MSU LIBRARIES ” RETURNING MATERIALS: P1ace in book drop to remove this checkout from your record. FINES wiII be charged if book is returned after the date stamped below. menses AGRICULTURAL DEVELOPMENT IN SAUDI ARABIA WITH A PRIMARY FOCUS ON WHEAT PRODUCTION BY Turky M. Al-Sadairy A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Resource Development 1984 COPYRIGHT BY TURKY MQ.ALrSADAIRY 1984 ABSTRACT AGRICULTURAL DEVELOPMENT IN SAUDI ARABIA WITH A PRIMARY FOCUS ON WHEAT PRODUCTION BY Turky M. Al-Sadairy Saudi Arabia used to be a food self-sufficient coun- try, but has become a food deficient country even though the agricultural sector continues to employ the highest percen- tage of the civil labor force. The research considers why the country declined from food self—sufficiency to become the leading agricultural importer in the Third World. Re- search objectives were to examine gains and declines in pro— ductivity under the country's agricultural development plans and the status of wheat production as an example of agri- cultural development. Data used for this research were secondary data from various government and international sources. Analysis em- ployed simple quantitative and descriptive methods. Findings of the study indicated that agricultural pro- duction is increasing rapidly, but not as fast as the increase in demand for agricultural products. Saudi Arabia is capable of re-gaining self-sufficiency in some of its agricultural products, such as wheat, but far from meeting all of its food needs. DEDICATION To my father, Saul, who passed on early in his life but who would be proud of this achievement. ii ACKNOWLEDGEMENTS Without the assistance of several people, completion of this study would have been impossible. Among those people I would like to especially thank my graduate advisor and chairman of my advisory committee, Dr. Milton H. Steinmueller. His understanding provided a comfortable working environment for me. To him I express my sincere gratitude. I would also like to express my sincere appreciation to Drs. P.E. Nickel and Lee M. James for serving on my thesis committee. Special thanks go to the Ministry of Finance and National Economy in Saudi Arabia for giving me this oppor- tunity, and for financial support. Also, I thank my friends and colleagues for their encouragement and support. Special thanks also go to the editor of this thesis, Kay J. Kay. Finally, I extend special recognition and deep love to my mother and my brother, Abdullah M.Al-Sadairy. Last, but by no means the least, my special gratitude and deep love to all my immediate family-—my wife, Nourah, and my children, Areej, Najla and Mohammed, for their love, moral support and patience throughout my graduate work at Michigan State University. iii TABLE OF CONTENTS CHAPTER PAGE I. PROBLEM STATEMENT, OBJECTIVES AND METHODS.... l 1.1 Introduction.... ..... . ................... l 1.2 Problem Identification............. ..... . 2 1.3 Objectives of the Study.................. 6 1.4 Methods and Organization ................ . 7 II. SAUDI ARABIA IN PERSPECTIVE............. ..... 10 2.1 Introduction ..... . .......... . ............ 10 2.2 Location and Size........................lO 2.3 Population......... .................... ..l4 2.4 Climate..................................16 2.5 SOil........................... ...... ....17 2.6 Land Classification... ................ ...21 2.7 water Resources... .... .. .. . . . .. .. . .... ...23 2.8 Summary..... ..... ... ......... ............33 III. AGRICULTURAL SITUATION.......................34 3 1 Introduction............... ..... .........34 3 2 Major Agricultural Products ............. .35 3.3 Agricultural Land and Cropping Patterns..4l 3 4 Trade in Agricultural Products...........64 3 5 Factors Causing Increased Importation of Agricultural Products.................73 3.6 Factors Contributing to Increased Demand for Agricultural Products................76 3.7 Summary..................................85 IV. PAST DEVELOPMENT PLANS AND AGRICULTURAL POLICIES........O........OOOC................86 Introduction.............................86 First Development Plan (1970-1975).......88 The Second Development Plan (1975-1980)..9l The Third Development Plan (l980-l985)...96 Agricultural Subsidies and Credits ..... .100 Major Problems Facing Agricultural Development.............................lOS Production of Selected Agricultural Pro- ducts During the Five-Year Development Plans (1970-1984)coo-0000000000000...0.01.2]. bhbbbh O O‘UlnwaH p O \l CHAPTER PAGE V. .WHEAT PRODUCTION................................127 5.1 Introduction.... ...... .............. ........ 127 5.2 Programs of Wheat Production................127 5.3 Trends in Wheat Production From 1978 to 1983 ............................ . ........... 133 5.4 Wheat Real Prices........ ....... ............133 5.5 Cost and Benefit of Wheat Production in Saudi Arabia. ............ . ........... . ...... 135 5.6 Trade in Wheat..............................14l 5.7 Production Effects of the New Wheat Subsidy Program ...... ...... ........... ..............143 VI. SUMMARY, CONCLUSION AND RECOMMENDATIONS.........149 6.1 summary.................................O...149 6.2 conClUSion..................................159 6.3 Recommendations for Further Study ........... 160 APPENDICES................... ...... .............l61 ‘BIBLIOGRAPHY......O ...... .......................209 Hid LIST OF TABLES PAGE Land Area by Use in Saudi Arabia..............22 Cultivated Areas in the Various Estimates of the Kingdom (Areas in Hectares), 1395/96 (1975/76), Winter Temporary Crops.............43 Land Holding by Region in Saudi Arabia........45 Trends in and Indexes of Agricultural Output in Saudi Arabia, l950-l980.............48 Trends in and Indexes of Areas Under Actual Cultivation (1950—1979/80) in Saudi Arabia (In Hectares)....................50 Agricultural Productivities in Saudi Arabia, 1950-1979/80..................................52 Productivity of Wheat and Barley in Saudi Arabia, l950-l979/80..................... ..... 54 Tomato and Eggplant Productivity in Saudi Arabia, 1950-1979/80 ..... . ...... ......... ..... 55 Crop Patterns in Saudi Arabia, 1950 to 1979/80 (Areas in Hectares)...................58 Trends in and Indexes of Livestock and Poultry Raising in Saudi Arabia for Selected Years 1960-1980 (Q=number)....................60 Imports of Agricultural Commodities to Saudi Arabia for Selected Years 1950 to 1980, in Tons ...... . ................................. 66 Indexes of Agricultural Imports to Saudi Arabia for Selected Years, 1950 to 1980 (1950 = 100)..................................67 Trends in and Indexes of Livestock, Poultry, and Eggs Imports to Saudi Arabia (Q=Number)...70 Saudi Arabia Income Elasticity of Demand For Selected Food Commodities.... ........ .....79 Oil Production and Oil Revenues, 1938 to 1977 ........................................ 83 Growth of GNP in the Period 1966/67 to 1984/84 Annual Compound Growth Percent Per Year (In 1969/70 Prices)..... ........ .......... ..... ...84 Agricultural Subsidies: Saudi Arabia ......... 102 Incentives for Agricultural Production: Saudi Arabia ......... ........ .............. 103 General Credit Movement of the Agricultural Bank 1964/65 to 1982/83 (A. D. ): Saudi Arabia.104 PAGE Price Spreads for Various Marketing Operations Over Auction Price in Riyadh on February 20, 1977 (1397). Saudi Arabia.... ................... 112 Production of Selected Agricultural Commodities 1970-1983: Saudi Arabia (1,000 MT) .......... ....122 Increases in Agricultural Production of Selected Commodities: Saudi Arabia (1970:100)...123 The Amount of Wheat Subsidy and Production Quantities Anticipated ...................... . . . .130 The Shortage Capacity (Current and Intended of Grain Silos in S.A., by Location (1,000 tons)132 Flour and Animal Feed Production Capacity by Location in Saudi Arabia...... ............... .. .132 Trends in Wheat Production (1978—83) ........ . . . .134 Trends in Wheat Prices .......................... 136 Costs and Benefits of Wheat Production in Saudi Arabia .......................................... 138 Imports of Selected Agricultural Commodities to Saudi Arabia (1970-82) .......... . ............. 142 LIST OF FIGURES FIGURE PAGE 2.1 Kingdom of Saudi Arabia... ....... . ..... ......12 2.2 Sedimentary Basin and Western Precambrian (Arabian GUlf)oooooooooooooooooooooooo00.000019 2.3 Wadies of Saudi Arabia ..... . ................. 26 3.1 Cereal Crops............... ........... . ...... 71 3.2 Fresh Vegetables............. ........ ........72 3.3 Total Agricultural Commodities.. ............. 74 CHAPTER ONE PROBLEM STATEMENT, OBJECTIVES AND METHODS 1.1 Introduction During recent decades there has been some change in economic theory with regard to the relative contributions of agricultural and industrial development to national econ- omic growth. Transition from an earlier "industrial funda- mentalism" has resulted in increased emphasis on the signi- ficance of agricultural development for the total develop- ment process.1 In this sense, Hayami and Ruttan report It is increasingly recognized that the functions which the agricultural and in- dustrial sectors must perform in order for growth to occur are totally inter- dependent. This clearly is an important contribution to economic 'doctrine' when contrasted with the naive industralization— first doctrines of the 19508. 2 During the past decade, Saudi Arabia has undergone rapid economic development stemming from rapid increments in oil production and prices during this period. Saudi lYujuro Hayami and Vernon W. Ruttan, Agricultural De— velopment: An International Perspective. (Baltimore: The Johns Hopkins University Press, 1980). 21bid, p.25. government officials, however, recognize that oil will not be a reliable resource forever, and that current oil revenues should be utilized to develop the country. A succession of five-year development plans promulgated since 1970 have in- creasingly reflected the need for economic diversification. Diversifying productive economy sectors and reducing the de- pendence on oil exports then, has become one of the impor- tant development goals. In addition to the oil sector, the industrial and agricultural sectors have been considered to be the pro— ductive sectors in the Saudi economy. The country, which was once a major exporter of agricultural products, however, has become a net importer of these products. In terms of agricultural development, self-sufficiency is emphasized as an important goal of the country's agricultural policy. Saudi Arabia is currently the leading agricultural importer among the Third World countries. In light of this reversal of the country's agricultural position, the intent of this study is to investigate Saudi Arabia's agricultural develop- ment potential with regard to the resources with which the country has been endowed that can be applied to agricultural productivity. 1.2 Problem Identification In the past, before the discovery of 011, Saudi Arabia's most important resources were agricultural resources. This was due to the fact that agricultural sector employed, and still employs, the highest percentage of the country's civil labor force. In 1980, the Ministry of Planning in Saudi Arabia reported: Despite the discovery and development of oil, and subsequently, rapid development in other sectors, agriculture has remained the primary occupation of the Kingdom's population. In 1394/95, it is estimated that about 695,000 persons, or 40 percent of the civil labor force, was engaged in agriculture. By 1399/ 1400, although agricultural employment de- clined sharply by about 96,000 persons, the sector still remained the largest employer, with about a quarter of the Kingdom's civil labor force. 3 In terms of food self-sufficiency, Saudi Arabia was once a food self-sufficient country, but gradually became a food deficient country. Balghonaim reported that "ac- cording to the United States Department of Agriculture, it--Saudi Arabia-~went from a condition of self-sufficiency to a dependency on imports for about two-thirds of the food consumed in 1975."4 In the 19305 and 19403, the country was not only food self-sufficient, but was also an exporter of some of its agricultural products. As Al—Turki reported, 3Ministry of Planning (S.A.), Third Development Plan 1980-85, (Riyadh: Ministry of Planning Press, 1980), p.137 The years 1394/95 correspond to 1974/75, 1399/1400 corres- ponds to 1979/1980. 4S.S.M. Balghonaim, "Agricultural Development in Saudi Arabia," (M.A. Thesis, California State University, Sacramento, 1977), pp.108-109. "Before 1949, Saudi Arabia was a net exporter of live animals, now it has become a heavy net importer."5 The increases in agricultural imports were not stop- ped by efforts under the first two five-year plans and the country is still moving rapidly in a negative direction in terms of food self-sufficiency. A large portion of the agricultural products consumed in Saudi Arabia are imported. The rate of increase, however, may not be increasing as rapidly. In 1983, the United States Department of Agri— culture reported: Saudi Arabia is the leading agricultural importer among all Third World countries. It accounts for about one-fourth of OPEC's total agricultural imports and a slightly smaller share of all the food imports of the 22 countries in the Mid-East and North Africa. In 1982, Saudi agricultural imports increased by 17 percent to $6.7 billion, down from a 29 percent climb in 1981. 6 The increases in imports of food have come about while Saudi development plans and policy have been emphas- izing agricultural development as one of its important de- velopment objectives. Food importation, apparently, has responded to other influential foreign Saudi Arabian social 5Mansoor I. Al—Turki, "Accelerating Agricultural Development in Saudi Arabia." (Ph.D. Dissertation, Color- ado State university, 1971), p.24. 6U.S.D.A. "Middle East and North Africa, World Agricultural Regional Supplement: Review of 1982 and Out— look for 1983," p.13. and economic life. With the rapid evolution of oil as the main driving machine of the country's economy, its main source of foreign exchange and governmental expenditure, have come rapid increases in the Saudi people's standard of living and consumption patterns. Population has ex— ploded as the country has imported hundreds of thousands of foreign workers to help build the expanding infrastruc- ture made possible by the new oil wealth. It is essential to understand the influence of these economic and social trends of recent years on agricultural self-sufficiency in Saudi Arabia in order to examine the country's future agri- cultural development potential in light of its resources. Emphasis on self-sufficiency--in the development p1ans--as the important goal of agricultural policy in the country has evidently failed to bring about accomplishment of this objective, in spite of advances in agricultural technology. The problem of this study, then, is to exam- ine the various trends and influences in Saudi agriculture that have made Saudi Arabia a large importer of food pro- ducts in the face of government emphasis on food self- sufficiency and to determine the country's future agricul- tural development potential. In this regard, the case of wheat production can be considered an illustrative example. Among agricultural products, wheat has been consid- ered as one of the most important agricultural commodities. Its importance can be derived from the heavy emphasis that the Saudi government puts on wheat production subsidies that have fixed the wheat price at Saudi Riyals 3500 per one ton (in dollars, abodt $1045 per ton) since 1978. In light of the above, the following questions are considered in this research. 1. Why did Saudi Arabia turn from food self- sufficiency to being the leading agricul- tural importer (in terms of both quantity and value) among all the Third World countries? What accomplishment, if any, of the Saudi development plans in terms of agricultural development has been achieved? Since wheat is an agricultural commodity that has received considerable attention from the Saudi government, where does the production of this commodity stand in terms of self-sufficiency? To what extent have agricultural practices been developed by the adoption of agri- cultural technology? 1.3 Objectives of the Study The objectives of the research are: (l) (2) (3) (4) to investigate the status of agriculture in Saudi Arabia; to explain why Saudi Arabia declined from self-sufficiency in food to a food-deficient country; to investigate, in detail, the status of wheat production as an example of agricultural development in the country; and to contribute to the literature on agri- cultural development in Saudi Arabia. 