Saudi Arabia Poultry and Products Annual 2018

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY

USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT

POLICY

Required Report - public distribution

Date:

11/4/2018

GAIN Report Number:

SA1811

Saudi Arabia

Poultry and Products Annual

2018

Approved By:

Alan Hallman, U.S. Embassy, Riyadh

Prepared By:

Hussein Mousa, U.S. Embassy, Riyadh

Report Highlights:

Chicken meat production in Saudi Arabia is expected to reach 650,000 MT in 2018, and is projected to

increase to 700,000 MT in 2019. Chicken meat consumption this year is estimated at 1.2 million MT.

Chicken meat consumption in the Kingdom fell this year is due to the departure of expats from the

Kingdom and lower imports due to a ban on stunning poultry - which was put into effect on June 1.

Total Saudi broiler meat imports in 2018 are expected decline to by about 19 percent to 575,000 MT

compared to 2017.

Changes to Data Series

This report provides chicken meat estimates and forecasts for 2017-2019. The prior chicken meat series

has been discontinued and will not be revised or updated in the future.

Official USDA data are available via the PSD database (http://www.fas.usda.gov/psdonline).

The October 2018 data release includes a historical chicken meat series back to 1999. The chicken meat

series will terminate with 2016 data. Chicken meat is defined as meat of domestic fowl (Gallus

gallus/Gallus domesticus) including all chickens: chicken, layer, hybrid, domestic breeds, spent hens,

ex-breeding stock, etc.

Executive Summary

Based on information provided by leading domestic chicken meat producers, total Saudi chicken meat

production is expected to fall to 650,000 MT in 2018, significantly lower than the 2017 production

estimate of 790,000 MT. Domestic chicken meat production in 2019 is expected to increase slightly to

700,000 MT. The production cost of locally produced chicken meat currently ranges between $1.6 and

$1.87 per Kg of average dressed weight. Saudi Arabia is a surplus table eggs producer and a significant

exporter to the GCC countries.

Estimated domestic chicken meat consumption in 2017 is reduced to approximately 1.27 million MT.

The three main reasons for the decline in estimated chicken meat consumption in 2017 are reduced

demand by catering companies, lower estimated production, and the departure of several thousands of

expatriate families.

Saudi Arabia’s 2018 chicken meat imports are estimated at 575,000 MT, a decrease of 19 percent from

2017. The main cause of the decline in Saudi Arabia’s total chicken meat imports is the Saudi Food and

Drug Authority’s (SFDA) ban on electrical stunning in poultry slaughtering. The new requirement,

which was fully enforced in June 2018, has substantially reduced the quantity of chicken meat exported

to Saudi Arabia by Brazil, the dominant poultry meat supplier to Saudi Arabia. The requirement has

also eliminated U.S. poultry from the Saudi market. In 2019, total Saudi chicken meat imports are

forecast to reach 675,000 MT.

Saudi Arabia’s 2018 chicken meat exports are estimated at 10,000 MT. The main reason for the sharp

drop in Saudi chicken meat exports is the import ban placed on Saudi chicken meat imports by the GCC

countries because of the discovery of highly pathogenic avian influenza in major chicken meat

producing provinces beginning at the end of December 2017.

The Saudi government provides assistance to domestic poultry farms to increase local chicken meat

production; they have a target of 60 percent of consumption by the end of 2020. The current self-

sufficiency ratio is unknown. The ban on poultry stunning implemented earlier this year reduced

chicken meat imports; supplying countries have not been able to meet demand.

Production

Almost all poultry meat produced in Saudi Arabia is chicken meat with the exception of about 1,500

MT of quail meat produced by Astra Farms in Tabuk.

Post reduced Saudi Arabia’s 2017 and 2018 chicken meat estimated production based on information

provided by major domestic poultry farms. The farms indicated that they have not been able to meet

their planned expansion targets due to high land prices, land ownership disputes, zoning/environmental

restrictions.

