0. Grain Silos & Flour Mills Organization (GSFMO) Kingdom of Saudi Arabia
Wheat and Flour Market in Saudi Arabia
By H.E. Eng. Waleed El Khereiji
Director General of Grain Silos & Flour mills Organization
Opportunities for the agricultural Sector and Food Industry Moderator
(16-18th September 2013)

1. I GSFMO Background & Overview II KSA Wheat & Flour Market Overview III GSFMO Privatization Program IV Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector V Conclusion
[PLACEHOLDER TEXT]

2. GSFMO is a national institution that aims to supply wheat and flour to the entire population of the Kingdom of Saudi Arabia
GSFMO Overview
Objectives
Grain Silos and Flour Mills Organization (GSFMO) is considered one of the leading national institutions that has a prominent role in the achievement of economic development in the Kingdom of Saudi Arabia, and in the provision of citizens’ needs of most important food materials.
GSFMO was established by the Royal Decree issued on February 1972, which was prepared by the government to provide all means of development and progress to the Saudi people
(I)
To form an integral industry of grain storage, flour production and processing of animal feed
(II)
To establish any other relevant food industries
(III)
To market its products
(IV)
To purchase grains and create a convenient reserve stock to face emergency circumstances
((V))
To meet the goals of the approved agricultural policy
III IV V

3. GSFMO fulfills its mandate through managing the full wheat and flour operating sector chains
GSFMO Roles and Responsibilities
Operating Sector Chains
Storage
Milling
Distribution and Sales
Production
Procurement
Transpo-rtation
GSFMO (Roles & Responsibilities)
Purchase wheat from local farmers according to a set price until 2015 and import the remaining demand from international suppliers for KSA. Also it operates all the flour mills in Saudi Arabia and ensure adequate investments to maintain enough supply to satisfy the growing demand.
Manage all wheat storage operations in KSA, both strategic and operational storage, in order to satisfy the increasing demand
Enforce food quality regulations at the point of purchase in storage silos and import tenders, such as protein content, weight, moisture, falling number, etc.
Implement directives by the Ministry of Health & Saudi Food and Drug Authority regarding food additives, e.g. vitamin D, Folic Acid, etc.
Private Sector Farmers
Grain Silos & Flour Mills Organization
Grain Silos & Flour Mills Organization
Grain Silos & Flour Mills Organization
Grain Silos & Flour Mills Organization
Grain Silos & Flour Mills Organization& Private Sector
Entities Involved
GSFMO Involved

4. GSFMO operates 11 branches with total capacity of ~11430 MT/day of flour milling, ~2.5 MMT for wheat storage and ~2900 MT/day for feed
GSFMO Flour Mills, Silos and Feed Mills Capacities
Flour Mills Capacities
(MT/day) (2013)
Silos Capacities
(000’ MT) (2013)
Feed Mills Capacities
(MT/day) (2013)
GSFMO Presence across Saudi Arabia
Khamis MushaitKhamis Mushait
Tabuk
600 40
Riyadh
300
Madina 60
Madina
600
Northern Province
Jawf
Dammam 80
Hail
600
Dammam
Tabuk
100
Jeddah
300
Hail
Tabuk
Qassim
Jawf
600
Jawf
100
Madina
Riyadh
Qassim
900
Jeddah
120
Dammam
300
Kharj
Dammam
Kharj
200
Jeddah
1,350
Wadi El Dawaser
Khamis Mushait
Hail
300
Khamis MushaitKhamis Mushait
Qassim
600
1,650
Qassim
485
Najran
Riyadh
2,550
Wadi El DawaserWadi El Dawaser
500
Khamis MushaitKhamis Mushait
Jazan
1,400
Jeddah
2,580
Riyadh
535
Total
11,430
Total
2,520
Total
2,900
Flour Mill
Silo
Feed Mill

5. New plants and expansions
GSFMO Flour Mills, Silos and Feed Mills New Expected Capacities
Flour Mills
(MT/day)
Silos
(000’ MT)
Feed Mills
(MT/day)
New plants and Expansion
AL ahsa 60
Jeddah
150
Kharj
300
Mushait
Northern Province 80
Jawf
Duba Port
Madina
600
Jazan
120
Dammam
Madina
300
Hail
AL ahsa
Tabuk
Eastren Region
Dheba
120
Jazan
600
Madina
Yanbu
120
Tabuk
300
Kharj
Yanbu Port
Jumoum
Kharj
600
Eastren
Region
Jeddah
120
Khamis Mushait
Jawf
300
Al ahsa
Jeddah
140
600
Dammam
140
Hail
300
Jazan
Jumoum
1,200
Jumoum
250
Flour Mill
Silo
Feed Mill
Total
3,750
Total
1,150
Total
1,500