1.4 Methods and Organization Information used as a basis for this research is ob- tained through written material (secondary data). Specific quantitative, as well as descriptive data, is employed. In this regard, one of the persistent problems of research about Saudi Arabia is the scarcity of reliable and avail- able data. Obtaining such data was a crucial and difficult task. It was necessary to request published and unpublished materials from the various Saudi government ministries and agencies. Some of the data were in Arabic and had to be translated to English. Other written materials, used in this study, such as books, articles, dissertations and theses were obtained through the Michigan State University Library. Analysis of the data obtained from books, reports, documents and similar sources was carried out through sim- ple calculations and comparisons. Frequency and percen- tage statistics were employed in making comparisons and to express the data in tabular form. The results of this research are presented in six chapters. In Chapter One the researcher introduces the topic, identifies the problem, specifies the objectives of the study, and states the methods and organization of the study. In Chapter Two, an effort is made to review the physical conditions of Saudi Arabia in terms of its location and size, climate, soil, water resources, and land qualit- ies. In addition, population is discussed in this chapter because of its impact on demand for agricultural products. The agricultural situation in the country is con- sidered in Chapter Three. Major agricultural products, trends in agricultural production, area under actual cul- tivation, and productivity are analyzed. Agricultural land and cropping patterns are explained to facilitate this analy- sis. Factors affecting demand for agricultural products are also considered, in an effort to explain why Saudi Arabia shifted from a position of food self-sufficiency to become the leading food importer among the Third World countries. Chapter Four presents the efforts made through three five—year development plans to develop agriculture. In this chapter the concept of "development" is considered and the agricultural development programs that were im- plemented under the three development plans are examined. Then, major problems facing such efforts are discussed and trends in some selected agricultural products during the development plan periods are examined. Chapter Five of the thesis is devoted to a discus- sion of wheat production as an illustrative example of agricultural development efforts and results in Saudi Arabia programs concerning wheat production, trends in wheat pro— duction, wheat real prices, costs and benefits of wheat pro- duction, trade in wheat, and the effects of development 9 programs on wheat production will be discussed. Finally, in Chapter Six, a summary of the findings and conclusions of the study will be presented. CHAPTER TWO SAUDI ARABIA IN PERSPECTIVE 2.1 Introduction In most of the Western world, Saudi Arabia (or Arabia) is known as a desert land where people live in tents and enjoy excessive wealth from oil that is being paid for by people in Western countries. Some people do not know the location of Saudi Arabia or that anything be- sides oil wellscan be raised in the vast arid country.. To facilitate reader understanding of this study, it is important to provide somea brief background description of Saudi Arabia. This is the objective of this chapter, which covers the topics of location and size, population, climate, soil, land classification, and water resources. Such information gives clarity to the country's past and present agricultural situation and is important for under- standing the following chapters. 2.2 Location and Size Saudi Arabia extends over an area of some 2,200,000 square kilometers (about 830,000 square miles) and occupies about four-fifths of the Arabian peninsula or an area about 10 ll one-third of the size of the United States.7 The area in which the country lies, the Arabian Peninsula, is a well- defined geographical unit, bounded on three sides by the sea. It is bounded on the east by the Arabian Gulf (Persian Gulf) and the Gulf of Oman, on the south by the Indian Ocean, on the west by the Red Sea, and meets the deserts of Jordan and Iraq in the north. This isolated peninsula, extending over more than one million square miles, is divided politi- cally into several states, of which the largest is Saudi Arabia.8 The Kingdom of Saudi Arabia, itself, is bounded on the south by the Sultanate of Oman, the Yemen Arab Republic and the People's Democratic Republic of Yemen; on the north by Jordan, Iraq, and Kuwait; on the west by the Red Sea; and on the east by the Arabian Gulf, Bahrain, Qatar, and the United Arab Emirates.9 The country consists of six provinces or regions. Each region has its own distinctive characteristics and agricultural potential (See Figure 2.1). 7A. El-Katib, Seven Green Spikes, FAO and the Ministry of Agriculture and Water in Saudi Arabia (Beirut: Dar Al-Qalam Press,1974)p.3. 8The Middle East and North Africa, (London: Europa Publication Limited, 1980-1981), p.639. 9Foud Al-Farsy, Saudi Arabia: A Case Study in Develop- ment, (London Stacy International, 1980), p.24. /\\_ f _ (I . Tum! \ I An MI ’\ 8‘; \ OTIOUIII .NII . IRA 30%“ ff \L‘ Q I much NATIOWAI CENTERS . ”M O 5m" l o m HEGIOWALCEWTEFS ‘~ Mm‘x = v m. om ERN REGION ' ‘ ' ° 0"" 0mm” “was N H -- ._ . . 7,0,. h mm. “L _ . . am 0mm towns . - hm '- ‘- ’ 5”" / \ _._. BOONOAm OF PLANNING t Tm N." Q . .\ . 0mm "55,0 -....— / . ”www- WOW N "w’ I. gaunvfl \' 55:3: hr ‘6 ' A' U“ './1 m... A o ZINN. "' _ Unuuh , 2. “W \ ., .... .. I... - - ’ 0mm: . Sham! .Hunvmm m' .. I . Inc-m \ . Dunno. . Rwldh -‘ ‘5. Hunt- 0...”, o “Inc‘s: “Influx. ‘ A a..." we» REGION \'Am " ""'" ' gm", 9’. W I - w CENTRAL REGION ."mmm I C O “W“ Mono AI bum '\ ) OM” _ Munovoh* , V I \\ on» m I an t I , o Kmmh - / i .1.“ ' ' " ‘ \. .w,wu ..’I . ' - Arum AI / As/Suuvvil ‘ .amu 0““ ,. u , ‘Mwah ‘ 5‘1 m WOOIDMOII - M'WY o .Afl Wm- \/ J ‘ . liq-«050.0%? “EB~.'M' z" ,_;_.7_. s. .- I ““3““ u ukmw\ - ' _;—:?=.-_"'r , ' _ FIGURE 2.1: Kingdom of Saudi Arabia Adopted From: Ministry of Planning (S.A.), Third Develop- ment Plant 1980-85, Ministry of Planning Press; Riyadh, 1980, p.xxxv. 13 The Western (Hijaz) Region is a coastal plain con— fined within a narrow space by mountains that drop sharply toward the Red Sea. This region has a long history of spiritual importance to the Muslim people since it contains the two holy cities of Mecca and Medina. In addition to Mecca and Medina, Jeddah and Taif are the region's major cities. The important feature of this region is the Al— Haji, in which one and a half to two million Muslims from all over the world make the journey to Mecca and Medina during the pilgrimage season each year. The Central Region (Najd) is a vast eroded plateau, considered to be the heart of the Arabian Peninsula. Most of this region is arid, with some oases in the northern part. At the center of this region is the kingdom's capi- tal city of Riyadh. The Eastern Region (Al-Hasa) is the country's wealth- iest area in resource endowments since it contains the massive oil deposits and associated oil production facilities. In addition, there are two agricultural areas-—A1-Hasa and A1-Quataif—-where palm dates are produced. Fishing acti- vities are conducted on a large scale in this region. The main cities are Dharan, Dammam, Jubail, Al-Khobar, Al-Hasa, and Al-Quataif. The Southern Region (Asir) contains a relatively fertile area of coastal mountains in the extreme southwest. 14 Mountain peaks rise to 10,000 feet with ample rainfall for cultivation. Asir includes the major towns of Abha, Jizan, and Najran. At the present time, the emphasis in this re- gion is focused on agriculture and on development of summer resort areas. The Northern Region (A1-Shamaliya) borders Jordan and Iraq at the most northern points of the country. The main towns in this province are: Tabuk, Hail, Sakaka, and Al-Jouff. Many oases make this region suitable for cul— tivated agriculture and for the production of meat through sheep, goat and camel raising. The final region is the Empty Quarter which is a barren desert of sand. There is no habitation in this region.10 2.3 Population Population estimates in Saudi Arabia have been in dispute for some years. An official estimate for 1956 put the population at 6,036,400. A census was held in 1962-63, but no figure was announced. ,The United Nations Population Division estimated the mid-1955 population at 6,750,000; mid-1970 at 7,740,000; and mid-1975 at 8,966,000. 10For more detail about these regions, see Foud A1- Farsy, Saudi Arabia: A Case Study, pp.24-27. 15 A total population of 7,012,642 was announced after a census held in September 1974. Foreigners working in the country total around 1.5 million. The immigrant workers come mostly from countries such as Egypt, the Yemens, India, Pakistan, Taiwan, and South Korea, although a large number of skilled and technical workers come from Western countries.11 The population of Riyadh (the capital city) was es- timated in 1974 at 667,000, with Jeddah (the second largest city and commercial center) at 561,000; Holy Mecca at 367,000; Holy Medina at 198,000; Taif (the summer capital) at 205,000; and Dammam at 128,000. The remaining popula— tion is distributed among the small cities and rural areas.12 The United Nations estimated the Saudi birth rate at 4.95 percent and the death rate at 2.02 percent, which produces an annual net population growth rate of 2.95 per- cent. The figure agrees substantially with the Saudi govern- ment's 1975 estimate of a 3.0 percent population growth rate.13 11The Middle East and North Africa, (London: Europa Publications, Ltd., 1981-1982), p.664. 12Ibid. l3Abdulaziz Ism Daghistani, "Economic Development in Saudi Arabia: Problems and Prospects," (Ph.D. Disser- tation, University of Houston, 1979), p.13. 16 2.4 Climate Saudi Arabia lies in the tropical and subtropical zones. Summer and winter are the most identifiable seasons; summer extends the longest, from late May to September, while winter lasts from early December to February. The mean monthly temperature is between 14°C and 20° C. in the winter and 35°C in the summer. In the coastal areas near the Red Sea and the Arabian Gulf, humidity is high, while internal areas like Riyadh City have very low humidity.14 Rainfall in the country is unpredictable and irregular, with large variations from one year to another. Long per- iods may pass without rain and, when rain occurs, it may take the form of a violent storm of short duration. Severe eros- ion and destruction results from time to time because of these storms.15 The annual rainfall varies between regions and be- tween areas within a region. In the northwestern part of the country, rainfall averages 30 mm. to 50 mm. annually, while it fluctuates between 40 and 90 mm. in the northeast. In the Central Region, rainfall decreases from north to south and from west to east, averaging from 110 to 85 mm. 14Ministry of Agriculture and Water (S.A.), A Guide to Agricultural Investment in Saudi Arabia. (Department of Agricultural Development, 1979), pp.4—7. lsEl-Khatib, Seven Green Spikes, pp.5-6. 17 per annum. In the western and southern part, the annual rainfall in the mountains exeeds 300 mm. and diminishes from south to north in this part.16 2.5 Soil Geographically, Saudi Arabia can be divided into six zones. The first zone comprises the coastal plains which are located in the east along the Arabian Gulf, and in the west along the Red Sea. The eastern coastal plain is covered by a wide belt of shifting sands, while the western coastal plain is characterized by many short wadis which offer a combination of climate, soil and water which are suitable for agricultural production. Second, the high- lands, located in the western part of the country, are a mountain series extending about 1,600 kilometers from the Gulf of Aqaba in the north to Aden in the south. The high- est peak is over 2,750 meters. The central plateau, the third zone, is located east of the highlands at an eleva- tion ranging from 600 to 1,800 meters. As Summan and Ad Dahna Plateaus make up the fourth zone. As Summan plateau is a hard, rocky plain, while Ad Dahna is a long and narrow sand belt. Fifth is the Najd Plateau and the Escarpment l61bid. 18 Region which is dominated by several steep escarpments. Finally, there is the Great Sands Area which consists of the Great Nafud in the north and the Rub' Al-Khali (empty quarter).l7 Geologically, Saudi Arabia consists of two parts (Figure 2.2). First, the eastern sedimentary basin com- prised of a variety of rocks which, under certain condi— tions, become a good environment for storing oil and water. Second, the Precambrian (Arabian) shield which is the ancient land mass in the central part of the Western region of the country.18 The geography and geology of Saudi Arabia demonstrate, to some extent, the nature of the soil in this country. As mentioned above, most of the country consists of a plateau of base rock which in some places is covered by a thin layer of soil. The remaining part is covered by sand or sand dunes. The physiographic features of Saudi Arabia, combined with the aridity of the climate, have resulted in saline and alkaline soils that cover most of the country lands.19 Thus 17Ministry of Agriculture and Water (S.A.), A Guide to Agricultural Investment in Saudi Arabia, (Department of Agricultural Development, 1979), pp.2-4. lBIbid, p.4. 19El-Khatib, Seven Green Spikes, p.6. 19 .‘Semmentary Basin and Western Precambrian {ArabIan Shield). KUWAIT ..., IRAN ..... 0 AL HAFUF IO RIYADH .u‘iwgfi 3%,; ‘1’, ”(€33 YEMEy/’ A D E N '2 “’3. J, - 5x39, :1 £10,: ., A ‘ ‘. . EH ' win-at) ‘ u 3 ' J's \ + _w ‘l . . . . rr' xx}§:’- 53.1" m T r‘ ' $§F L i IO‘r? ‘ ~ “ ‘ I.“ 3&3“ 'A $2.: .' ‘ 75" 3": 'T . € . :§MQ'I“1 . .5“? :..'l 4'- ... 2" ) FIGURE 2.23 Sedimentary Basin and Western Precambrian (Arabian Gulf) SOURCE: Ministry of Agriculture and Watcr (S.A.) A Guide to Agricultural Investment in Saudi Arabia: Department of Agricultural Development, Riyadh: 1979 ,o.5 20 lands available for agriculture are limited and have low fertility and/or high salinity. El—Khatib reports: Lands suitable for the irrigated agri— culture are limited and those which are available are composed mainly of alluvial soils developed from weathering of quartz sandstones, silt stones and shale having been thoroughly mixed by the action of wind and water or deposited in layers of varying texture. These soils are generally found in small depressions or narrow strips in Wadi channels. All of these lands are flat and nearly level. In some places, such as A1 Hassa and Qatif, where agriculture is practiced much of the soil has lost fertility and become saline. 20 There are many different types of soil in Saudi Arabia. Among them are: l. the desert marls which is found in Hijaz region; 2. heavy sand-gravel soil in Najd re- gion and in some parts of the eastern region; 3. loam soils are found in some of the highlands of Najd; and 4. alluvial soils and sandy-loam soils are found in the banks around scattered wadis all over the country. 21 ZOIbid 21Balghonaim, Agricultural Development in Saudi Arabia, pp.16-l7. 21 Al-Fiar quoted from Pasteur, The inherent fertility of the Saudi Arabia soils is low. Organic matter and nitrogen are largely absent; phosphorus is very low; potassium however, is generally available in quantities sufficient for growing most crops. 22 2.6 Land Classification Land, in Saudi Arabia, is classified into three main categories: arable land, range land, and non—agricultural land, which represent 0.24 percent, 99.7 percent and 0.06 percent, respectively, of the total area of the kingdom (Table 2.1). Arable land has been estimated at 1.5 to 2.0 million hectares of which about 525,000 hectares are under cultivation. Most of the country is range land, consisting of permanent grassland, forest, semi-desert range land, and desert land. It comprises about 219,480,000 hectares or 99.7 percent of the total area. Non-agricultural land, which consists of settlements, roads, etc., covers about 116,000 hectares or about 0.06 percent of the total area.23 22Al-Fiar, M.H. "Agricultural Marketing System in Taif, Saudi Arabia," (M.A. Thesis, Michigan State Uni- versity, 1973) pp.25-26. 23Ministry of Agriculture and Water (S.A.) A Guide to Agricultural Investment in Saudi Arabia, (Department of Agricultural Development, 1979), pp.29—33. 22 TABLE 2.1: Land Area by Use in Saudi Arabia Land Area Classifi- Land 1,000 cation Use Hectares Percent Arable Cultivated 525 0.24 land Range Permanent 1,700 0.75 Land grassland Forest 2,780 1.25 Semi-desert 140,000 63.60 range land Desert 75,000 34.10 (barren) Non-agricultural settlements, 116 .06 land roads, etc. TOTAL 220,121 100.00 SOURCE: Ministry of Agriculture and Water (S.A.), A Guide to Agricultural Investment in Saudi Arabia, 1979, p.31. 23 2.7 Water Resources Water shortage is a global problem facing many coun- tries in the arid and semi-arid zones. Studies made by the United Nations and other international agencies have reached the conclusion that there is a possibility of facing a water crisis in the near future in most parts of the world.24 In Saudi Arabia, water scarcity is one of the most important problems facing agricultural production. Asfour, holds that "the backwardness of agriculture is due to the intemperate climate and the scarcity of resources, par— ticularly water."25 Water scarcity results from the fact that there are no rivers or perennial streams in the en- tire country and rainfall is low, ranging from 30 mm. to 300 mm. per annum from one part of the country to another.26 Variability occurs in water quantity, quality and depth and, to some extent, reflects the geographical struc— ture of the country. Karl S. Twitchell (1958) found that 24Al-Zokair, A. "A Study of Agricultural Development in Al-Kharj, Saudi Arabia," (M.A. Thesis, Michigan State University, 1980), p.29. 25Asfour, E.Y., Long Term Projections of Supplygof and Demand for Agricultural Products in Saudi Arabia, (Economic Research Institute, American University of Beirut, 1969), p.57. 26 El-Khatib, Seven Green Spikes, p.6. 