Post estimates Saudi Arabia’s 2017 chicken meat production at 600,000 MT. Local chicken meat

production is projected to reach 650,000 MT in 2018 and increase to 700,000 MT in 2019. The

significant reduction in estimated 2017 and 2018 chicken meat production is mainly due to problems

securing land permits for expansion and the prohibitively high cost of farmland.

In June 2018, the Saudi Ministry of Environment, Water and Agriculture (MEWA) organized a

workshop entitled “Developing the Poultry Industry and Increasing Local Production”. All major

poultry producers participated in the workshop. All obstacles that hinder increased poultry production-

such as securing poultry farmland, permits, and the excessively high cost of land - were discussed and

recommendations were issued. In its July 2018 press release, MEWA indicated that it would implement

workshop recommendations aimed at facilitating or accelerating procedures for obtaining environmental

approval for poultry projects. It would also review the prices of land leases to stimulate domestic

production and increase domestic production capacity. The objective is to enable the country reach 60

percent self-sufficiently in chicken meat production by the end of 2020.

Chicken meat production in Saudi Arabia is concentrated in about ten vertically integrated companies

(three large companies: Al-Watania, Fakieh and Almarai and 7 medium farms) which control more than

80 percent of production. MEWA estimates that there were 436 chicken farms in Saudi Arabia in 2016,

an increase of about 6 percent compared to 413 in 2012.

Saudi poultry farms are located in 12 provinces, but 93 percent of chicken meat production comes from

six provinces. In 2017, Al-Qassim province (where Al-Watania Poultry Farm is based) accounted for

about 34 percent of the total Saudi chicken meat production, followed by Makkah with 15 percent,

Riyadh with 14 percent, Aseer with 13 percent, Hail with 12 percent, and the Eastern Provinces with 5

percent.

Spent Chicken meat

It is believed that the quantity of spent hens used for food in Saudi Arabia is negligible. Smaller table

egg producers sometimes sell live spent hens to customers who desire the flavor of gamier bird.

Customers generally visit the farms to purchase the birds and then cook them for several hours. As

such, spent hen meat does not make it to the supermarket shelves in the Kingdom.

In 2013, MEWA gave poultry growers the option of slaughtering spent hens for further processing, but

stipulated that slaughtering of spent chickens must be scheduled on different days from when younger

and tenderer chickens are slaughtered. Major poultry producers (which also dominate table egg

production) prefer to kill the birds and bury them. The companies say that meat from the spent hens is

tough and could negatively affect the quality and image of their poultry products if they include them in

their product range. The companies also do not have separate slaughterhouses for spent hens and are

concerned that processing spent birds meat on their normal processing lines might pass along a bad odor

reportedly emitted from spent hens.

Production Costs

Chicken meat production costs in Saudi Arabia are relatively high because of the high costs of

controlling temperature in chicken houses under extremely hot weather conditions, and a heavy reliance

on imported feed, vaccines, and equipment. In order to reduce production costs, the Saudi government

(SAG) provides several types of production support. These include subsidies for animal feed, and

interest-free loans and rebates on the purchase of certain poultry equipment.

Feed costs account for about 70 percent, on average, of chicken production costs in Saudi Arabia.

Production costs for local chicken ranges between $1.6 and $1.87 per Kg, of dressed weight. This is

sometimes higher than the retail prices of some imported chicken meat in the Saudi market. The Saudi

government offers import subsidies on 31 imported animal feed ingredients to importers to reduce

production costs. The import subsidy is based on the energy and protein contents of each feed

ingredient. For instance, import subsidies on 48 percent protein soybean meal and corn are set at $137

and $82 per MT, respectively. The imports subsidies on distiller's dried grains with solubles (DDGS)

and corn gluten feed (CGF) are $99 and $91 per MT, respectively. There has been speculation in the

poultry and dairy industries that Saudi Arabia might eliminate its feed import subsidies due to fiscal

pressure.

Chicken Production Cycles

The growing cycle for chickens in Saudi Arabia varies between 28 to 35 days, with an average daily

bird weight gain of 50 grams. The average live weight for chicken when marketed is approximately

1,300 grams, while the average ready to cook chicken carcasses weight when marketed is approximately

one kg. The average feed conversion ratio (FCR) is estimated at approximately 1.70 kg.