6. Other Wheat Derivatives
GSFMO offers a wide range of Flour products, Feed products and other Wheat Derivatives to its clients
GSFMO Products
Flour Products
GSFMO produces varieties of flour:
Powder flour (75-80% Extraction)
Fine flour (70-74% Extraction)
Ordinary Flour (85% Extraction)
Whole Wheat Flour (95% Extr.) I II
III
Feed Products
GSFMO produces feed-pound (50 kilograms) of high-quality poultry feed and livestock feed (fattening / double), in addition to other feed products
GSFMO Products
Other Wheat Derivatives
GSFMO produces a number of wheat derivatives including:
Jareesh
Harees
Bran for Human consumption

7. Local Wheat Vs. Imported Wheat Supply
GSFMO is gradually shifting towards 100% imports of international wheat by 2016
GSFMO Wheat Supply
Local Wheat Vs. Imported Wheat Supply
(MMT) (2008 – 2016)
Comments
Historical
Planned
In 2008, the Saudi government adopted a new policy to gradually reduce domestic wheat growing due to water scarcity
The new policy envisaged replacement of domestic wheat procurement through imports; by all of the Kingdom’s wheat demand will be met by imports
GSFMO started applying the new policy in 2008 by importing thousand tons of wheat; this quantity was increased six fold in 2009 to reach 1.92 MMT
On the other hand, the local procurement of wheat was decreased from 1.72 million tons in 2008 to thousand tons in 2012
2008
2009
2010
2011
2012
2013
2014
2015
2016
Local Wheat
Imported Wheat
Local Wheat (%)
85%
33%
40%
36%
28%
25%
18%
12% 0%
Imported Wheat (%)
15%
67%
60%
64%
72%
75%
82%
88%
100%

8. GSFMO Imported Wheat – By Country Import of Hard & Soft Wheat
GSFMO ensures its wheat supply from several countries and is currently looking to expand its imports base to include Hard & Soft wheat
GSFMO Sources of Wheat
GSFMO Imported Wheat – By Country
(Percentage) ( till July)
Import of Hard & Soft Wheat
GSFMO imports hard wheat & it has opened up new channels for soft wheat exporters.
Saudi Arabia is studying local consumer demand to assess potential needs for soft wheat, which is suited for products such as biscuits, and accordingly, GSFMO will gradually increase imports of soft wheat
Saudi flour mills were traditionally built to process hard wheat, but the newly established flour mills are able to handle both hard and soft wheat
USA
Brazil
Argentina
52%
European Union
Australia
20%
Canada

9. GSFMO Background & Overview II KSA Wheat & Flour Market Overview GSFMO Privatization Program Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector Conclusion
[PLACEHOLDER TEXT]

10. Saudi Population Growth
KSA’s population is expected to grow at 2.4% per annum reaching a total of ~40 Million in 2025
Saudi Population Growth
(Million) (2004 – 2025)
Historical
Forecast
39.6
2.4%
36.8
37.7
38.6
35.9
33.5
34.3
35.1
32.7
31.2
31.9
30.4
28.4
29.0
29.7
24.2
2004
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025

11. Average Caloric Intake Benchmarks Average Flour Consumption Benchmarks
KSA average daily caloric intake is 14% above the world average resulting in higher flour consumption habits
Average Caloric Intake Benchmarks
(Cal/Capita per Day)
Average Flour Consumption Benchmarks
(Cal/Capita per Day)
Yemen
Indonesia
Korea
Sudan
Sudan
Korea
India
Peru
Peru
India
Indonesia
Yemen
World
Germany
Chile
USA
-2.7%
Jordan
World
Egypt
Canada
KSA
+14%
KSA
+8%
Russia
Portugal
Germany
France
Canada
Chile
France
Jordan
Portugal
Russia
USA
+35.6%
Egypt
Saudi Arabia is Higher than world average by 14%
Saudi Arabia is Higher than world average by 8%

12. In 2025, flour demand in Saudi Arabia is expected to reach 3
In 2025, flour demand in Saudi Arabia is expected to reach 3.6 MMT which is equivalent to around 4.5 MMT of wheat demand
Flour and Wheat Demand in KSA
Yearly Flour Demand Forecast
(MMT/Year)
( )
Historical
Forecast
3.2%
3.5
3.6
2.9%
3.0
3.1
3.2
3.3
3.4
2.7
2.8
2.9
2.5
2.6
2.3
2.4
2.5
2.0
2005
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Yearly Wheat Demand Forecast
(MMT/Year)
( )
Historical
Forecast
3.2%
4.3
4.5
4.0
4.1
4.2
2.9%
3.7
3.8
3.2
3.3
3.4
3.5
3.6
2.9
3.0
3.1
2.5
2005
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025