24 the water resources in Saudi Arabia are dependent upon topo- graphy, geological formations and climate.27 Generally speaking, four main categories of these water resources exist: surface water, ground water, sea water (after de- salination), and sewage water (after chemical and biological treatment). 2.7.1 Surface Water Although there are no perennial streams in the usual sense, in some exceptional situations, limited spring water is available to some widely scattered areas of Saudi Arabia. The availability of such spring water has been important throughout the history of the country. The location of some cities, such as Mecca and Jeddah, was based on the location of springs. While the Eastern Region (Al-Hassa) may sometimes have more than 140 springs, most of them are small and depend on rainfall.28 With spring water, runoff water constitutes the main source of surface water in the country, but depends on rain- fall which is very 1ow and unpredictable. Runoff accumulates 27Balghonaim, "Agricultural Development in Saudi Arabia," p.48. 28Al-Fair, "Agricultural Marketing System in Taif, Saudi Arabia," p.24. 25 in different parts of the country in scattered wadis (drought valleys) which remain dry most of the year, and sometimes for many years (Figure 2.3). Most important in Saudi Arabia are 90 wadis located on the Tihama plain which flow into the Red Sea. The water which flows through them amounts to about 62 percent of all runoff water in the country.29 In addition to the Tihama wadis, there are several wadis scattered throughtout the country. In the Southern Region, Wadi Turabah, Wadi Raynyah, Wadi Bishah, and Wadi Tathlith are the most important ones. In the Central Re- gion, Wadi Bark, Wadi Nisah, and Wadi A1 Sahba; and in the Northern Region Wadi Aruma, Wadi Al Batin and Wadi As Sirhan are the most important ones.30 2.7.2 Ground Water Ground water has been used for domestic, municipal, industrial and irrigation purposes throughout the history of the Arabian Peninsula. Raleigh Barlowe reported, 29Ministry of Agriculture and Water (S.A.), Water Resources and Projects,(Riyadh: Middle East Press, 1981), pp.19-20 (Arabic). 3OIbid 26 WADIES OF SAUDI ARABIA Al Wajh Umm Lajj Yanbu AI Baht Jedda ‘9 . “‘ I <3 AHMhlflk . I ”W 0 AIOunIudhah 1.6“" . , wi’ .3‘ ABha Khamis Mushayt I - / “‘ rm" M I} w 62"“ ’I/j- . 7 \ . / ° . I 0L 2450 \./' E A Kilometers S A N I R P“ B Source Atlas OISaudIArabIa.Bandagln.1978 A FIGURE 2.3: Wadies of Saudi Arabia SOURCE: Abdulrahman K. Al-Zaidy, "Food and Agriculture in the Arid Environment of Saudi Arabia Under Human Pressures and Change," (M.A. Thesis, Michigan State University, 1980), p.73. 27 Wells have been used as a source of domestic water supplies almost since the beginning of history. Throughout this period the use of ground waters has often been taken for granted with little consideration being given to the matter of water rights. 31 The scarcity of surface water has made ground water especially important. El-Khatib reports: Thus, the ground water resources of Saudi Arabia are of great importance for agri- culture. Two-thirds of the country is underlain by sedimentary formations most of sandstones, limestones, shales, marbles, and alluviun and these are the main sources of ground water. 32 The Sedimentary Basin and the Precambrian (Arabian) Shield, discussed earlier in this chapter, function dif- ferently with respect to ground water and water runoff. These functions define the importance of these geological formations in agriculture. The Sedimentary Basin zone covers about 1,640,900 square kilometers or nearly 73 percent of the country's area to a thickness of about 5,500 meters. Some layers of this area contain huge amounts of water, but the quality, quantity, 31R. Barlowe, Land Resource Economics: The Economics of Real Estate, (Englewood Cliffs, N.J.: Prentice Hall, 1978), p.420. 32El-Khatib, Seven Green Spikes, p.6. 28 and depth of the water differ from one part to another and from one layer to another within this area. It has been found that some of these aquifers are 30,000 years old. The recovery of the water from rainfall is very low when compared with water extraction. The Sedimentary Basin is composed of about 28 aquifers (i.e., layers of rocks carry- ing water under certain conditions).33 The Precambrian Shield covers about 610,000 square kilometers or nearly 27 percent of the Kingdom. This zone is located in the western part of the country and includes some major cities such as Mecca, Jeddah, Taif, Medina, Hail, Afif, Najran, Bishah and some parts of the Asir, Ghammed regions. Water in the Precambrian Shield depends on the amount and frequency of rainfall and the resulting runoff water which penetrates through the soil and is stored in the underground. Accordingly, this zone is an independent source of water, especially for large uses. It is possible to utilize runoff water in this way for agricultural de- velopment as well as urban uses, especially from such large wadis as Wadi Bishah, Wadi Turabah, Wadi Nejran and Wadi Jizan.34 33Ministry of Agriculture and Water (S.A.), Water Resources and Projects, pp. 20-31 (Arabic). 34Ibid. 29 Hydrological studies conducted in Saudi Arabia indi- cate that nine aquifers storing usable ground water cover large areas of the country. 1. Saq aquifer forms a size of 1,500 km. x 250 km. and a thickness of 300-600 meters. It could produce 315 million cubic meters of water annually without affecting the water level. The quality of water is excellent in this aquifer where the soluble salts range from 450-800 parts per million (PPM). Qasim area, Hail, and Tabuk are supplied by water from this aquifer. Wajid aquifer forms a size of 250 km. x 300 km. with a thickness of 950 meters. Water discharge from this aquifer reaches 800 gallons per minute and its quality is excellent--soluble salts range from 400 to 800 PPM. This aquifer supplies Wadi Dawasir area with its water needs for agricultural as well as urban uses. Tabuk aquifer forms a size of 900 km. by 150 km. with a thickness of 150 to 170 meters. It can produce about 70 million cubic meters of water without decreasing the water level. Water quality is good; soluble salts do not exceed 800 PPM. This aquifer also sup- plies Qasim area, Sakaka and Tabuk with some of their water. Minjur aquifer forms a size of 800 km. by 600 km. with a thickness of 300 meters. Water quality in this aquifer is medium; soluble salts reach about 1,200 PPM. This aquifer supplies Riyadh city with some of its drinking water, in addition to the Al-Kharj area. Its production capacity reaches 70 million cubic meters annually. Al-Bayyad aquifer has a length about 600 km. and thickness of 600 meters. The qual- ity of water and discharge capacity are medium. It also supplies Riyadh city with some of its water needs. 3O 6. Al-Wasi aquifer has a size of 800 km. by 1450 km. and a thickness of about 500 meters. Its production capacity is good, with good quality water. It also supplies Riyadh with some of its water needs. 7. Umm Er Radhuma aquifer has a length of 1000 km. and a thickness of 240 meters. Its production capacity is excellent, it reaches 3,000 gallons/minute with medium quality water whose soluble salts reach 1,800 PPM. It supplies some of the eastern part of the country and Wadi Harad. 8. Damam acquifer has a thickness of about 35 meters. Production capacity and qual- ity of water are medium, with soluble salts that reach 1,300 PPM. It supplies agri- cultural needs for water in Qatif, Dammam and Al-Khobar. 9. Noejene aquifer, which has a thickness of 298 meters, has good quality water. It supplies Al-Hassa area with its agri- cultural water needs. 35 2.7.3 Sea Water Sea water has become one of the water resources which, through modern technology, can provide drinking water for some places which suffer from water scarcity. Improved technology led the Ministry of Agriculture and Water to 35Ibid, p.60. 31 construct the technological facilities to desalinate sea water to help overcome problems of water scarcity. Water desalination in Saudi Arabia began around 1967 when the small town of Al-Wajh on the Red Sea coast faced a critical shortage of water after seven years of drought that sharply reduced ground water reserviors. To resolve the crisis, the Saudi Arabian government first drilled artesian wells forty-three miles outside AL-Wajh. Water from these wells was then transported to the town by trucks at a rate of about 240,000 gallons per month (five gallons per person per day for 2,500 inhabitants). The cost was about $20 per one thousand gallons. In late 1967 a de— salination plant was installed, with a daily capacity of 65,000 gallons, which provided this town with 20 gallons of water per person per day for less than $2 per one thous— and gallons.36 Conversion of sea water into drinking water was the responsibility of the Water Desalination Department at the Ministry of Agriculture and Water until a specialized 36 pp.30-31. Al-Zokair, "A Study of Agricultural Development," 32 governmental agency was established to take over this re- sponsibility in 1974. This agency, the Saline Water Con- version Corporation, is responsible for producing water in the coastal areas of the country for urban and industrial uses where ground and surface water are unable to provide an adequate and safe supply.37 2.7.4 Sewage Water Sewage water is a water resource in Saudi Arabia which has not been utilized well until now. Ministry of Agriculture and Water officials recognize recently the im- portance of such water and have begun to reuse it,after proper chemical and biological treatment, to protect pub- lic health. In addition to the Ministry of Agriculture and Water, the Ministry of Municipal and Rural Affairs, Ministry of Industry and Power, and the Ministry of Health work together to set the rules and parameters that govern the recovery and reuse of such water.38 37Balghonaim, "Agricultural Development in Saudi Arabia," pp.55-57. 38Ministry of Agriculture and Water (S.A.), Water Resources and Projects, p.59. 33 2.8 Summary It is apparent from this chapter that Saudi Arabia presents conditions that are, at best, inhospitable to most forms of agriculture. The climiate is hot and dry, rainfallijsslight in most areas and there is little arable land. Yet, at one time, the country was a net exporter of food. In the following chapter, the agricultural sit- uation is examined to see what can be grown under the conditions outlined here, in what quantities and in which areas . CHAPTER THREE THE AGRICULTURAL SITUATION 3.1 Introduction After reviewing the major characteristics of Saudi Arabia with particular emphasis on those features related to agriculture, it is appropriate to discuss the agricul- tural situation in Saudi Arabia in more detail. The im- portance of doing so is because of the vital role of the agricultural sector as the major employing sector in the Saudi economy. In this chapter, major agricultural production is examined in order to identify the most common agricultural practices in the country. Then, agricultural land, farm size and cropping patterns are discussed in order to faci- litate analysis of trends in agricultural production, chang- ing patterns in production and changes, if any, in agri- cultural productivity. Diverse factors affecting these areas are considered. Additionally, trade in agricultural products is dis- cussed, with a focus on trends in agricultural commodities imports, because Saudi Arabia is one of the leading food importing countries, as explained in Chapter One. Comparisons 34 35 are made between domestic agricultural production and pro- duct imports where it is appropriate to do so. Finally, factors affecting both imports of agricultural products and increasing demand for such products are examined. 3.2 Major Agricultural Products As a result of variations in climate, soil, water resources availability, and farming practices, agricultural products vary from one region to another. Even though there is diversification in agricultural production, some impor- tant consumer products are not produced at all and others are produced in only small amounts. According to Asfour, "Except for some rice grown in the East, and some coffee grown in the Asir, several important consumer products, such as sugar and tea, are not produced at all in Saudi Arabia."39 The classification of major agricultural commodities produced in Saudi Arabia includes dates, wheat and cereal crops, vegetable crops, fruits excluding dates, animal fodder, and livestock for dairy and meat production. 3.2.1. Dates Date palms are the predominant trees grown all over the country except in the high mountain areas in the southern 39E. Asfour, Saudi Arabia—-Long Term Prolectionryf Supplyjand Demand, p.59. 36 region. Dates were and still are one of the staple food crops produced in sufficient quantities to meet local de— mand and to provide exports to some of the neighboring states. Dates are the only major staple food crop whose production is sufficient to meet local demand. They are grown in most parts of the country, though the products of El-Hasa and Medina areas are better known. Dates represent the major agricultural food crop and consti- tute the main element of diet of a large segment of the population. 40 Even though most available statistics show an increase in date production, some observers believe there has been a gradual decline, since the 19405, in date production. Most observers have noted a gradual de- cline in cultivation of date palms since World War II. Date trees grown almost everywhere in the kingdom and formerly provided an important staple in the diet of many people, particularly the bedouin, as well as furnishing wood and fronds for building material. 41 According to a census taken by the Ministry of Agri- culture and Water from 1382-85 A.H. (1962-65 A.D.), the palm trees numbered 8,711,185 with an estimated value of 401bid, p.60 41R.F. Nyrop, et al., Area Handbook for Saudi Arabia, (Washington, D.C.: U.S. Government Printing Office, 1977), p.291. 37 about S.R. 3,000,000,000, and an average annual production raised camels, sheep and goats by herding and grazing them in nomadic patterns throughout a desert area circumscribed by tribal authority. But this activity has diminished over 53U.S.D.A., World Agricultural Situation, WAS 19 to 26. S4Salih Ali Al-Shomrany, "Agricultural Land Use Pat- terns in Relation to the Physical, Locational, and Socio— economic Factors in the Assarah Region of Saudi Arabia," (Ph.D. Dissertation, Michigan State University, 1984). 55R.F. Nyrop, et al., Area Handbook for Saudi Arabia, p.293. 41 the years as a result of changing life style throughtout the country, and because of the oil wealth and moderniza- tion.56 In the recent years, farms specializing in poultry, dairy, and sheep production have been developed under the encouragement of the Ministry of Agriculture and Water and the Saudi Arabian Agricultural Bank, by providing farmers with subsidies and loans. Other agricultural products are being produced in the country, but are not listed in the most recently avail- able statistics. Unlisted products are either produced in only small amounts or have been introduced so recently that statistical data have not been updated to reflect their production and any change in agricultural patterns. 3.3 Agricultural Land and Cropping Patterns Production of the major agricultural products of Saudi Arabia, takes place under the conditions of climate, soil and limited water availability discussed in Chapter Two. These conditions are, at best, inhospitable. Along with other features, they affect agricultural practices, agricultural seasons and farm size. SSIbid, pp.293-295. 42 Of the two main agricultural seasons in Saudi Arabia, winter and summer, the winter season is the rainy season in most of the country's regions and thus the most suitable for farming, especially where land is rainfed rather than irrigated. Data concerning the total areas cultivated during the winter season show that in 1975/76 about 330,000 hectares of land were under cultivation of winter crops. Almost 72 percent of this land was not irrigated, the re- maining 28 percent was irrigated (Table 3.1). In terms of total agricultural land, 1979/80 data show that 15 to 20 millions donums were considered suit- able for agriculture, and almost 6.1 million donums were 57 actually under cultivation in 1979/80. Of this land about 51 percent was rainfed and the rest was irrigated.58 Farm sizes vary from one region to another. The 1973 agricultural census shows that the total area held in farms was 534,801 donums in the Asir region; 3,365,831 donums in Qassim region and 12,134,623 donums in the entire country. The number of holdings shows 36,564; 5,972; and 180,670, holdings, respectively, for the two regions and One Acre = 4.05 Donums, one hectare = 10 donums. 58Khalid A. Al-Hamoudi, "An Evaluation of the Current National Agricultural Data Base in Saudi Arabia: An Infor- mation System Approach," (Ph.D. Dissertation, Michigan State University, 1984, p.23. 43 TABLE 3.1: Cultivated Areas in the Various EmiratesuHmHm>H:: wumum cmoH50Hz :.comouma< ewum>m coHumEHOMCH c< .coHumunmmHQ .Q.£mv ”mHQmH< Hosmm CH mmmm mama amHSDHDUHHm< Hmcoflumz ucmuusu 0:» mo coflumsam>m cc: .Hozoemmta< .< Uflamcx "soum couaoo< "mUmDOm muom a mEDCOU mo.vm c.mv on.mm m o.No oNo.omH mNo.va.NH sooocHx o.mm NNo.mm m 8.4H vom.mm Hom.vmm HHma o.mm mom.NH v m.vH NNN.NH omm.NoN mcmmuHN o.mm moH.aH N o.NG Hom.vm mHo.