Poultry Disease Outbreaks

Controlling poultry diseases is a major challenge for the Saudi chicken industry. According to some

industry contacts, the chicken mortality rate has declined significantly over the past five years-it is

currently estimated at less than 15 percent. The high mortality in Saudi chicken farms was mostly due

to outbreaks of viral diseases such as Newcastle Disease (NCD), Gumboro (IBD), Infectious Bronchitis

(IB) and Avian Influenza (H9N2 subtype).

In December 2017, a highly pathogenic avian influenza (H5N8) virus was discovering in a Riyadh live

birds market. By March 2018, the virus had spread to seven poultry producing regions Riyadh, Al-

Qassim, Makkah, Asir, Al-Madinah, and Jizan which forced MEWA to depopulate about 9 million

birds to control the disease under its avian influenza contingency plan - which is based on a stamping-

out policy. According to MEWA, commercial poultry farms have been free of H5N8 virus since the

end of March 2018. However, in July 2018, the governorate of Riyadh region closed the Azizia live

birds market located in Riyadh city after discovering a duck infected by H5N8 virus.

Consumption

Estimated chicken meat consumption in 2017 is reduced to approximately 1.27 million MT. The main

reasons for the sharp decline in chicken meat consumption in 2017 were: (1) the permanent departure

of thousands of expatriate family members, who were not able to pay a new per capita levy on expat’s

that increases annually, and (2) reduced demand in the HORECA sector. The consumption estimate

also fell due to lower estimated production. Food catering companies serving the construction sector

were affected by a sharp contraction in that sector and closure of several major labor camps.

Reported chicken meat consumption is forecast to decline by an additional 4 percent this year due to the

departure of additional expat family members, tight supplies of imported chicken meat, and higher retail

prices caused by SFDA’s decision to inforce a preexisting ban on electric immobilization in poultry

production. Please note that projections do not include estimates for stocks as stock numbers are

unavailable. Stocks were likely drawn down due to tight market conditions in 2018, so the actual

decline in consumption is likely significantly less than 4 percent.

Reported chicken meat consumption is projected to increase by 12 percent to about 1.4 million MT in

2019. This is due to increases in stocks and a projected increased demand for chicken meat by catering

companies that serve the growing number of religious visitors who come to Saudi Arabia to perform the

Umrah and Hajj rituals. The Saudi government has been promoting religious tourism. The program

appears to be successful as the number of religious tourists increased from 8 million less than a decade

ago to 15 million in 2017. The government’s Vision 2030 includes a target of 30 million religious

tourists by 2030.

Work on several stalled construction projects is expected to resume next year as higher oil prices boost

the Kingdom’s revenues. This will increase demand for chicken parts such as leg quarters.

Poultry meat consumption in Saudi Arabia is high compared to other animal protein alternatives. Per

capita consumption in 2017 is estimated at approximately 39 kg. According to the Saudi General

Authority for Statistics, the total Saudi population was estimated at 32.6 million in 2017.

It should be noted that estimates for total and per capita chicken meat consumption in this report may

overstate or understate the actual level in a particular year because chicken meat inventory data is

unavailable. Beginning and ending stocks for poultry meat are assumed to be zero. Saudi chicken meat

importers tend to purchase more than actual market needs when prices are attractive to build up stocks

and sell when prices start to go up. A significant quantity of frozen chicken meat may be held as carry-

over stocks. Total chicken meat imports reached a record high in 2015 of about 962,524 MT due to

attractive prices offered by Brazilian suppliers, an increase of 20 percent over 2014.

Demand Fluctuation

The Saudi poultry meat market is cyclical. Demand rises dramatically in the winter, during the Umrah

and Hajj seasons (prior to Eid-al-Adha)-particularly in the cities of Makkah and Medina where visitors

go to perform the Umrah and Hajj rituals. However, consumption declines in the summer months when

millions of Saudis and expatriate workers leave the Kingdom for vacations and during the month of

Ramadan. In recent years, and under normal conditions, poultry meat consumption has been steadily

rising because of its affordability and the perception that it is healthier than red meat.

