The Saudi poultry market has a cyclical nature, with consumption rises sharply during the month of Ramadan and the Hajj season, when millions of Muslim pilgrims visit to the country every year to perform their religious rituals. It is estimated that more than three million people come to Saudi Arabia during the Hajj period and additional four million visitors come throughout the year to perform Umras (non-proscribed pilgrimages).

Despite the steady growth in poultry consumption in recent years, local poultry production has not kept pace with the increased demand. In 2007, Saudi Arabia’s total poultry production was estimated at 490,400 MT, providing about 51 per cent of the country’s consumption needs, while 475,000 MT were provided through imports. In 2011, Saudi poultry production declined to 420,000 MT, contributing only 35 per cent of the market’s needs, while imports climbed more than 60 per cent to 780,000 MT.

In 2011, the bulk of Saudi Arabia’s poultry meat imports came from Brazil (623,000 MT) and France (149,000). US poultry exports to the Saudi market are very small, about 10,000 MT. This is mainly due to Saudi import requirements that imported meat must be from chicken fed only on vegetable-origin feed and are hormone-free. These conditions are very difficult for most US poultry producers to satisfy.

It should be noted that the overall policy objective for the Saudi poultry sector is to encourage local poultry production and increase self-sufficiency. In the last two decades, this policy has been implemented through various support measures that included providing subsidies for poultry feed ingredients, interest- free loans for purchasing equipment, as well as packaging and cold storage facilities.

With the soaring prices of poultry feed, Saudi poultry producers have been asking the government to increase the subsidy levels for feed commodities. The last government revision of these subsidy rates was made in July 2011 and included a list of 31 feed ingredients, such as soybean meal which received the highest subsidy rate of $202 per MT and barley straw that received the lowest rate of $49 per MT.

In mid October 2012, the Saudi Minister of Agriculture reiterated the government’s support for local poultry producers and called on agri-business companies to increase investment in poultry projects, especially for hatching eggs, baby checks and chicken grandparent farms.

In recent weeks, the MOCI has been engaged with major Saudi poultry companies in a strategic dialogue to speed up construction of production expansion projects and to address growing market needs. It has been reported that the three largest Saudi poultry producers, Al-Watania Farm, al- Fakieh Farm and Al Marai Farm, have been implementing expansion plans that would add about 510,000 MT of poultry meat annually to total Saudi production by 2015. If and when completed, these projects would more than double Saudi Arabia’s poultry meat production, currently estimated at 425,000 MT.

The recent poultry crisis has also revived previous calls in Saudi Arabia to establish strategic poultry reserves sufficient for six months of annual poultry consumption. Although there are no details available on the strategic reserve plan, its general concept suggests that the government and the private sector would join efforts to build strategic stocks of about 650,000 MT, with the government would be responsible for financing the product imports while private sector companies would be responsible for building and managing the cold storage facilities that will be needed for the poultry strategic reserve.