¢VH.N moomz o.m mmm H N.mN woe.h NHN.m>H mcHomz o.vm mov.NH N o.NN mmN.mm cos.NmN.N cmume o.ov «mm.N v o.mH Hmm.N oom.mmH manmm o.mH mNm m m.mm om¢.N NHN.qm cmunmz H.o H H N.om omm NHN.mN m>cmm H.o N N m.NN mum.H meo.vm Hmoe m.o H H o.mm HmH Nom.N Hassmumso m.o q H o.mN emm Nme.VN xsonme o.HN NNm.H H m.vv HmN.m qu.HmN HHmz o.o o H a.mm mp HNm.m HHHN o.m H H o.mHN mm NOH.N muHmmzx m.m VNN H m.mom th.m Hmm.mom.m eHmmmso o.mv Hem.v H m.voH NmN.cH va.Hao.N cumsHm m.o Nm N m.mH oHo.HH NqN.omH :HmHmmm maumm meumm mmomam .mescoav meumm .wEDcoov mumHHEm ochHmm ochHmm can; ocHoHom 00 «00¢ no a mo.oz mo .0: new; .02 mmuoe oUmHm>< monum>< Avhlmhmav mflnmu< Hoomm CH coaomm >9 ocapao: ocma "N.m mqmH00o ooaflomma "MUmDOm ammo» mmmn xmocH Q mcoe CA musmusom v.4mm m.ooq m.mNN N.ooN o.va ooH mmxmocH mdouo HH< Hmm.Nov.H www.qu.H HNN.Nmm mNm.mNm mom.avm amo.mmm mundane N.mNN m.vNN N.mNH A.HNH N.mH OOH moxmvcH mmumo omN.Nvm mmN.Nmm mum.NmH moo.NmN oom.mN ooo.omH musayso 4.4mmN m.mmeN H.ocHN H.NmHH N.NN QOH mmxmocH moanmummm> mam.mmo cmo.mHN oNN.mHm www.mvm ovN.HN mNN.mN mundane m.vam o.cov H.moH M.Hmm m.mmN ooH mmxoocH Amammumuv onuU mmN.NmN mvv.mmN vmm.mHH mmN.mmN mHm.moH cem.HN mundane onHm om\m>mH mN\VNmH NN\HNmH mmmH NmmH ommH :oHHoso mono Iona ommH-ommH .mHnmue Hogan :H usauso HmuzuHsuHume Ho mmxmncH 6cm :H mucoue "m.m mqmee 49 2. Field crops (cereals) have increased from 71,300 tons (index of 100) in 1950 to 267,289 tons (index of 374.9) in 1979/80, which means that these crops have multiplied almost 3.75 times. 3. Vegetable crOps have increased from 29,226 tons (index of 100) in 1950 to 696,876 tons (index of 2384.4) in 1979/80, which means that vegetable outputs have been multiplied 23.84 times through this period. 4. Date production has increased from 150,000 tons (index of 100) in 1950 to 342,286 tons (index of 228.2) in 1979/80, which means that date production has been multiplied 2.28 times during the period. Thus, vegetable outputs ranked first in total in- crement as an index followed by field crops (cereals) and then by the dates. 3.3.1.2 Trends in Area Under Cultivation Table 3.4 shows the area under actual cultivation for each of the variables or output groups in Table 3.3. The results of this analysis are summarized below. 1. Areas for all crops under cultivation has in- creased from 95,316 hectares (index of 100) in 1950 to 579,645.7 hectares (index of 608.1) in 1979/80, which means that areas under actual cultivation for all crops have multi- plied 6.08 times over the period (1950 to 1979/80). hl¢ Ucm mlt mmHDmB EOHM @mumHDUHmU "momDOm maouo Hmooom chuo 6cm mmammam mcaosaoxmm 50 H.mom H.mmv o.noN m.emN m.NHN ooH mmxmocH . mmdouo HH< N.mvm.mhm «.mmN.moe a.amv.va o.mNm.NQN o.oov.NON o.on.mm mmmua m.nNN N.¢¢N m.HmH v.NOH m.HoN o.ooH mmxmncH mmumo o.mmm.oo M.HNH.mm N.mm¢.Nm o.HmN.NN o.oom.mv o.NmN.HN mmmua m.NmN.H N.omm.H m.vmm o.Nom N.NN c.80H mmxmocH mmanmummm> n.mmm.Nm m.mmm.am m.vNN.mN o.NmH.mm o.ooo.m o.mNH.v mmmue m.ohm H.HHm N.mNN m.mmN o.mNN o.COH mmxmocH Amammumuv macho onHm m.mHN.vmv N.mos.ovm m.mm>.mmH o.aNm.mNH o.ooq.mmH o.mmm.po mmmua om\m>mH ms\qamH NA\HN¢H mmmH ammH ommH Ammumuom: :Hv manmu< Hosmm cH Hom\m>mHnommHs coHum>HHHso Hmzuoa 006:: mmmuc mo mmxmocH cam cH mocmue "v.m mHmNB 51 2. Field crop (cereals) areas have increased from 67,838 hectares in 1950 to 454,715.9 hectares in 1979/80, which means that areas under cultivation for this agri- cultural group have multiplied 6.7 times over the period. 3. Vegetable cultivation areas have increased from 4,128 hectares in 1950 to 52,953.7 hectares in 1979/80, which means these areas have multiplied 12.82 times over the period. 4. Date cultivation areas have increased from 21,752 hectares in 1950 to 60,353 hectares in 1979/80, which means that areas of this farming activity have been multiplied 2.77 times. Also in this analysis, it is clear that areas under vegetable cultivation were expanded most, followed by areas of cereal crops and then dates (in index numbers). These analyses indicate that agricultural patterns in Saudi Arabia have been shifting toward vegetable culti- vation at the expense of date cultivation (as measured in index numbers). 3.3.2 Agricultural Productivities Comparing agricultural outputs by agricultural areas devoted to each cateogry in Tables 3.3 and 3.4 allowed the calculation of the agricultural productivity for each category (Table 3.5). This table shows that all Ac can me .N< .H< mmHnme xHocmaac "mmom36m WOHMuUOZ CM mmh m0u< Hamuao oHOH> mwue uamuso 6HOH> m0»: uzmuso 6HOH> ummur nusmuzo mumm» meOHU Hat nmumo munnmuomo> Anamououv macho baofim \Mqouo co\mNaH-omaH .mHnmuc chmm :H mmHHH>HHo=coua HarauHaoHuo< "m.m mamas 53 agricultural productivities (yield = tons per hectare) de- clined except vegetable crops. This result was unexpected because of the development of production knowledge and technology over the three decades and led the researcher to investigate this issue a little further, to be specific, two different crops of each category (mentioned above) were analyzed individually. Of the field crops, wheat and barley productivities were analyzed (Table 3.6). The result of this analysis indicated that wheat and barley productivity (yield per hectare) increased, with the productivity of wheat in- creasing more rapidly than barley. This result does not confirm the results that depicted in Table 3.5 but the increment is very small when compared with the increment in areas under cultivation. Of the vegetable crops, tomato and eggplant pro- ductivity were analyzed separately and results are shown in Table 3.7. The results show a small decline in tomato productivity and a small increment in eggplant productivity. These do not confirm the earlier analysis (Table 3.5), but also fail to indicate an increment in agricultural pro— ductivity commensurate with the incrementtxflxfl.agricultural area. These fluctuations in agricultural productivity could be a result of fluctuations in total production which are affected by one or a combination of the factors mentioned 54 HN cam m< .N< .H< mmHnme ancmCQH "moNDOm mHmuomC Hon mC0u u onH>o moumuomc CH mwnc Q mC0u CH HCQHCOm 4N.H mm.N cm.o Nm.H oo.H mm.o 6H0H> H.Nov.v o.mmo.> m.va.mH NmH.mN oom.mN moH.HH mmu< HmHHmm o.Hov.m o.0HH.mH o.mHm.m «4N.mq oom.mN mmN.mH Haauso CH.N NH.N Ho.H mq.H Hm.o Nm.o unHmHH o.mNN.Hm H.HOH.No o.HNm.mm oam.am oom.mv oom.HN nmmHN Hmong o.NmH.HvH H.mmo.NmH o.vmm.mm HoN.mNH 6mm.Nv OON.ON mundane om\mHmH mH\vaH NH\HHmH momH HmaH ommH :onwmw mono om\mHmHuommH .mHanN Hosmm cH smHHmm 6cm Hams: Ho >HH>HHosnoua “o.m mamas 55 s we 6cm .m< N< .H< "mmHnme xHocmad< soup omeHsuHmo "mmomaom mumuomc Hon mC0u u onH>o mwhmuuwr— CH mmwh<fl mCou CH HDQHDOm om.m Ho.cH HH.OH oo.w .......... onHH N.omm.N H.mHm.m H.465 Hoo.H .......... mane HcmHaoom o.mmo.vN o.mmH.mm o.mmN.m Nov.o .......... HaaHzo om.HH «V.VH NH.oH HH.HH .......... 06H0H> m.oHo.HH m.mmm.ON m.mmm.OH Nao.m .......... nmwu< mmoumeos o.HNH.Hoc.N o.qu.Hom o.omm.0HH Hmv.mv .......... muzauso om\aN¢H mH\eHmH NH\HHmH mmmH HmmH omaH :oHHuso mono loam om\mhmHlommH .MHQmHC Hosmm CH >uH>Huosnon quHaaom UCm Cameos u>.m mam<9 56 previously. Also, the decline in agricultural productivity could be a result of one or more of the following: 1. land (soil) fertility decline--through ex- tensive use over time, when fertility is not restored by adding fertilizers, or through failure to follow a good agri- cultural rotation cycle, etc. ' 2. physiological factors--such as using the same crop variety for a long period of time, which makes the plants more vulnerable to disease and reduces pro- ductivity. 3. failure of Agricultural Extension Services to improve farmers' production skills and knowledge. To sum up this analysis, agricultural productivities in Saudi Arabia have been fluctuating while total agri— cultural outputs and areas under actual cultivation havew been increasing. This means that any increment in agri- cultural output has been brought about by expansion of area under cultivation rather than by increasing agri- cultural productivity. Expanding the area under cultiva- tion requires a lot of agricultural resources (i.e., land resources, water resources, labor, money) to bring about only small increments. Such development is inefficient in a country such as Saudi Arabia where there are short- ages in water resources and labor supply. 57 3.3.3 Change in Agricultural Patterns To further investigate this issue, changes in each of the categories of production, with the addition of two more categories, other fruit crops (citrus, grapes, and others) and fodder crops, were calculated as a percentage change of the total area under actual cultivation. Table 3.8 shows the areas devoted to each category of production by hectares and its percentage of the total area. The results are summarized in the following points. 1. Areas devoted to field crops fluctuated from 71.17 percent of the total area in 1950 to 65.65 percent in 1963 and reached the highest level in 1979/80 when 74.71 percent of total agricultural areas were used for field crops. The total change between the beginning year (1950) and the ending year (1979/80) was an increase of 3.54 per- cent. 2. Areas devoted to vegetable crops increased from 4.33 percent of the total area in 1950 to 8.7 percent of the total area in 1979/80, an increase of 4.37 percent. This proportion was increased dramatically to a peak of 12.37 percent in 1963 and then began gradually decreasing. 3. 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Domestic production of total agricultural com— modities increased but total agricultural imports increased more rapidly, particularly after 1977 (Figure 3.3).69 4. Both domestic production and imports of live— stock and poultry increased. Thus, comparison between domestic agricultural pro- duction and imports of agricultural commodities, reveals that both of them are increasing rather rapidly, which means that demand for agricultural products is high and increasing with time trends (upward). 3.5 Factors Causing Increased Importation of Agricultural Products There are several factors contributing to the in- creased importation of agricultural products to Saudi Arabia. First is import subsidies. Imports of some basic agri- cultural commodities have been subsidized by the Saudi government, either by direct subsidy or by reducing tar— iffs on some imported products. When the Saudi currency was devalued in 1959, the government granted subsidies to importers of many basic foods to keep the prices low for the population. In ad- dition, a 10 percent tariff was levied on imports of fresh vegetables in 1962. 70 69For more detail, see Appendices A and B. 7OR.F. Nyrop, et al., Area Handbook for Saudi Arabia, p.296. Quantity - (1,000 tons) I4 I {1. 1 if; :1 . . :"7'rl'rrrm‘ 177*" r ' u), i! 75 These subsidies applied, in 1379 (A.H.), to some twenty major food products, including twelve cereals, five oil products, dairy products, sugar and live animals.71 Imported agricultural product subsidies continued over time and the list was expanded to include new import items. "In order to control inflation the Ministry of Commerce expanded its program for subsidizing imported food."72 This expansion included several items of dairy products, vegetable oils, milk, lamb carcasses73 and bar— ley. In 1980, subsidy payments for imported barley aver- aged over 70 percent.74 In addition to subsidies, imports of agricultural products increased because of developments in food mar- keting and ports. "Modernization of food marketing and ports, combined with wider dispersion of petroleum wealth, contributed to the boom in food imports."75 71E. Asfour, Saudi Arabia--Long Term Projection, p.71. 72U.S.D.A., Africa and Middle East, 1980, p.71. 73R.F. Nyrop, et al., Area Handbook for Saudi Arabia, p.13. 74U.S.D.A. Middle East and North Africa, 1981, p. 13. 7SIbid. 76 International events have also had some effects on such imports. "Saudi Arabia imports of barley soared from 53,000 tons in 1978 to 405,000 tons in 1979. This was partly because of the rush to make purchases in France before the EC barley export payment of about $100 per ton ended on March 31, 1979."76 In addition to these factors, demand for agricul- tural products has been increasing rapidly. Otherwise, agricultural producers--dome5tic and imported--would not find consumers to buy the greatly increased amounts of food. The important factors in increased demand for such products include changes in consumption patterns, and econ- omic and population growth. 3.6 Factors Contributing to Increased Demand for Agri- cultural Products 3.6.1 Patterns of Food Consumption and Cost of Living Consumption patterns and cost of living are two important indicators in the continuing increasing demand for agricultural products which, in terms, affects im- portation of food stuffs. 76U.S.D.A., Africa and Middle East, 1979, p.55. 77 In the past, Saudis possessed few material goods, but oil wealth has generated tremendous consumption of material goods. Though Saudi Arabia remained an under- developed country, standards of living improved consider- ably for the majority of the people from 1970 to 1975. Extensive programs were undertaken to improve living con- ditions. Examples of these programs include government financed housing and subsidized imported food. Another example of improving conditions was the average Saudi diet, which was about 2,200 calories per day in 1972, and 2,500 calories per day in 1975.77 "The wealthier Saudi families now have an average daily per capita caloric intake of about 3,000, and foreign workers have a higher average."78 Information concerning household consumption pat- terns can be found in the Central Department of Statistics, consumer surveys for 1969-70 and 1977. This information shows a decline in the proportion of food in total house- hold budgets. Specifically, the survey of 1977 shows that the average total expenditures in Saudi households was SR 5,927, of which SR 1,596 or 27 percent was allocated to food. Also, information shows that income elasticity 77R.F. Nyrop, et al., Area Handbook for Saudi Arabia, pp.69-74. 78 U.S.D.A. Middle East and North Africa, 1981, p.13. 78 of food is about 0.5881 which means a 1 percent increase in income results in an 0.5881 percent increase in the demand for food.79 Table 3.13 shows income elasticity for selected foods. As for cost of living by the early 19705, the cost of living had increased geometrically. In 1973, observers placed inflation at 20 percent, and in 1974/75 at a rate ranging from 28 to 40 percent.80 In order to solve the problem of inflation, or at least to reduce its impacts, the government of Saudi Arabia adopted several policies such as abolishing road and ex- cise taxes, reducing customs tariffs, and import surcharges, and extending the list of subsidized goods.81 It also in- creased public employees' wages and salaries. The first increment was in 1974 and ranged from 30 percent for the lowest paid to 15 to 28 percent for the medium to high brackets. The second increment was in November 1975 at 12 percent across the board.82 The third increment in these wages and salaries was in May 1981 which ranged from 35 to 40 percent.83 79Robert E. Looney, Saudi Arabia's Development Potential: An Application of an Islamic Growth Model (New York: Lexington Books, 1982, pp.144-146. 80 R.F. Nyrop, et al., Area Handbook for Saudi Arabia, 3 . . . . Jebran Chamieh, ed,, Saudi Arabia: Record of Econ- omic Development, (Sin E1 Fil, Lebanan: The ResearCh and Publishing House, 1983), p.67. 79 TABLE 3.13: Saudi Arabia Income Elasticity of Demand for Selected Food Commodities Commodity (1) (2) Cereals 0.4315 0.2 Meat 0.6872 0.4 Dairy Products 0.4498 1.2 Oil and Fats 0.5129 0.5 Fresh Vegetables 0.4782 0.6 Fresh Fruits 0.5746 0.6 Sugar 0.6181 0.5 All Foods 0.5881 0.44 Sources: (1) Robert E. Looney, Saudi Arabia's Development Potential: Application of an Islamic Growth Model (New York: Lexington Books, 1982) p.145. (2) E. Asfour, Saudi Arabia—-Long Term Projections, p.19. Information in these tables published in 1965 for Asfour figures and in 1982 for Looney figures. 80 3.6.2 Population and Economic Growth As mentioned in Chapter Two, population estimates in Saudi Arabia have been in dispute for some years. An official estimate for 1956 puts the population at 6,036,400 and estimated the mid-1955 population at 6,750,000. In 1974 a census was held, and a total population figure of 7,012,642 was announced. The United Nations estimate for the mid-19705 put the total population at 7,740,000. Another source estimated the Saudi population in mid-19805 at 8.2 million, the birth rate at 49, death rate at 18, annual rate of growth at 3.0, and 23 years to double the population.84 The important point here is that the Saudi popula- tion is increasing, although it is difficult to measure this increment because of the diversity in estimates from one source to another. The population growth rate, es- timated at 2.95 percent by the United Nations, and at 3.0 by the Saudi government, is likely the most dependable in- dicator of the increment in the Saudi population. From all this information, it may be concluded that the Saudi population at least doubled during the period from 1950 to 1980. 84Huw R. Jones, A Population Geography, (New York: Harper and Row, Publishers, 1981), p.281. 81 Another important issue related to population is the number of foreign workers in Saudi Arabia. The 1974 census indicated that the non-Saudi population in the coun- try was 791,105;85 while other sources put the non-Saudi population at 1.5 million in the same year.86 However, this figure increased dramatically and was estimated at over three million by 1981. The population of the 3 million workers from South Asia and Yemen, who receive relatively low wages, has declined while the number from the United States, Europe, and East Asia, who receive relatively high pay, has increased. The per capita income of the 8 million local residents continues to rise as more rural dwellers move to rapidly growing urban centers. 