Consumer Preference

Saudis consumers prefer locally produced fresh chicken meat. More than 80 percent of local chicken

meat is sold chilled; many poultry producers have switched their chicken meat production lines from

frozen to chilled products for its higher profit margins. They are higher partly because chilling saves

freezing and cold storage charges. Consumers, particularly Saudis, do not mind paying as much as 50

percent more for fresh\chilled domestic chicken meat over frozen imported chicken meat. In general,

Saudi consumers prefer 900 to 1,100 gram birds. They perceive large chickens (1,200 to 1,500 grams)

as old and not tender. Hotels and restaurants prefer 900 to 1,000 grams to serve whole, in halves or in

quarters; they prefer to buy a lighter weight bird at the lowest possible price. All imported chicken meat

into Saudi Arabia is frozen, and is mostly consumed by expatriate communities and the food service

sector. Brazilian frozen chicken meat is the most preferred imported chicken by restaurants and catering

companies as they offer smaller sized birds, which fit in rotisseries.

One of the incentives that the Saudi poultry sector receives from the Saudi government is a stipulation

in catering contracts that companies that serve foods to government institutions should use more than 70

percent local content. Several Saudi catering companies contacted for this report indicate that they use

100 percent local chicken meat when catering to government institutions such as the military, hospitals

and universities.

The issue of Halal slaughter is not a major concern for most consumers in Saudi Arabia, as the

government assures them that all imported meat products, including poultry, are slaughtered according

to Islamic rituals. However, some Saudis tend to believe that domestically slaughtered chicken s are of

higher Halal standards than imported products from non-Muslim countries like Brazil and France. As

such, they prefer to purchase domestically grown chicken meat at higher prices.

Trade

Imports

Available trade data from supplying countries for the January-July 2018 period puts total Saudi chicken

meat imports at 335,319 MT, a reduction of about 25 percent compared to 445,251 MT imported in the

same period in 2017. The main reason for the reduction is SFDA’s decision to implement a two-decade-

old Fatwa (Islamic religion edict) issued on July 3, 1997 by the Makkah based International Islamic Fiqh

Academy (religious scholars of the Muslim World League). The Fatwa banned electrical stunning of

poultry before slaughtering. In Islamic Shari’a or law, slaughtering is achieved by cutting the throat, the

esophagus and the jugular vein. This is the preferred method to slaughter a sheep, cattle, bird, etc., and it

is permissible in other animals. According to SFDA, the Fiqh Academy issued the fatwa to ban poultry

stunning after it conducted experiments at major poultry slaughtering houses in Latin America and

observed that electrical stunning led to the death of a significant number of chickens before their throats

were cut. Analysts that follow the Saudi poultry industry question why it took Saudi Arabia 21 years to

implement the fatwa. It can be viewed as a halal issue or a non-tariff measure to assist the

competitiveness of local poultry producers.

The Saudi government provides local poultry producers with several direct and indirect subsidies to help

them reduce their production cost. The sector depends on imported feed, equipment, and all year long

air-conditioning. The government provides a wide range of assistance to the industry as part of its effort

to boost the country’s self-sufficiency level in chicken meat production to 60 percent by 2020.

Until this year, it was normal for the Cooperative Association of Saudi Poultry Producers (CASPP) to

complain about Brazil and France dumping chicken in the Saudi market. CASPP blamed the two major

exporters of frozen chicken for causing domestic chicken meat producers to lose money - which forced

several small ones to close. CASPP claims that the price of imported chicken reached as low as $1.87

per kg in 2016, which is close to the production cost of local producers. [The production cost of locally

produced chicken meat is estimated at between six and seven SAR ($1.6-1.87) per Kg average dressed

weight]. The association lobbied the government for several years to intervene and to protect the local

poultry industry from "unfairly low" prices by imposing anti-dumping duties on Brazilian and French

exports of frozen poultry products. The local industry’s lobbying efforts produced results in December

2016 when the government effectively increased customs duties on imported chicken meat from 5

percent ad valorem to 20 percent ad valorem. SFDA’s ban on stunning in the production process appears

to have reduced imports and increased the cost of imported frozen chicken. Even though some local

major poultry producers have used chicken stunning technology on their farms, they have not publicly

made complaints about the stunning ban. They may not find a reason to complain as it has drastically

reduced imports, sharply increased retail prices, and made local chickens more competitive with

imports.

