dishes. They occupy a prominent place in the diet of the Muslims during Ramadan, where they are traditionally eaten every evening for breakfast, which, in turn, leads to high consumption demand during the Ramadan season.

Although dates are consumed predominantly at a higher rate, with the increase in diversity of the local population, with many expatriates living in Saudi Arabia, people have shifted toward other fruits and vegetables, such as watermelon, grapes, citrus fruits, and tomatoes. This has also increased the country’s reliance on imports.

With increasing urbanization and higher disposable incomes in the country, and increased awareness about healthy diets, people are shifting toward healthier diet plans, which include fresh fruits and vegetables. Saudi Arabia relies on imports from other countries to cater to domestic demand.

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