87 From this information, it is likely that the foreign workforce in Saudi Arabia doubled between the early 19705 and the early 19805. With a citizen population doubling from 1950-1980 and foreign workers in the country doubling from 1970-1980, such huge increments, over a relatively short period, can be considered one of the major factors underling greatly 85Daghistani, "Economic Development in Saudi Arabia," p.13. 86"The Middle East and North Africa? 1982, p.664. 87 U.S.D.A., Middle East and North Africa, 1981, p.11. 82 increased demand for agricultural products. Another of these factors is the economic growth experienced over the period. Saudi Arabia is one of the largest oil producers and exporters in the world today. Oil production in com- mercial quantities started in 1938 with an annual produc- tion of 0.5 million barrels, which developed into 3,623.8 million barrels annually in 1980 (Table 3.14).88 This means that oil production has been increased geometrically from 1938 to 1980. Accordingly, revenues from exported oil increased from $3.2 million in 1939 to $608.7 million in 1963; to reach $101,813 million in 1981 (Table 3.14). This resulted in a high rate of economic growth. Table 3.15 shows the growth of GNP in the period 1966/67 to 1984/85. The total economic growth shows 8.75, 13.41 and 8.04, respectively, during the periods 1966/67, 1970/75, and 1975/80. From 1981-1985 it is estimated to be 3.28 in the period between 1980/85. The high annual economic growth rate can be con- sidered another of the most effective factors in raising demand for agricultural products, particularly when annual growth in the agricultural sector is the smallest one among the sectors. 88Daghistani, "Economic Development in Saudi Arabia," pp.36-4l. 83 TABLE 3.14: Oil Production and Oil Revenues, 1938 tol983 Production Revenues Year (Million Barrels) (S Million) 1938 0.5 ——- 1939 3.9 3.2 1940 5.1 --- 1941 4.3 --- 1942 4.5 --— 1943 4.9 --- 1944 7.8 --- 1945 21.3 --- 1946 59.9 10.4 1947 89.9 --- 1948 142.9 --- 1949 174.0 --- 1950 199.5 56.7 1951 278.0 110.0 1952 301.0 212.2 1953 308.3 169.8 1954 350.8 236.3 1955 356.5 340.8 1956 366.7 290.2 1957 373.7 296.3 1958 385.2 297.6 1959 421.0 313.1 1960 481.3 333.7 1961 540.7 377.6 1962 599.7 409.7 1963 651.8 607.7 1964 694.3 523.2 1965 804.8 662.6 1966 950.0 787.9 1967 1,023.8 909.1 1968 1,114.1 926.8 1969 1,173.8 949.0 1970 1,386.3 1,214.0 1971 1,740.8 1,884.9 ‘1972 2,201.8 2,744.9 1973 2,772.6 4,340.0 1974 3,095.1 22,573.5 1975 1 2,582.5 25,675.8 1976 3,139.3 30,754.9 1977 3,353.9 32,583.4 1978 3,038.0 32,234.0 1979 3,479.2 48,435.0 1980 3,623.8 84,466.0 1981 3,586.0 10l,813.0 1982 . 2,367.0 70.479.0 1983 (Estimate) 1,825.0 37,123.0 Sources: (1) E. Asfour, Saudi Arabia--Long Term Projections, pp.124-125; (2) A.I. Daghistani, "Economic Develop- ment in Saudi Arabia " Ep 37 38 and 148; (3) SAMA, Annual Report: 1403 (19 ), (Riyadh: S.A. Printing co. Ltd?) 1985. 84 TABLE 3.15: Growth of GNP in the Period 1966/67 to 1984/85, Annual Compound Growth Percent Per Year (In 1969/70 Prices) First Second Third Plan Plan Plan 1966/67 1970/71 1975/76 1980/81 to to to to Economic Sectors 1969/70 1974/75 1979/80 1984/85 Producing Sectors Agriculture 3.62 3.59 5.40 5.35 Other Mining 5.56 21.07 17.14 9.78 Other Manufac- turing 11.76 11.39 15.37 18.83 Utilitiess 11.31 10.93 24.41 29.46 Construction 3.32 18.57 17.78 2.48 Service Sectors Trade 10.09 13.94 22.06 8.42 Transport 10.58 16.97 21.13 12.93 Finance 7.94 8.16 12.99 7.29 Other Services 9.76 7.09 13.91 2.95 Government 4.39 7.75 5.96 7.16 Non—Oil Economy 6.96 11.66 15.13 6.19 Oil Sector 10.34 14.80 4.78 1.34 Total Economy 8.75 k3,4k 7,94 3,28 SOURCE: Ministry of Planning (S.A.), Third Development Plan 1980/85, (Riyadh: Ministry of Planning Press), p.20. 85 3.7 Summary In summarizing the agricultural situation in Saudi Arabia from 1950H1980, it is apparent that (1) domestic agricultural production increased during the period from 1950 to 1980; (2) agricultural productivity decreased during the same period; (3) agricultural patterns under- went dramatic changes; and (4) imports of agricultural products increased from one year to another, with par? ticularly rapid growth in the 19705. Not all of these changes were prescribed in the five year national develop- ment plans that encompass the best thinking of Saudi goals and directions of the country. The focus of the next chap- ter is on the three five-year development plans that guide agricultural decision—making from 1970-1975, 1975-1980 and 1980-1985. CHAPTER FOUR PAST DEVELOPMENT PLANS AND AGRICULTURAL POLICIES 4.1 Introduction Before discussing development and development plans, it is useful to briefly discuss the foundations of the concept of development. The term development has been widely and variously used, with different kinds of criteria, to distinguish countries from each other, such as "developed" countries and "underdeveloped" or "developing" countries. It is also used interchangeably with such terms as industriali- zation, urbanization, and modernization. A number of ad- jectives are used in conjunction with it, as in rural de- velopment, resource development, social development, econ- omic development, and agricultural development. One definition of development, according to Rogers, emphasizes the social process of an evolving society. Development is a widely participatory process of social change in a society, intended to bring about both social and material advancement (including greater equity, freedom, and other valued qualities) for the majority of the people through their gaining greater control over their environment.89 . , 89E.M. Rogers, (ed.) Communication and Development: Critical Perspectives, BeverlyIHills, CA: Sage Publications, 1976), p.133. 86 87 In Saudi Arabia, the conception of development is entirely different than the conception mentioned above, in the sense that development is the responsibility of the government which plans and implements development through- out the country. This is due to the fact that the Saudi government does not allow its citizen to possess the im- portant resources of production such as oil and minerals. The oil and the oil revenues that comprise 90-95 percent of the national budget are government properties. A definition of development that is more applicable to Saudi Arabia is by Sanders, who finds that development "invovles national planning, allocation of resources and systematic movement toward definite goals."90 The emergence of development planning in Saudi Arabia can be traced to November 26, 1958 when the Saudi government established an "Economic Development Committee" as a semi-independent governmental body which was linked to the Ministry of Finance and National Economy. On Sept- ember 17, 1960 the "Economic Development Committee" was dissolved and a "Supreme Planning Board" established as a result of the failure of the development committee to achieve 90I.F. Sanders, "The Concept of Community Development.” in L.J. Cary (ed.) The Community Development Process, (Columbia, MO: University of Missouri Press, 1970) p.9. 88 its goals. The "Supreme Planning Board" was replaced by the "Central Planning Organization" in 1965, which was given a more powerful status than its predecessor. On October 13, 1975, this agency was further upgraded to 91 This ministry status as the Ministry of Planning. ministry is largely responsible for the rapid pace and direction of development in Saudi Arabia. In 1970, the Saudi government put into effect its first comprehensive five—year development plan. Following the first one, and based on its achievements and changing conditions, the Second Development Plan was devised for 1975-80, and the third Plan for 1980-85. These three development plans are discussed briefly in this chapter, with primary focus on the agricultural sector. 4.2 First Development Plan (1970-1975) The First Development Plan was established with four general goals: to maintain the religious and moral values of Islam, to increase the well-being of the citizens, to maintain the security of the country, and to maintain econ- omic and social stability by achieving three objectives: 91 pp.44-56. A.I. Daghistani, Economic Development in Saudi Arabia, 89 l. maintaining a high rate of general national production growth 2. developing human resources to increase and facilitate their participation in the de- velopment process 3. diversifying productivity sectors and reducing the dependence on export of oil by increasing the productivity of other sectors. 92 The program to implement this plan was a relatively modest one costing 56,223 million Saudi Riyals (one dollar is equal to 3.34 Riyals), of which a large proportion (32,762 million Riyals) was allotted to economic and social development.93 In analyzing the First Development Plan, Helen Lack- ner (1978) detailed some of its achievements and failures which are summarized here. -I.sreasing GDP by 10 percent a year does not give a real indication of the development of the economy since the increase in GDP is mostly due to the multiplication of oil revenues rather than to increased output in industry or agriculture. -Agricu1ture failed to reach its target. The plan aimed for a 4.6 percent increase in production yearly over the plan period. The real rate of growth turned out to be 3.6 percent. 92Saudi Arabia: Central Planning Organization, De- velopment Plan 1390 A15. (1970 A.D.), (Dammam: Al-Motawg Press, 1390 A.H.) p.25 (Arabic) 93"The Middle East and North Africa, 1980-81," London: Europa Publication, Ltd., 1980/81), p.646. 90 -The first plan's achievement in the health sector were limtied by difficulties of insufficient staffing, lack of organization and coordination between the differ- ent departments. -The Plan's targets in telecommunications with automatic telephones and satellite connections were not fulfilled and work was concentrated in the large popula- tion centers at the expense of the rural areas. -In industrialization, the general picture is one of highly underdeveloped industry.94 Since this was the government's first attempt at long-term planning for developing the country, one might have predicted that it would not achieve its targets as well as those countries that have had long experience with planning, but it was a necessary starting place. In conclusion it seems that the First De- velopment Plan was by no means an unqualified failure, as it was an improvement on the previously chaotic situation. It started the establishment of the planning processes, collecting reliable statistics and created the possibility of measuring the degree of progress, defined in terms of modernisation.95 94Helen Lackner, A House Built on Sand: A Political Economy of Saudi Arabia, (London: Ithaca Press, 1978). 95Ibid, p. 146 . 91 4.2.1 Agriculture Under the First Development Plan The emphasis that was given to agricultural de- velopment under the first development plan had the main goal of increasing self-sufficiency and increasing pro- ductivity by utilizing available resources. Success was to be achieved by accomplishing several objectives: (1) increasing agricultural production by 27 percent during the period of the plan, which means 4.6 percent annual growth rate. (2) encouraging the use of fertilizers and machinery by subsidies. (3) increasing the distribution of new lands. (4) providing agricultural credits.96 Agricultural achievement under the first develop- ment plan were not very extensive. As mentioned previously, the annual growth rate was 3.6 percent instead of 4.6 per- cent, while the annual economic growth rate achieved was 10 percent. 4.3 The Second Development Plan, 1975-1980 The Second Development Plan covered the period 1975-80; its general goals were as follows: 96Saudi Arabia, Central Planning Organization, First Development Plan, 1390 A.H. (1970 A.D.), (Dammam: Matawa Press, 1390 A.H.), p.32. 92 (1) maintaining the religious and moral value of Islam; (2) assuring the defense and internal security of the country; (3) maintaining a high rate of economic growth by developing economic resources, maximizing earnings from oil over the long—run, and conserving depletable resources. (4) reducing economic dependence on export of crude oil (5) developing human resources by education, training, and raising standards of health (6) increasing the well-being of all groups within the society and fostering social stability under circumstances of rapid social change. (7) developing the physical infrastructure to support achievement of the above goals.97 The second five-year plan provided for expenditures of no less than Saudi Riyals (SR) 498,230 million (about $142,000 million). The largest single investment item in this plan was defense, put at SR 78,157 million, followed by education at SR 74,161 million, urban development at SR 53,328 million and industrial and mineral production at SR 45,058 million.98 7Ministry of Planning (S.A.), Second Development Plan 1975-1980, (Jeddah: Dar Okaz Press, 1975), p.4. 98"The Middle East and North Africa, 1980-81," (London: Europa Publications, Ltd., 1980-81), p.646. 93 In terms of achievements under the second develop- ment plan, Lackner (1978) predicted that the difficulties and problems that arose in the first development plan were likely to arise in the second one. The difficulties and problems which have arisen in the conception and implementation of the First Development Plan are also likely to arise in the Second for a number of rea- sons: both were devised with the assistance of U.S. consultants, both are a collection of piecemeal suggestions, both fail to take into consideration the restrictions imposed by an inadequate infrastructure, both fail to recog- nize the limitations imposed by the inexper- ience of the administration and the lack of manpower at all levels. 99 In contrast to the above, the Second Development Plan was considered by some as a successful endeavor. Despite the pessimism of most foreign com- mentators, the Saudis pursued the goals of the second plan with great determination, and the results have been, on the whole, successful. Difficulties were confronted and overcome: a crisis of port congestion was countered by improved efficiency and the rapid construction of new berths; run- away inflation was successfully met with spending controls and some cutbacks in projects; and the exploitative ambitions of foreign companies were kept in check. Although the main industrial projects fell behind schedule, infrastructure grew apace, endowing the country with the basic trans- port and communications facilities required by a modern industrial state. 100 99 100 p.646. Helen Lackner, House Built on Sand, pp.147-148. "The Middle East and North Africa, 1980-81," 94 4.3.1 Agriculture Under the Second Development Plan The objectives for agricultural development, as mentioned in the Second Development Plan, were three: (1) to raise the per capita income and improve the welfare of rural people, (2) to minimize the country's dependence on imported food, and (3) to release surplus labor for employment in other sectors. These objectives were to be achieved by raising the level of productivity in agriculture and by bringing more land into production.101 The agricultural policy set in the Second Develop- ment Plan to meet these objectives was as follows: In order to reduce the Kingdom's dependence on food imports and to help develop its rural areas, the Government will: --Encourage private enterprise in food pro- duction, processing, and marketing while confining its own activities to those into which private entrepreneurs are unable or unwilling to enter. --Aim at a reasonable balance between the economic and social rewards available from agricultural activities in the rural areas and the rewards available from other econ— omic endeavors in the urban areas. 101Ministry of Planning (S.A.), Second Development Plan, 1975—80, p.123. 95 --Recognize future as well as present needs and consumer as well as producer needs in implementing agricultural programs. The Government's strategy for affecting this national policy is based on the following eight principles: --The best use of water resources, especially depletable resources. -HMaximum feasible self-sufficiency in the production of farm machinery, seed, ferti— lizer, and other inputs. --Development by the private sector, in- cluding cooperatives, of the facilities and services required for food processing and distribution. --The same guarantees for foreign investors in agriculture as for foreign investors in industry. --Provision by the public sector of the physical infrastructure and the safety and animal health services required by the private sector in agriculture. —-Expansion of the credit available from both government and private sources for the de- velopment of agriculture, including fisheries. --The provision, when studies show they are needed and feasible, of special economic in— centives and programs to stabilize prices or support farm incomes. --Protection of the environment from pollution associated with agricultural activities. 102 The agricultural achievements of the Second Develop- ment Plan were greater than those under the first one if measured by the annual growth rate which was 3.6 percent in the first plan, and 5.4 percent in the second one. 102Ministry of Planning (S.A.), Second Development 1975-80, p.124. 