SFDA’s decree to ban poultry stunning was implemented on poultry products that were produced after

May 31, 2018. SFDA had held several meetings with Brazil exporters, in the months leading up to the

implementation of its ban on poultry electrical immobilization. It also changed several deadlines after

discussions with Brazilian government and poultry exporters. Consequently, the implementation

deadline for Brazil poultry imports was moved from initial date of January to March, then to May 31,

2018. Brazilian exporters asked SFDA to provide a longer grace period. Nevertheless, SFDA stood fast

to the June 2018 deadline. The implementation of the stunning ban drastically reduced the size of

Brazilian poultry exports to Saudi Arabia - particularly in the month of June when total Brazilian poultry

exports to Saudi Arabia reached record low of 14,460 MT. It appears that Brazilian exporters have

somewhat adjusted to the SFDA’s ban on poultry immobilization and their monthly exports to the

Kingdom have risen significantly in the past three months compared to June.

According to Brazilian Customs data, the country exported 47,641 MT of poultry meat to Saudi Arabia

in the month of September, a 230 percent increase compared to the month of June.

The June nationwide strike by the Brazilian truck drivers could be another contributing factor for the

record low exports in the month of June. Currently, there are only three major Brazilian poultry

companies (JBS, Vibra and Nicolini) that meet SFDA’s requirements and are engaged in exporting

chicken meat to Saudi Arabia. BRF, which used to dominate the Brazilian poultry exports to Saudi

Arabia with its household name Sadia, has reportedly not been able to meet the SFDA poultry

immobilization or stunning ban requirement. According to local chicken meat importers, total Brazilian

chicken meat exports to Saudi Arabia are expected to exceed 50,000 per month starting in October.

Saudi Arabia has been the largest importer of chicken meat from Brazil, accounting between 15 to 20

percent of all Brazilian chicken meat exports to the world. Brazilian dominance of the Saudi market has

continued and but its market share was reduced by six percent to 78 percent in the first seven months of

this year (Jan-July) compared to same period last year. France was the second largest supplier of chicken

meat to Saudi Arabia with 16 percent followed by Ukraine with 3 percent and U.S. with 2 percent of the

total Saudi poultry meat imports over the first seven months of 2018.

France exported 4,313 MT of poultry meat to Saudi Arabia in July 2018. A reduction of 31 percent

from its June 2018 exports of 6,270 MT. French poultry exports to Saudi Arabia now come from one

poultry slaughtering facility. The Brittany-based Doux Poultry facility which was acquired in May 2018

by Al-Munajem Group, a large Saudi frozen food importer. They were a minority shareholder and

exclusive agent of Doux chicken in Saudi Arabia. According Al-Munajem, its Brittany-based facility

meets all SFDA requirements and is geared to mainly supplying frozen chicken meat to Saudi, other

GCC and Yemeni markets. Other poultry exporting countries that have already met or are expected to

meet SFDA requirements shortly are Ukraine, Turkey and Russia. Turkey exported 240 MT of frozen

chicken in July 2018.

Post estimates total Saudi chicken meat imports for 2018 at 575,000 MT, a reduction of 29 percent

compared to 2017 mainly because of exporting countries difficulties in meeting SFDA’s requirement

that stunning not be used in the production process. For 2019, total Saudi chicken meat imports are

projected to increase by 100,000 MT to 675,000 MT.

The United States made its last shipment of chicken meat to Saudi Arabia in May 2018, when only 259

MT arrived at Saudi ports. No U.S. producer has indicated a desire to produce chicken meat without

stunning. Many producers believe producing chicken without electric immobilization (stunning) is

inhumane and that doing so would result in additional substandard product and reduced line speeds.

