Saudi poultry production up, but struggling with disease and costs

The USDA forecasts Saudi Arabia will produce around 640,000 tonnes of broiler meat in 2014, up 7% from 600,000 tonnes in 2013. This is equivalent to around 42% of the country’s consumption, with the balance – equivalent to around 875,000 tonnes last year – imported, making Saudi Arabia the world’s largest broiler meat importer.

Impossible targets​

While domestic broiler production is set to grow 9% to 700,000 tonnes by 2015, assisted by generous government subsidies of around US$533 per tonne and massive investment from poultry producers, Saudi Arabia is unlikely to be able to ramp up production sufficiently to meet 100% of local demand. The USDA attributes this to the continuing high costs of poultry feed, and “endemic​” diseases, resulting in an average mortality rate of 25% across the country, with some farms at 50% – something the Saudi authorities are working to cut.

“To reduce the risks associated with high mortality rates and encourage local investors, the Saudi Agricultural Development Fund (ADF) is considering the implementation of a new cooperative plan to subsidise insurance for poultry production. The stated goals of this national scheme include establishing stricter bio-security programs for participating poultry farms, reducing average chicken mortality rate in the Saudi farms from 25% to 5%, and encouraging new investments in the poultry sector by compensating farmers for the financial loses they may suffer in the case of poultry diseases outbreaks​,” the report said.

The report added many analysts believe it is not possible for Saudi Arabia to reach self-sufficiency in poultry production by any means, instead claiming 60% is a feasible target. But even this level will require a major overhaul of the kingdom’s poultry industry, including the implementation of a “unified biosecurity system​”, along with subsidised feed and continuing major investment.

Dominant players​

Three companies – Al-Watania Poultry, Fakieh Farms, and Almarai – control more than 65% of the kingdom’s poultry production, and have collectively invested at least US$2.3bn in expansion of their poultry operations since 2010, according to the USDA. Al Watania alone accounts for more than a third of Saudi Arabia’s poultry production, and is aiming to increase its output by 46% between now and 2016.

Saudi Arabia’s poultry exports – mostly to other GCC countries – will reach 50,000 tonnes this year, up 42% year-on-year. The USDA notes, though, that Saudi producers are forced to pay back any subsidies to the government when exporting broiler meat.

Brazilian poultry continues to dominate Saudi Arabia’s imports, providing 79% of all broiler meat brought in to the country, with France in second place at 18%. The US is in third place with only 3% of all Saudi poultry imports, due to American producers’ inability to guarantee chickens are fed on vegetarian-only diets and not given growth hormones.