96 4.4 The Third Development Plan, 1980-1985 The Third Development Plan extends for the period 1980 to 1985. The general goals mentioned in this plan are: (1) to maintain the religious value of Islam, by applying, propagating, and fostering God's Sharia (law); (2) to assure the defense of religion and the country, and maintain the internal security and social stability of the Kingdom; (3) to continue balanced economic growth by developing the country's resources, by increasing the income from oil over the long term and by conserving deplet— able resources, thereby improving the social well-being of all citizens and providing the economic strength to attain all other fundamental goals of development, (4) to reduce dependence on the production of crude oil as the primary source of national income, (5) to develop human resources through education, training and the raising of health standards, (6) to complete the basic infrastructure which is required for the attainment of these other goals. 103 Planned investment for the Third Development Plan is set at SR 782,000 million (about $235,000 million). 103Ministry of Planning (S.A.), Third Development Plan, 1980-1985, (Riyadh: Ministry of Planning Press, 1980), pp.3-4. 97 The Third Development Plan is intended to shift emphasis away from infrastructure projects onto the productive sec— tors, with particular emphasis on agriculture. Also, the plan stresses the need for manpower training to reduce reliance on foreign labor and for Saudi private investors to be encouraged to play a more prominent role in the econ— omy.104 It is too early to judge the Third Development Plan's achievements, but one can discover some of the highlights by comparing the goals and expenditures of these three de- velopment plans. The First Plan was focused on three main points: (1) maintaining a high rate of general national production; (2) developing human resources; and (3) re- ducing dependence on oil. In terms of costs, this Plan's expenditures were SR 56,223 million. The Second Develop- ment Plan focused more attention on economic growth (main- tain a high rate of economic growth by developing economic resources, maximizing earnings from all over the long term, and conserving depletable resources), while in the Third Development Plan more attention was given to the "balance" in economic growth and improving the social well-being and 104 p.646. "The Middle East and North Africa," 1980, 81, 98 moral values. Also, in the Second Development Plan, the intent was to develop infrastructure while in the Third to complete it. In terms of expenditure, the Second De- velopment Plan budgeted no less than SR 498,230 million, while the Third Development Plan budgeted no less than $782,000 million to accomplish its objectives. 4.4.1 Agriculture Under the Third Development Plan More attention is given to the agricultural sector in the Third Development Plan than in the First and Second Plans. This can be derived from the objectives and policies regarding the agricultural sector. Objectives: The main objectives of the Kingdom's agricultural development are given below. (1) To establish and maintain a prudent level of self-sufficient in food pro- duction, recognizing both producer and consumer interests. (2) To provide the opportunities for attaining reasonable agricultural incomes and raise the welfare of rural people so as to achieve a balance between the economic and social rewards attainable in rural and urban areas. (3) To optimize the use of agricultural water resources. (4) To optimize the use of the Kingdom's land resources. (5) (6) (7) 99 To optimize the use of the Kingdom's marine resources. To improve the skill level in the agri- cultural sector. To protect the agricultural (including marine) environment. In the achievement of the above objectives, the following policies will be pursued. (l) (2) (3) (4) (5) (6) (7) Continue the detailed evaluation of the Kingdom's available water and land resources. Continue the improvement of efficiency of the traditional agricultural sector by the adoption of modern farming methods that minimize labor and water inputs, assisted by improved crop selection, the formation of farming cooperatives, im- proved subsidy schemes and the combina- tion of extension services. Continue the encouragement of the private sector in the development of larger scale agricultural projects ranging from major integrated agricultural projects, such as the Haradh project, to individual crop, dairy, and livestock projects. Improve range management through protective measures and discouragement of overgrazing. Continue the efficient development of the major reclamation projects. Improve the sector's data base to provide reliable information for analysis by both the public and private sectors and assist the overall management of the agricultural sector. Review the agricultural subsidies avail- able and improve their overall effective- ness. 100 (8) Review the Scheme for Barren Land Distri- bution and make appropriate adjustments to expedite its contribution to agricultural production. (9) Increase the research effort concentrating on practical problems of production and marketing. (10) Increase and promote training programs availability for both public and private sectors. 105 4.5 Agricultural Subsidies and Credits Because Saudi Arabia is a developing country, agricultural practices were traditional. This traditional agriculture was in economic equilibrium until rapid change and population growth began. In addition, when increased oil earnings began flowing into the country the compara— tive advantage in Saudi economy became very high which caused many farmers to move from the agricultural sector to others because of the greater incentive (high rate of return) available in economic activities other than agri- culture. Faced with declining agriculture, the Saudi gov- ernment moved to develop the agricultural sector by using such techniques such as agricultural subsidies and credits to promote the adoption of new technologies and thus in- crease production. 105Ministry of Planning (S.A.), Third Development Plan, 1980—1985, pp.149-151. 101 4.5.1 Agricultural Subsidies In 1973, the Saudi government started introducing a subsidy package program in order to increase agricultural production. Farm machinery, fertilizers, animal feed con— centrates, wheat, sorghum and rice were subsidized. In 1974, poultry farms, dairy farms, sheep, and camels were added to the subsidy program and in 1976, the total cost of transporting 200 or more dairy cattle was introduced to subsidize dairy farm activities (See Table 4.1). Other subsidies were introduced later on such as those on seed potatoes, dates and date palms planted. Some subsidies were changed, such as the wheat subsidy (See Table 4.2). 4.5.2 Agricultural Credits The Saudi Arabian Agricultural Bank (SAAB) was founded in 1964 by the government in order to provide in- terest-free credit to the agricultural sector. Credit to support agricultural activities is provided through this bank under varyimg conditions (See Tables 4.2 and 4.3). It was apparent that the Saudi Arabia's goals and objectives under the First and Second Development Plans, the agricultural development plans in particular, were not entirely met, although the latter period showed im- provement. Now, over half-way through the Third Development 102 TABLE 4.1: Agricultural Subsidies: Saudi Arabia (1973-1975) Year Introduced Amount Inputs Farm Machinery 1973 45% of price Fertilizers 1973 50% of price Animal Feed Concentrated (36% protein) 1973 50% of price Poultry Farms 1974 30% of price Dairy Farms 1974 30% of pricea Transportation of 200 or more dairy cattle 1975 Total cost of transportation Feed for drought relief At normal prices Outputs Wheat 1973 SR 0.25/kg Sorghum 1973 SR 0.25/kg Rice 1973 SR 0.30/kg Sheep 1974 SR10.00/head Camels 1974 SR50.00/head a20% if financed by Agricultural Bank. Poultry and dairy farm subsidies include only machinery and equipment. SOURCE: Ministry of Planning (S.A.), Second Development Plan, 1975-80, (Jeddah: Dar Okaz Press, 1975), p. 122. 103 TABLE 4.2: Incentives for Agricultural Production: Saudi Arabia (As they appear in the Third Development Plan) Type Amount Production Input: a. Fertilizer 50% of cost' b. Animal Feed 50% of cost c. Potato Seeds 5 tons free Machinery and Equipment: a. Poultry equipment 30% of cost b. Dairy Equipment 30% of cost c. Engines and Pumps 50% of cost d. Fish trawlers variables Transportation: a. Air transport of cows 100% of cost Production Output: a. Wheat SR 3.5/kga b. Rice SR 0.30/kg c. Corn SR 0.25/kg d. Millet/Barley SR 0.15/kg e. Dates SR 0.25/kg f. Date palms planted SR 50/tree Agricultural Credit: All types variable conditions Agricultural Industrial Credit: All types variable conditions Land Acquisition: Land distribution free aPurchase price (1978/79) SOURCE: Ministry of Planning (S.A.), Third Development Plan! 1980-85. (Riyadh: Ministry of Planning Press, 1980), p. 104 «NH.d .HNmmH .000p0 HHH«m “rp«>Hmv H.o.< mm\Nm¢H. .:.< movH\NoeH .Hpoa0m H«:cc< rpc0000cHz .mccm "mmomsom Nae.me.mHH.mH CNN.NHN mNN.HHH.mmm.NH «No.0NN HpN.«me.HNN NmH.Nm Heeoe Hmm.HNowppH.e www.mm pmoaeme.oeH+e Nme.mm Hem.oeN.mN eme.m mm\Nm Heo.Nom.Nmm.N pee.em mop.mee.mom.N omm.Hm mmm.pme.mN pmm.m NN\H« Hme.ppm.omm.N «NH.me opo.oep.Hme.N «Hm.mm HNe.pNN.mm OHm.m H«\cm HOH.pmp.«NH.H NNH.mH Hme.Hmm.mOH.H mNN.eH pem.emH.NN Hmm.m om\me Npm.HHo.moe mmH.mN HmN.pmN.mmp meH.mH moe.mmN.mH moo.e me\me «0N.mpp.mmm «5N.oN HNm.emm.Hem pNH.pH Hem.mHH.me Nem.m «H\HH Hpm.mmm.mme Hem.HN mpN.omm.NHe eeH.HH mac.mmN.eH mmp.m He\pe eHo.mme.mpN Noe.mH mem.mmH.HeN mNp.pH mee.meN.m meo.m 0H\me mme.mom.meH HmN.pH meH.mNm.mmH pHv.NH map.HmH.e mmm.m me\ee mo«.mom.pm eHe.m mmo.mmH.Nm mep.m oHe.eemm. HeH.H eH\mH me.mmm.¢H Hee.e emN.HHp.pH oem.N NmN.pHm.N Hmm.H mH\NH H0H.Nmm.pH mp«.m Hee.NeN.eH Hmp.N www.mpN.N emN.H NH\HH «Np.eNp.pH Hmm.e pov.Nmo.eH oep.N NNN.mHm.N HeN.H He\oe NNH.0MH.pH pmm.e NHN.HNH.mH mpm.N emm.moo.m meH.H oe\mp moo.eem.mH eep.m eme.oON.NH eve.N HHN.0H«.H HNN.H ap\«p oom.mHo.NH Nme.m oom.eee.oH oom.N coo.Nem.H NNN.H Np\ep oop.NmH.mH 04H.m oom.mmo.NH HpN.N oce.Nmo.H mam Hp\pp mNe.HNm.N NNm.H Hpm.Nmp.« Hme.H epm.emN HeH pp\mp mmm.m«m.e mNp mom.mmN.e mem coo.HmH Nm mp\ep HCSOE< . OZ ”Hr—50:2 . OZ HCDOE< . OZ mumw> mCmoa Hobos mCmoq EHMEIECHUmz mCmoq Eumenuuozm mCmoq «Hn«0< Hps«m "A.o.0 p0pc00xm 0Hp0po H«p0r0o ”m.e msmee 105 Plan period, it is important to identify some of the major problems facing such efforts. 4.6 Major Problems Facing Agricultural Development In Saudi Arabia, developing the agricultural sec- tor is an especially difficult task because of the many problems that confront this sector of the economy, his- torically and environmentally. Among these problems are those of water, transportation, marketing and comparative advantage. 4.6.1 Water Resources As mentioned in Chapter Two, water resources are the most scarce resources affecting agriculture in Saudi Arabia. The water resources that exist comprise four cate- gories: surface water, ground water, sea water (after desalination), and sewage water. Surface water is the most scarce in Saudi Arabia, where there are no perennial streams or rivers, making runoff water the only real surface water in the country. Also rainfall is very low and unpredictable. Ground water is the main water resources in Saudi Arabia and used for such different purposes as domestic, municipal, industrial, and agricultural irrigation. Nine aquifers have been 106 identified in the country which store usable water. The main problems with these aquifers are that (l) the amount of water available in these aquifers is not precisely known, and (2) most of these aquifers contain water from a long time ago and are not rechargable from rainfall. In other words, this underground water is an exhaustable resource. The size of the Kingdom's water reserves is a closely guarded State secret. No one knows, or wants to say, how much underground water there is. There is much concern among both Saudi and Western agricultural special- ists about the unrestrained use of a limited resource. Some of the experts note that some aquifers are millions of years old and aren't recharged by rainfall anymore; other report wells drying up at a rate of three feet a month. 106 Sea water is the only water resource that is not an exhaustable one, but it is also the most expensive water resource. Even though there has been great development in this water resource, it is considered inadequate for the country's needs and reserved to urban and industrial uses. Total water demand was estimated at the end of the First Development Plan period as 1,900, 300 and 170 million cubic meters per year for irrigated agriculture, oil well injection and urban uses, respectively. At that time, there were five desalination plants in operation, with a 106Brad Heller, "Saudi Wheat Farms Tap Subsidies, Aquifers," The Wall Street Journal, May 29, 1984, p.30. 107 total installed capacity of 17.7 million cubic meters per year and power generation of 50 MW. This water desalina— tion and power generating were later increased to 65.4 million cubic meters per year and 350 MW and this capacity was scheduled to reach 523 million cubic meters per year, with 3,145 MW of associated power generation at the first three years of the Third Development Plan.107 This amount of water from desalination plants was a small portion of the total water demand at the end of the First Development Plan (1975) and the total demand should be increased by the end of the Third Development Plan (1985), by a con- siderable amount. Sewage water is present in very small amounts due to the fact that this kind of water is available only in the large cities in the country. To the writer's know- ledge, it has not been utilized yet. Another dimension to this problem of water scarcity is the traditional way of irrigating agriculture in the country. This is the flow-irrigated system in which a farmer covers all planted areas by flow water and is con- sidered an inefficient way of utilizing the available water. New irrigation systems have been introduced but are still few in number and too limited for large scale farming. 107Ministry of Planning (S.A.), Third Development Plan, 1980-85, pp.1l6—118. 108 New projects primarily use either the drip or sprinkler irrigation methods. The drip system is more widely used for irrigating vegetables and orchards and its use is being encouraged by MAW. The center pivot irriga- tion system was introduced in 1977 (1397) with only one such system. At present, there are over 30 systems in operation, and each is capable of irrigating up to 50 hectares. 108 In a summary, water scarcity is one of the major problems that affect Saudi agricultural development. It seems destined to continue to affect such activity in the near future. 4.6.2 Agricultural Marketing The traditional markets in Saudi Arabia are the Al-Suq which represents the old-age Middle Eastern market- place. Richard F. Nyrop, et al., describe these Suq mara kets and the changes in them over time. The suq is the old—age Middle Eastern marketplace. In its historical develop- ment in Saudi Arabia most local markets were small because of long, arid distances separating communities. Craftsmen, farmer, and nomad met at small weekly markets to exchange products.... Barter was the usual method of exchange and conversation was an integral part of the bargaining process. 108Ministry of Agriculture and Water (S.A.), Guide to Agricultural Investment, p. 38. 109 Conditions changed, but the suq tradition changed more slowly. Nevertheless, by 1976 barter had given way to the use of money in most parts of the country, the merchant had replaced the producer as the seller of goods in most markets, and fixed prices rather than bargaining were becoming more common. 109 As for agricultural marketing in particular, Mohammed Al-Fair discussed the agricultural market in Taif, Saudi Arabia, which is very similar to agricultural marketing in any part of the country. He indicated six components in the agricultural marketing process, all of which are related and depend on each other. The components are: (1) landholding, (2) farm management, (3) transpor- tation, (4) the central market, (5) auctioneer, and (6) the consumer. The present traditional system of agricultural mar- keting, involving these components is inefficient and needs to be improved. Until it is, agricultural development in the country will be retarded by inadequate markets. The most important problems within this system--as Al-Fair saw them--were l. unstable prices which fluctuate from one day to another as a result of the producer's need to sell his product within 24 hours from the time of harvest at whatever prices he can get, especially perishable items; 109R.F. Nyrop et al., Area Handbook for Saudi Arabia, p.305. 110 2. poor and costly transportation; 3. poor communication; and 4. lack of standards for grading and quality control. 110 Even though there has been great achievements in transportation and communication facilities, these four problems still exist and have a great impact on agricul- tural marketing at this time in Saudi Arabia. In terms of transportation, most agricultural pro- ducing areas are located far away from the large populated areas where the large markets are. This forces the farmers to transport their products through long, arid distances to the markets, which is costly in money and time. It is worthwhile to mention that there is no single large firm or organization that buys the farmers' products at the farm. Instead, the farmers have to carry and to transport their products to the market no matter how far it is. In addition, transportation facilities, particularly for perish- able products, are limited which causes a lot of damage and spoilage of locally grown fruits and vegetables. Another problem in the agricultural market is the middleman who buys the farmers' products and sells them llOMohammed, Al-Fair, "Agricultural Marketing System in Taif, Saudi Arabia," (M.A. Thesis, Michigan State Univer- sity, 1973). 