Exporting Country

Saudi Arabia Chicken Meat Imports

Quantity in MT

Jan-July 2017

Market Share

Jan-July 2018

Market Share

Brazil

373,666

84%

268,330

78%

France

57,849

13%

55,979

16%

Ukraine

5,731

9,664

United States

5,467

7,410

Turkey

1,448

1,496

Others

1,090

1,656

Total

445,251

100%

344,535

100%

Source: Global Trade Atlas

Poultry production methods in the United States address SFDA’s root concern – that the chickens be

alive immediately before slaughter – but not the letter of GSO standard 993. That standard does not

allow electric immobilization (stunning) of poultry because of concerns, based on observations more

than 21 years ago in another country, that it might kill the birds. GSO standard 993 does allow stunning

of cattle, sheep and goats. U.S. Food Safety and Inspection Service (FSIS) regulations and practice also

require that the chickens be alive immediately before slaughter. Electric immobilization is used

however. USDA is continuing to work with SFDA to resolve the issue.

Over the past few years, the U.S. share of the Saudi imported chicken meat market has fluctuated

between 1 and 3 percent. This is principally because of the difficulties that U.S. poultry meat producers

face meeting SFDA’s poultry feed regulations. SFDA requires that imported poultry meat be

accompanied by a government issued health certificate attesting that it came from poultry that were only

fed on vegetable protein and are free from growth hormones. In order for FSIS to issue the required

animal protein free certification, exports of U.S. poultry and poultry products to the Kingdom come

from slaughter facilities that participate in the Agricultural Marketing Service’s (AMS) Animal Protein

Free Verification (APFV) Program for Poultry. Very few U.S. poultry producers participate in the

APFV program. These conditions have eliminated most U.S. poultry producers from exporting chicken

and other poultry products to Saudi Arabia.

Reduced Chicken Meat Imports in 2017

In 2017, Saudi Arabia imported 707,410 MT of chicken meat, down by about 20 percent from a year

earlier as reported by supplying countries. The significant decline in chicken meat imports in 2017 was

mainly due to reduced demand because of the departure of hundreds of thousands expatriates from the

Kingdom. This was the result of slowdown in the country’s economy (particularly the construction

sector that depends on financed projects), the conversion of certain sectors of the economy to from

predominantly expatriate employment to almost exclusively Saudi, and the imposition of a per capita

tax on the dependents of expatriates.

Exporting Country

Saudi Arabia Chicken Meat Imports

Quantity in MT

2016

Market Share

2017

Market Share

Brazil

746,286

84.2%

589,575

83.3%

France

120,423

13.6%

97,901

13.8%

USA

11,778

1.3%

8,856

1.3%

Ukraine

2,484

0.3%

7,633

1.1%

Turkey

1,015

0.1%

2,041

0.3%

Argentina

3,990

0.5%

960

0.1%

Other Countries

394

0.0%

444

0.1%

Total

886,370

100%

707,410

100%

Source: Global Trade Atlas

Chicken Parts

While most poultry meat consumption in Saudi Arabia is in the form of whole chicken, demand for

chicken parts has soared in the past several years due to expansion of food catering industry, the growth

of fast food outlets, casual dining establishments, and increased demand by hotels. Saudi imports of

chicken parts increased by 98 percent over the past seven years, from 115,512 MT in 2010 to 228,734

MT in 2017. In 2017, imported chicken parts accounted for 32 percent of total Saudi chicken meat

imports. Brazil maintained its share of Saudi chicken parts imports at 94 percent for the third

consecutive year.

Other important factors in the continued increase in demand for chicken parts (such as leg quarters and

breast and deboned chicken meat) are increased demand by households of working-couples, expansion

of Shawarma restaurants (a popular Middle Eastern style sandwich), rising demand for ready-to-cook

poultry meals, and the continuing growth of hypermarkets and supermarkets.