13. GSFMO Background & Overview KSA Wheat & Flour Market Overview III GSFMO Privatization Program Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector Conclusion
[PLACEHOLDER TEXT]

14. In line with the Government strategy, GSFMO is now embarking on a privatization program…
Privatization in KSA
Government’s Strategic Objectives
Sectors Targeted For Privatization 1
Improving the efficiency of the national economy and enhancing its competitive ability to meet the regional and international challenges
Encouraging private sector investment and effective participation in the national economy, and increasing its share of domestic production to achieve growth in the national economy
Expanding the ownership of productive assets by Saudi citizens
Encouraging (national and foreign) local investments
Increasing employment opportunities, optimizing the use of the national work force, and ensuring the continued equitable increase of individual income
Reducing public expenditure and reducing the burden on the government budget by giving the private sector opportunities to finance, operate, and maintain certain services that it is able to provide
Gov. shares in Arabic/ Islamic Investment Companies
Agricultural Services
Airport Services
Industrial Cities Services 2
Government shares in Public Companies
Wheat Mills and Storage facilities
Air Transportation and Related Services
Municipal Services 3
Government Hotels
Desalination
Port Services
Education Services 4 5
Sports Clubs
Water and Sewage Collection
Highways
Telecom Services 6
Health Services
Social Services
Railways
Postal Services

15. GSFMO Scope of Privatization Scope of GSFMO Privatization
Procurement
Transportation
Storage
Milling
Sales
Value Chain
Current
Players
GSFMO (imports)
Private Farmers
Private agricultural
Development companies
Sudais, Al-Mousallam,
ARASCO, Al-Habbad,
Al-Shorreih …
Grain Silos Flour Mills Organization (GSFMO)
Privatization
Potential?
Status
Assumed to remain public
Government assumed to continue to perform procurement role
Leverages purchasing power and ensures availability of wheat
GSFMO currently is the sole entity performing storage and milling activities
All milling, sales and some storage activities will be privatized
Rationale

16. Post-privatization, GSFMO will regulate the entire wheat & flour sector and manage the wheat strategic reserve for KSA
ILLUSTRATIVE
GSFMO Current Vs. Future Role
Current State – Pre-privatization
Future State – Post-privatization
GSFMO Current Scope of Work
GSFMO Future Scope of Work
Silo Operations
Flour Mill Operations
Feed Mill Operations
Wheat-sector Regulatory Function
Strategic Reserve – Silo Operations
Flour Mill Operations
Feed Mill Operations
Operational Reserve – Silo Operations
Private Companies’ Scope of Work
Comments
GSFMO is expected to privatize only part of its grain storage silos – the minimal capacity needed to ensure smooth milling operations of the flour mill companies; the remaining storage capacity will be retained by GSFMO (for strategic reserve purposes)
In the future, GSFMO is expected to undertake the role of wheat-sector regulator, entailing:
Setting regulations related to food quality
Inspecting flour mills to ensure compliance with quality regulations
Regulating the competition among the private flour milling operators
Ensuring that the market structure fosters fair competition amongst operators in the sector
New Function

17. GSFMO Background & Overview KSA Wheat & Flour Market Overview GSFMO Privatization Program IV Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector Conclusion
[PLACEHOLDER TEXT]

18. Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector
USA is one of the leading suppliers of Hard & Soft Wheat in the world and it has been the most stable source for wheat over the years; so the stability of the global market of wheat is being served both by the USA and Kingdom of Saudi Arabia as a common goal.
(II)
Over the period ( ) GSFMO imported about one million tons of US wheat which represented 12% of total wheat imports.
(III)
There are co-operation and coordination between GSFMO and USWheat association where GSFMO hosted its Wheat Crop Quality Trade Seminar for the third year in a succession and we prepare for fourth Seminar . Also GSFMO’s representatives participated and spoke in all USWheat association regional seminars.
we are looking forward to receive competitive prices from US origin in the coming tenders especially in views of an improved outlook for “new crop” 2013/2014.
USA Institution & Companies are invited to introduce training programs for international wheat exchanges and flour mills techniques.
We welcome USA Companies to collaborate with GSFMO in Privatization of flour mills plants. 

19. GSFMO Background & Overview KSA Wheat & Flour Market Overview GSFMO Privatization Program Facts and Opportunities for cooperation Between Saudi Arabia& USA in agriculture and food sector V Conclusion
[PLACEHOLDER TEXT]

20. Participation in Hard &Soft Wheat tenders Privatization Program
Conclusion
USA Companies and institutions are welcomed to collaborate with GSFMO in I
Participation in Hard &Soft Wheat tenders
Privatization Program II
III
Employee development
III

21. Thank You 21