111 within a short perid of time. They reap a very high profit, in some cases more than 100 percent (Table 4.4). Marketing margins are high and in some cases excessive. For fruits and vegetables, the farmers' share of the retail price is estim- ated at 35 to 45 percent. The commission agent charges a fee of 4 percent to 5 percent. The wholesale margin is around 10 percent, while the retail margin varies considerably and ranges between 30 percent to 120 percent over the wholesale price. 111 Marketing operations, such as grading, packing, storing, cooling and processing, are still undeveloped or fall short of the need for domestic produced and imported food stuffs. In short, the agricultural marketing system in,Saudi Arabia is an undeveloped system in which the prices of both domestic and imported foodstuffs fluctuate. The most important factors affecting this market system and prices are: (l) the absence of grading and standardization; (2) costly transportation; (3) short period of time which is devoted to wholesale process; (4) poor communication between producer and consumer; and (5) middleman intervention between producer and consumer, accompanied by a high retail margin over the wholesale price. lllMOAW (S.A.), Guide to Agricultural Investment, p.47 112 .mv.d .lmNmH .0p0EdoH050d HausuHsoHHo< mo acosuumdmo “Cp«>Hm. .memu< szmm CH ucosum0>CH HmusuHsoHum< cu opHsu < ..«Hnmuc Hpsmmv "wogsom o b m -- -- vhH cm.v va oo.v omH oHH oo.m mm.~ mmoumHom mmH oo.HH moH m~.m moH mn.m -- -- -- NH.m Conesosu -- -- -- co.m -- om.v -- -- -- - zmmzom -- -- oNH om.MH o~H om.MH oNH HNH oo.mH mn.oH muxo mmw oo.m mm~ oo.m mmH oo.v mmH QMH vm.~ MH.~ quHdmom -- -- «mm oa.m heH oo.v mvH HHH om.~ m~.~ muoHC«O cum cc.m -- -- com oc.m cow -- -- om.~ mCmom cmmuo on mmN oo.¢ HH~ om.h me om.m mmH moH oh.m om.m mcmmm ocHupm -- - vmm oo.v emu co.v mmH oHH mm.H Hn.H mwoumeoe QUHHC .mm ooHum .mm moHum .mm ooHum moHum .mm .mm qu CoHu .ox CoHu .Ox CoHu .Ox CoHu CoHu .0: .0x -Uoseou -o:< mo mom -o:< mo Com -u:< uo mom -o=< no -o:< «0 Cum Com mo ucmouwm ouHum ucmoumm ooHum accoumm muHum quouom acmoumm ooHHm moHum muomeEumdsm uoxum: HH0u0m uoxumx HHmumm uaxuml- uoxumx onmoHozz CoHuoac bumHm: nnmuumm wounmowx mHnmuc Hosmm .anH. hhmH .CN >umsun0m Co Ccm>H¢ CH muHum CoHuos< um>o nCoHumquo UCHuoxum: monum> HOW mommuam moHum v.v mqme¢. .wanmh< wfismm CA. yawn: Oswa—OMU HO Quay—am flcm COauUZOOh—m mo umOU .m¢< . Hmuocoo ee.~ em.m o.nod.e o.edq.m~ e.mmm.o man.ma~.n eeq.aeq.e m.m-.~ mo~.~ee.m m.eme mdmem>< mm.~ oe.v «.mom.s «.mmo.m~ h.mm~qe oed.eee.m em~.mem.e~ omeqm em~.eeeqe mes e se.~ v~.m m.emm.e v.os~.ma d.eee.o msm.odv.~ eee.a~e.m ewv.~ cm~.emm.~ Hem m co.~ om.m o.ddm.m e.amm.- d.dnm.p em~.ad~.~ coo.~eo.m ~mo emm.~oe.~ mmw v moumuooz oma coca who: "omcmm .m -.~ m~.m ~.eve.m o.o~m.- e.emo.e m~q.mom edd.mm~.~ -m ~an.oeo n.md momee>< m~.~ we.m m.ed~.e v.m~e.- m.v~n.m onquo eee.e~m.~ ecu om~.~de ems m m~.~ o~.m p.ame.v c.5av.- e.~e~.e emp.mem ocm.vv~.~ Rem oee.mms mod N me.~ mo.” ~.pdo.n m.ea~.m~ v.od~.e~ Awe.mm~ em~.~de mew mmv.-e do a magnuom: and cozy mmoq "mmcmm .< .dx\¢m. .z 1: 1: .:\em. .mm. .mm. .meou. 1mm. 1:. eonesz code \eoa. \em. \mm. cow» demoed ceded: code umoo made even unaccum came» uwwoum chauom (caucum uoz ~m:::4 noncoum Amscc< coum> (ohm mo umou oomuo>¢ oomuo>< no umou Anne? Hauoa um:::< “ouoa Iguasu moauo>¢ ommuo>< deuce A Hmawev .menmec “65mm ea eoeuoaned anon: do easemeom new memoo "e.m mdmee 139 2. The average return to one hectare was SR 11,878.8 for the projects less than 150 hectares and SR 13,496.6 for projects larger than 150 hectares, or an increment of SR 1,617.8 per hectare. This indicates that financial return can be increased by increasing the area under wheat culti- vation. The combined average financial return for the six projects was SR 13,208.l per hectare. 3. The net profit from farming one hectare of wheat was found to be greater in the large projects than in the small ones. The net profit from one hectare was SR 5,048 for a farm with an area of 100 hectares; it was SR 6,963.0 for a farm with an area of 450 hectares. 4. Average Yield (productivity): For the three projects of less than 150 hectares each, the average yield was 3.23 tons per hectare; while the three projects of more than 150 hectares each, the average productivity was 3.87 tons per hectare. The combined average yield for these six projects was 3.75 tons per hectare. 5. The average cost of one unit of product, for those projects less than 150 hectares each, was an average cost for producing one kilogram of wheat of SR 2.11. In the projects with more than 150 hectares, the average cost of producing one kilogram of wheat was found to be SR 1.69, 140 which means that the combined average cost of producing one kilogram of wheat was SR 1.75 in these six projects.132 From this study, it is clear that growing wheat in Saudi Arabia is very profitable farming--particu1arly for the large projects or farms (an average 106.5 percent profit for the six projects in the study). This explains the high increment in wheat production during recent years. Also, this study indicates that wheat productivity (yield) was very high in these six projects (3.75 tons per hectare as an average), which does not conform to the analysis of wheat productivity in Chapter Three of this thesis. This is due to the fact that the analysis of wheat productivity was based on total wheat farming in Saudi Arabia including small farms--which are in the majority--while this study was based on six relatively large farms or projects--which are rare. The difference between the productivity of the large farms and the small farms can be explained by three advantages: (1)farmers on larger farms have more access to finan-' cial firms; (2) farmers on large farms have more acces to ex- tension services and other specialized agencies; and (3)farmers on large farms have more access to new technology and production 132Translated from Saudi Arabian Agricultural Bank (SAAB), Cost of Production and Future of Growing Wheat in Saudi Arabia, (Riyadh: Safir Press, 1401 A.H.) (1981 A.D.), pp. 19-21 (In Arabic). 141 techniques. Accordingly, the writer feels that these two important issues, (1) costs and benefits of growing wheat and (2) wheat productivity need to be studied further and on a wider scale before any results can be generalized. However, these results can be used as an indicator for the economics of wheat production in Saudi Arabia under optimum conditions. 5.6v Trade in Wheat As mentioned earlier in this thesis, the increasing demand for wheat as well as other commodities requires one of three steps: either (1) increasing imported goods or (2) increasing domestic production or (3) a combination of the two. In fact, this is the method that has been adopted in Saudi Arabia. In addition to examining production, then, it is necessary to investigate trade in this commodity in Saudi Arabia. Table 5.7 shows the imports of wheat and flour, bar- ley and grapes by quantity (MT) and by value ($1,000). Wheat and flour imports reached their peak in 1979 (888,237 MT.), declined to 707,893 MT in 1981 and were estimated at 741,291 MT for 1982. In contrast, barley imports increased rapidly from 36,933 MT in 1970 to 2,275,299 MT in l9Blandwere estimated at 3,530,000 MT for 1982, recording the highest increases in imported quantities and value among these three 142 .eeom .Nmee 0» meme eoee mesmme .xoonemee memes .oed .meOeemz emeeea ”mueDOm mummx omocu uom mumEeumo Och eoew Uo>eump woeumeumumn ooo.em u msem>m mmm.me ooo.m~ em~.med ooo.emm.m eme.mee em~.eee meme ~me.me mem.m~ vem.mee mm~.me~.~ eeo.ome mmm.eoe emde Nam.~e mee.m~ vem.emm eom.e-.e eeo.~e~ moo.ome omde mem.e mmm.ee mmm.eee mme.eem mem.~e~ em~.mmm eeme em~.m eee.d oee.m emm.mm ~mm.eee ~m~.oee meme eme eee.m eoo.me edm.mee mee.moe eem.moe eeme meo.e mm~.m eme.m eee.m~ mee.moe mem.eme meme omm cem.~ ooe.e oom.- coo.em ooe.mme ememe owe oom.~ ooo.e com.- ooo.me oem.m~e neeme eme em~.~ mme.~ dem.- mmm.mm oee.em~ meme dam oe~.e Nme.e mmm.ee mmm.m~ eee.~mm mede mme omm.~ mem.e mmm.ee mdo.e~ doo.em~ eeme mew eeo.e ee~.~ mmm.em mme.e~ mmm.e~m cede 05Hm> B: mosam> opam> B2 now» hwdhmm AHCOHM>ADUW ummnzv esoee d among emmuoemec menmee eodmm 0» mmeueooeeoo emesuesoeeoe omeomemm mo mueOQEH "h.m mqm<9 143 crops. Grapes were the smallest imported crop among them, but also increased rapidly from 1,065 MT in 1970 to 28,313 MT in 1981, and need was estimated at 29,000 MT for 1982. On the export side, these three crops did not record any export quantity; if there was any, it was a very small quan- tity. More recent data shows that the amount of wheat Saudi Arabia imported in 1983 was 400,000 tons, a decline of about 50 percent from estimated 1982 wheat imports.133 Thus, the import data records consistently declining needs for imported wheat which may be attributed, at best in large part, to the government's emphasis on encouraging productivity in this commodity. 5.7 Production Effects of the New Wheat Subsidy Program As T.W. Schultz explains in "Transforming Traditional Agriculture," farmers are not perverse economic men in re- sponding to economic incentives whenever such incentives are available to them. The results achieved in this study indicate that agricultural production in Saudi Arabia has increased rapidly, particularly during the 1970s and early 19803 (See Chapter Four). In terms of wheat production, 133U.S.D.A., "Middle East and North Africa:- Outlook and Situation Report, Economic Research Services," RS-84-3, Washington, D.C., April 1984. 144 increments have been achieved to the point that the country is expected to produce about 400 to 500 thousand tons over its need in 1984. This result is a response to the wheat subsidy program which consists of buying wheat from farmers for SR 3.5 per one kilogram, which has been termed the "high- est wheat price in the world." This program achieved its positive effects on wheat production in particular and on agricultural practices in general in Saudi Arabia, through a variety of improvements in farming practices. 5.7.1 Adoption of High-Yield Wheat Varieties As mentioned earlier in this chapter, the earlier wheat output subsidy was not concerned with the wheat variety that farmers produced. In other words, each farmer was paid the subsidy for any variety of wheat crop. Because of this unconditional subsidy, farmers grew local wheat varie- ties such as Hentta, Maeia, Halba, Samaa, and Logaimy that were not good for bread-flour industries and not disease resistant.134 In the current wheat subsidy program, the subsidy is limited to the varieties of wheat which are permitted and recognized by the Grain Silos and Flour Mills Organization and by the Ministry of Agriculture and Water. This condi- tional subsidy encourages the Saudi farmers to plant new, disease resistant wheat varieties--which are also considered 134Alyamamah Magazine, Issue 772 (Oct. 12, l983),p.15 145 high—yielding varieties-~such as Maxiback, Jory, and Dirab (locally developed variety).135 As a result, as seen in Table 5.6, the average yield has increased (3.75 tons per hectare), particularly on the larger farms. 5.7.2 Adoption of New Technology (Machinery) As mentioned in Tables 4.1 and 4.2, most agricultural machines are subsidized at a high rate, ranging from 30 per- cent to 50 percent of their cost. These subsidies result in adoption of new mechanized technology in farming. In addition to the subsidy incentives, evidence of this adoption may be derived from the fact that in 1974/75 about 695,000 persons of the civil labor force were engaged in agriculture. By 1979/80, agricultural employment had declined sharply, by about 96,000 persons.136 At the same time, from Chapters 3 and 4, we know that agricultural production had been in- creasingly rapidly. From this information it can be con- cluded that new agricultural technologies--particu1arly machines have been substituted for the labor force formerly engaged in agriculture. In a country such as Saudi Arabia, where the labor shortage is acute, and where the machine technology is available at a low subsizided cost, it is a 135Saudi Arabian Monetary Agency, Annual Report: 1980, (Riyadh: Saudi Arabian Printing Company, Ltd., 1980). Also, Alyamamah Weekly Magazine, Issue 772, (October 12, 1983),pp 15-16. ' 136Ministry of Planning (S.A.), Third Development Plan; 1980-1985, (Riyadh: Ministry of Planning Press, 1980), p.137. 146 rationale for farmers to use such technology wherever it is available to them. 5.7.3 Other Effects of Wheat Subsidies If adoption of high—yielding wheat varieties and new machine technology can be considered advantages of the wheat subsidy program, there are some other effects of this sub- sidy that must be considered disadvantageous. For one, the wheat subsidy appears to have caused some farmers to grow wheat at the expense of other crops, such as millet, barley, onions, and sorghum. The response to wheat appears to have crowded out expansion of feed grains and some vege- tables. Millet output has tumbled as farmers in Tihama switched to wheat. Sorghum output remained at about 120,000 tons. Onion output fell from 91,000 tons in 1980 to only 11,000 tons in 1982 and little recovery was reported in 1983. 137 Additionally, the opportunity costs of producing wheat at a very high price appears to be very high. The Saudi government is buying wheat at about $1,000 a ton, while this commodity is available in the U.S. for less than $140 a ton. 137U.S.D.A., "Middle East and North Africa: Outlook and Situation Report." Economic Research Services, RS-84—3, April 1984, p.10. 147 This year alone the Saudi government will spend about $1.3 billion buying wheat grown on irrigated Saudi desert land. It could have imported the wheat for only about $225 million. It will pay $1,000 a ton for any Saudi farmer's wheat, a commodity currently available in the U.S. for less than $140 a ton. 138 From this, it is clear that the Saudi government could save money by importing wheat instead of growing it. The rationale for not doing so is both politically and future oriented. First, for security reasons, the Saudis believe it is necessary to keep their country from being vulnerable to a grain embargo. "The Saudis say they fear a grain embargo might be imposed by wheat growing nations in retaliation for the oil-producer's cartel Saudi Arabia "139 helped start. Second, the current spending on wheat production is not only the cost of growing wheat, but the cost of gaining new technology and experience. The U.S. spends something like $40 billion for farmers not to grow crops and we spend 1 billion, "says Abdulrahman al-Khorayef, --"We're paying that price not just for wheat. We are getting technology and ex- perience and the basic structure for our future food supply. 140 138Brad Heller, "Saudi Wheat Farms Tap Subsidies," 139Ibid 140Ibid 148 Overall, it is clear that the decision to subsidize wheat production and to achieve self-sufficiency in this commodity is political rather than economic. As a poli- tical decision, it looks toward a future of efficient and productive agriculture in Saudi Arabia--despite the inhos- pitable conditions extant in most of the country for most agricultural products. CHAPTER SIX SUMMARY, CONCLUSION AND RECOMMENDATIONS 6.1 Summary The agricultural sector in Saudi Arabia was and still is the largest labor-employing sector, which gives agriculture high priority in the Saudi Development Plans. Another factor of its importance is food self-sufficient. Saudi Arabia was a food self-sufficient country in the early 19305, but gradually became a food deficient country and is now considered the leading agricultural importer among all Third World countries. Much of this happened while the Saudi development plans were emphasizing agricultural de- velopment as one of the country's important development ob— jectives. In investigating agricultural productivity and trends from 1950-1980, information used as a basis for this study was obtained through written material (secondary data). Specific quantitative data as well as descriptive data were used. In Chapter Two, some general information about Saudi Arabia--such as location and size, population, climate, soil, land classification, and water resources--was given to 149 150 facilitate understanding the conditions that exist and affect Saudi agriculture. In Chapter Three, the agricultural situation was dis- cussed. Information in this chapter indicated that there is a large variety of agricultural products in Saudi Arabia. The most important groups of these agricultural products are: 1. Dates, which is the major crop being grown in the country. 2. Wheat and other cereal crops, such as barley sorghum, millet and maize. 3. Vegetable crops which have gained importance during the last two decades and consist of tomatoes, watermelons, pumpkins, melons, onions, eggplant, squash, okra, green beans, dry beans, potatoes, cucumbers and others. 4. Fruits other than dates, which constitutes the smallest of the agricultural groups. The major fruits in this group are citrus, grapes and others. 5. Fodder crops, in which alfalfa is the major crop. 6. Stock raising, which was almost entirely done by bedouins who used to raise camels, sheep and goats by nomaic herding through the country. In recent years, poultry, dairy and sheep have been raised on special- ized farms. Data shows that about 15 to 20 million donums were under actual cultivation in 1979/80. Of this figure about 51 percent was rainfed and the rest was irrigated. Farm size per holding is about 14.6 donums in the Asir region, 563.6 donums in Qassim, and 67.0 donums as a national aver- age. 151 In Chapter Three, also, trends in output and area under cultivation were analyzed for the period 1950 to 1979/80, this analysis yielded the following results. 1. Total crop output was increased from 335,657 tons in 1950 ot 1,402,861 tons in 1979/80, which meant that all crop outputs were multiplied almost four times over a period of three decades. Vegetable outputs ranked first in total increment, followed by field crops (cereals) and then by dates. 2. Area under cultivation has increased from 95,316 hectares in 1950 to»579,645.7 hectares in 1979/80, which meant that areas under actual cultivation for all crops was multiplied almost. six times in three decades. Expansion imlareas'under vegetable cultivation ranked number one among other agricultural activities, followed by area under cereal crop and areas under date cultivation, respectively. This analysis of agricultural outputs and areas under cultivation indicated that agricultural patterns in Saudi Arabia are undergoing some important changes, in which vegetable cul- tivation is growing very rapidly at the expense of date cultivation. 3. Agricultural productivity was found to have fluctuated in all farming activities, and in wheat, barley, tomatoes and eggplant in particular. The declines in agri- cultural productivity were a result of one or a combination of the following factors: 152 (a) Land (soil) fertility which decline through extensive use over time without replacing fertility by adding sufficient fertilizers, or as a result of not following a good rotation cycle or other farming practices. (b) Physiological factors, such as using the same crop variety for a long period of time which makes the plant more vulnerable to plant diseases. (c) Failure of Agricultural Extension Services to improve farmers' production skills and knowledge. In addition to these factors, drought is an important factor that plays a significant role in increasing or de- creasing agricultural productivity. Since agricultural productivities in Saudi Arabia did not increase very rapidly (fluctuating), while total agri- cultural outputs and areas under actual cultivation were increasing very rapidly, the increment in agricultural out- puts were brought about by expansion of areas under actual cultivation, rather than increasing agricultural productivity. This means that a lot of agricultural resources, i.e., land resources, water resources, labor, money, etc., were used to bring about this increment. This kind of development is inefficient in a country such as Saudi Arabia where there is a shortage in water and labor resources. By examining change in agricultural patterns as a percentage change of the total area under actual cultivation, it was found that some farming activities were increasing 153 while others were decreasing. Vegetables achieved the highest increase while others were decreasing. Vegetables achieved the highest increase followed by the field crops (cereals) and fruits. Dates had the highest relative de- cline among the other groups, followed by fodder crops. In terms of livestock and poultry, it was found that all livestock and poultry populations had increased during the period 1960 to 1979/80. The largest increases were in goats, cattle, sheep, camels, and poultry, from highest to lowest percentage rate of increase, respectively. Also, it was found that: (1) change in administra- tive structure; (2) technological change; and (3) economic factors, such as providing agricultural subsidies and credits, were the most important contributions to increasing agri- cultural outputs. High demand levels for agricultural pro— ducts was another important factor and likely contributed to government subsidy decisions. This high demand for agri- cultural products derives from the fact that, in addition to its domestic agricultural production, Saudi Arabia is one of the leading importers among all Third World countries, particularly in agricultural products. By analyzing imports of agricultural commodities for the period 1950 to 1980, it was found that total agricultural imports had increased dramatically during three periods: the first was between 1963 and 1967, the second from 1973 154 to 1977, and the third was during the period 1979 and 1980. Imports of cereals ranked highest while imports of vege- tables ranked the lowest, among all agricultural commodities imported. Imports of goats ranked the highest, followed by eggs, cattle and buffalo, sheep, poultry, and camels, respectively. By comparing domestic production with imported agri- cultural commodities, it was found that: (1) domestic cer- eals production was increasing, but imported quantities of this group were increasing more rapidly; (2) quantities of fresh vegetables imports were increasing, but domestic pro- duction of fresh vegetables was increasing even more rapidly; (3) total domestic agricultural production was increasing, but imports of agricultural commodities were increasing more rapidly; and (4) both domestic production and imports of livestock and poultry were increasing. This indicated that demand for agricultural products was both very high and in- creasing with time as income trended upward. It was found that import subsidies, developments in food marketing and ports, some international events, and high demand for agricultural products caused by more people and moreincome were the most important factors contributing to increased imports of agricultural commodities. In terms of this high demand for agricultural pro- ducts, some factors have been identified as important factors 155 that contributed to increased demand. Those factors are: (1) the improvement in the standard of living for the majority of the people (per capita income rose from SR to SR ); (2) government efforts to reduce inflation and the cost of living, such as abolishing the road tax, reducing custom tariffs, and increasing public employee's wages; (3) popula- tion increase at an annual rate of growth of 3.0 percent among Saudis and increment in the non-Saudi population to over three million; and (4) a high economic growth rate supported by oil production and revenues. In 1970, Saudi Arabia launched a five-year develop- ment plan approach to modernization. The First Development Plan covered 1970-75; the Second Development Plan covered 1975-80; and the Third Development Plan is in effect from 1980-85. In all these development plans, the Saudi govern- ment has given considerable attention to diversifying pro- ductive sectors and reducing dependence on the export of oil. Among the productive sectors, agricultural development has been given a high priority. During the First Develop— ment Plan, agriculture failed to reach its target of 4.6 percent increase in yearly production, and reached only 3.6 percent. The achievements under the Second Development Plan in agriculture was better. The annual agricultural growth rate during the Second Development Plan was 5.4 per- cent. The Third Development Plan, now in progress, is in— tended to shift emphasis away from infrastructure projects 156 onto the productive sectors, with particular emphasis on agriculture. In keeping with the agricultural goals of the de- velopment plans, a large agricultural subsidies program was started in 1973 and adjusted in 1978. In addition to this, a non-profit agricultural credit program has been provided through the Saudi Arabian Agricultural Bank since 1964, which has been extended and developed throughout the three development plans. As in any development efforts, these development plans faced, and will continue to face in the near future, some problems and difficulties. Among these problems are: (1) water resource scarcity, which is a crucial problem; (2) undeveloped agricultural marketing with a high proportioncfi'consumer prices going to the middle men; (3) the role of comparative advantage which is, in most cases, against agricultural activities, i.e., poor soil, water scarcity, labor shortage, and undeveloped market, while the advantage of agriculture is the support by the Saudi government of this sector; and (4) low farming ef- ficiency and inefficient Agricultural Extension Services. Regardless of these problems, the contributions of the agricultural sector to the GDP in Saudi Arabia is es- timated to have increased by 10 percent annually during 1982/83; when most agricultural products showed high pro- duction increments. As a result, Saudi Arabia is nearly 157 self-sufficient in milk and produces about one-third of its red meat needs and much of its poultry, while eggs are being exported and wheat production is expected to be above domestic needs in 1984. (As a result of improvements under the three development plans, it is apparent that Saudi Arabia is capable of achieving self-sufficiency in some of its agri- cultural products. In general, however, it is still far away from achieving self-sufficiency in all agricultural products and the food needed to feed the nation. As one of the basic foods, wheat has received high priority from the Saudi government. The first wheat sub- sidy program, which consisted of SR. 0.25 per one kilogram, was not successful in increasing wheat production. Thus, the Saudi government increased this subsidy to a complete fixed price of SR 3.5 per one kilogram through the Grain Silos and Flour Mills Organization which became the agency responsible for buying wheat production from farmers. This new program has been in effect since 1978 and the amount of wheat production has increaesd dramatically since that time, to the point that Saudi Arabia is expected to produce about 400 to 500 thousand tons over its needs in 1984. In terms of wheat prices, the wholesale (farm) prices have been fixed at SR 3.5 per one kilogram since 1978, but retail prices fluctuate and are very low. Wheat retail prices do not reflect the wholesale prices because of the wheat sub? sidy. 158 From a study of six agricultural projects, the aver- age cost of wheat production was found to be SR 6,586.6 per hectare, or SR 1.75 per one kilogram, while the average profit was found to be SR 6,621.5 per hectare, or 106.5 percent. The average yield (productivity) was found to be 3.75 tons per hectare. These results cannot be generalized, however, because the results reflect large scale farming rather than the small farms that are more common in the country. Such results can be used as an indicator of the economics of wheat production under optimum conditions. Although further studies are recommended for: (1) recent costs and benefits of growing wheat across Saudi Arabia; and (2) recent wheat productivity country-wide, it is apparent some definite gains have come from the new subsidy program. Imports of wheat and flour have declined since 1980 and expected to reach their minimum in 1983. In 1984, Saudi Arabia is expected to produce more than it needs for wheat self-sufficiency. The new wheat production program has also had some effects on agricultural patterns in Saudi Arabia. Among these effects are: (1) Adoption of high-yield wheat varieties; (2) Adoption of new technology (machinery); (3) Other side effects in which some agricultural products are declining such as barley, millet, and onion, while other products remain con- stant, such as sorghum. 159 Increased wheat production is an expensive under- taking in Saudi Arabia, which has the world's highest wheat price, but there are reasons why the Saudi government is willing to pay the price. Among the reasons are: (1) the country's security from grain embargo, and current spending on wheat production is not only the cost of grow- ing wheat, but the cost of gaining new technology and ex- perience. 6.2 Conclusions As a result of the three development plans-~as well as other factors--Saudi Arabia has demonstrated that it is capable of achieving self-sufficiency in some of its agri— cultural production such as wheat, eggs, milk and red meat, but, in general, it is still far away from achieving self- sufficiency in all agricultural products and food needs. In terms of wheat production, Saudi Arabia has achieved high increments in domestic wheat production. This increment is due to the high wheat prices (subsidized) that the Saudi government is paying for this commodity-- as well as other factors. This high wheat price has had some impacts on agricultural patterns in Saudi Arabia. Some impacts are positive such as achieving self-sufficiency in wheat production and encouraging Saudi farmers to adopt new technology in farming activities. Other impacts 160 are negative such as exhausting water resources which are very scarce in Saudi Arabia--and encouraging Saudi farmers to shift from other agricultural activities to wheat pro- duction, which results in reduction of other agricultural commodities. It appears that millet, onions, barley and others have been reduced as a result of expanding wheat pro- duction. 6.3 Recommendations for Further Study The researcher recommends further studies in the general areas that follow. 1. Factors affecting supply of and demand for agricultural products in Saudi Arabia; 2. Income elasticity and the resulting impacts on food consumption in Saudi Arabia; 3. The possibility of achieving self-sufficiency in other food products and the role of the Saudi Development Plans in doing so. 4. The capability of water resources to support agricultural development in Saudi Arabia; and 5. Trends in agricultural productivity. In particular, further studies are recommended in the following areas. 1. Recent costs and benefits of growing wheat in Saudi Arabia; 2. Recent trends in wheat productivity; and 3. The impacts of subsidizing wheat production on other farming activities in Saudi Arabia. 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(Quantities in Tons) 1367 to 1381 A.H. Hijra Wheat Coarse Year & Wheat Rice Grains Other Total Flour (Maize, Millet) 1367 10,028 6.538 2,176 293 19,035 1368 64,608 29,266 6,092 735 100,171 1369 22.954 40,498 2,326 521 66,299 1370 30,967 54,082 265 708 86,022 1371 36,252 41,997 6,532 1.340 86,121 1372 53.769 44.695 15.450 1.475 115.389 1373 48,848 52,828 13,850 1,724 117,250 1374 65.999 60,020 4,005 2,780 132,804 1375 60,420 84,460 2,903 2,471 150,254 1376 112,292 71.338 25.737 5.227 214,594 1377 86,368 64,108 8,709 3.403 162,588 1378 88,596 101.554 17,840 11,878 219,868 1379 110.934 116,596 24,482 6,051 258,063 1380 113.239 77.828 36,666 3,119 230,862 1381 92,135 79.725 22,974 2,929 197,763 Source: Asfour, E., Saudi Arabia--Long Term Projection of Supply of and Demand for Agricultural Products, 1965, p. 112. 201 Table B-11 Imports of Animal Feed, S.A. (Quantities in Tons) 1367 to 1381 A.H. Hijra Barley Other Total Year 1367 147 88 235 1368 2,299 369 2,668 1369 1,258 660 1.918 1370 1,119 1,755 2,874 1371 2,751 370 3,121 1372 5.310 973 6,283 1373 5.911 511 6,422 1374 5,254 598 5.852 1375 16,280 935 17,215 1376 14,581 1,037 15,618 1377 11,410 2,065 14,015 1378 21.044 3.373 24.417 1379 27.879 4.280 32,159 1380 38,584 5,716 44.300 1381 16,057 5.642 21,699 Source: Asfour, E., Saudi Arabia--Long Term Projection of Supply of and Demand for Agricultural . 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Hijra Wheat & Year Wheat Rice Maize & Barley Others Total Flour Millet 1367 10,028 6,538 2,176 147 293 19.182 1368 64,608 29,266 6,092 2,299 735 103.000 1369 22.954 40,498 2,326 1,258 521 67.557 1370 30,967 54,082 265 1,119 708 87,141 1371 36,252 41,997 6,532 2,751 1,340 88,872 1372 53.769 44.695 15.450 5.310 1.475 120,699 1373 48,848 52,828 13,850 5,911 1,724 123,161 1374 65.999 60,020 4.005 5.254 2,780 138,058 1375 60,420 84,460 2,903 16,280 2,471 166,534 1376 112,292 71,338 25,737 14,581 5.227 229.175 1377 36,368 64,108 8,709 11,410 3,403 123.998 1378 88,596 101.554 17.840 21,044 11,878 240,912 1379 110,934 116.596 24.482 27,879 6.051 285.942 1380 113,239 77,828 36,666 38,584 3,119 269.436 1381 92,135 79.725 22,974 16,057 2.929 213.820 Source: Calculated by the writer from Tables B-10 and B-11. Table B-16 206 Imports of Agricultural Commodities (tons) (1367-1381 4.8.: 1947-1961 A.D.) /‘g / Hijra Cereals Animal Fruits & Animal Other. Total Year Feed Vegetables Products Commodities 1367 19,035 235 5.092 1,398 14,426 40,186 1368 100,071 2,668 10,911 2,706 26,848 143,204 1369 66,299 1,918 10,834 6,503 25,478 111,032 1370 86,022 2,874 15,231 3,891 27.452 135.470 1371 86,121 3.121 17,846 6,825 27,736 141,649 1372 115.389 6,283 34.488 9.695 29.970 195.825 1373 117,250 6.422 43.364 11,320 36,483 214,839 1374 132,804 5,852 38,015 21,823 48,072 246,566 1375 150,254 17,215 52,373 18,419 47,319 285,580 1376 214.594 15,618 62,148 21,564 52,392 366,316 1377 162,588 14,015 56,354 16,847 62,787 312,591 1378 219,868 24,417 74,767 20,262 61,927 401,241 1379 258,063 32,159 80,639 25.936 58,804 455,601 1380 230,862 44.300 70,925 24,233 75,284 445.604 1381 197,763 21,699 78,637 26,759 85.518 410,376 Source: Calculated by the writer from Tables B-10 through B-14. BIBLIOGRAPHY A1 Farsey, Foud. Saudi Arabia: A Case Study in Develop- ment, London: Stacey International, 1980. 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