The U.S. has been a distant second in the Saudi chicken parts imports market over the past several

years. In 2017, U.S. chicken parts exports to Saudi Arabia were down by about 25 percent to 8,839

MT. According to trade contacts, dark chicken meat accounts for about 70 percent of total chicken parts

imports and the balance is chicken breast. U.S. fast food chains such as McDonald’s, KFC and their

local rivals such as Al-Beck, Herfy, and Kudu depend mostly on imported chicken parts. Western casual

dining restaurants including Chili’s, Apple Bees, Fuddruckers, and TGI Fridays use significant

quantities of chicken parts - particularly chicken breast. A large part of imported deboned chicken is

destined for Shawarma restaurants. Shawarma is made of boneless chicken meat or beef mixed with

pickles, lettuce and mayonnaise wrapped with pita bread.

Frozen Chicken Cuts And Edible Offal (Including Livers)

Reporting Country

2016

2017

Brazil

201,401

215,249

United States

11,742

8,839

Ukraine

626

2,547

Turkey

673

1,807

Other

305

292

Total

214,747

228,734

Source: Global Trade Atlas

Import Prices

CIF prices (for August 2018 arrivals) for Brazilian frozen whole chicken ranges between $1,800 and

$1,850 depending on the quantity imported, brand name and weight. This is approximately 28 percent

higher than prices quoted the same time last year. The main reason for the higher prices this summer

seems to be the shortage of chicken meat produced without stunning. Some Brazilian exporters are

quoting C&F prices of up to $2000 per MT for October arrivals. However, local importers believe that

price is very high, and that the maximum import price that the market can support is $1,850 per MT.

Local Chicken meat Retail Prices

The sharp increase in imported chicken prices has made local chicken meat become more competitive

than ever before. During the last week of August, it was observed that per kg prices of domestic frozen

chicken meat were cheaper or equal to imported Brazilian and French chicken meat. A 1100 gram

package of local chicken was selling at $3.63 while a brand of imported Brazilian chicken sold for

$3.87. A 1,200 grams package of local frozen chicken sold for $3.91 while the same size of French

frozen chicken was sold for about $4. Locally produced chilled chicken meat sold for between $3.93

and $4.67 per kg.

Despite the recent increases in the chicken meat prices, it remains the most price competitive animal

protein source. Imported lamb is sold for $9.3 per kg while beef is as low as $6.1 per kg. Domestically

produced fresh lamb and veal were sold for $18.4 and $15.2 per kg, respectively.

Import Requirements

Saudi Poultry Meat Import Regulations:

1. Ban on Poultry Stunning: Chicken must be slaughtered without the use of electrical

immobilization or stunning.

2. Hormone Free Certification: The official health certificate accompanying a shipment of

poultry meat must include a statement confirming that the poultry meat was tested and found to

be free from hormones by the responsible government agency of the exporting country.

3. Ban on Animal Protein Feeding: SFDA poultry meat regulations require that the government

health certificate accompanying shipments of poultry meat must clearly indicate that the birds

slaughtered were not fed animal protein, animal fats, or any animal byproducts. In order for

FSIS to issue the required animal protein free certification, exports of U.S. poultry and poultry

products to the Kingdom must come from slaughter facilities that participate in the Agricultural

Marketing Service’s (AMS) Animal Protein Free Verification (APFV) Program for Poultry.

Information about this program can be found on AMS' Website.

4. Quality Standards: Imported poultry meat and products must meet all existing Gulf Standards

Organization’s (GSO) poultry meat quality standards and specifications. An Appendix to this

report lists all current GSO technical regulations or standards related to poultry meat.

5. Halal Certificate: Poultry slaughtering has to take place in an officially licensed slaughterhouse

and in accordance with Islamic slaughtering procedures: GS 993/1998 “Animal slaughtering

Requirements According to Islamic Law”.

6. Certificate of Islamic Slaughter: A certificate of Islamic slaughter must be issued for all poultry

meat and products entering the Kingdom of Saudi Arabia. This certificate is issued by Islamic

Centers in the United States approved by the Saudi Embassy or Consulates. The certificate must

be attested by the Saudi Embassy or Consulate in the U.S. before the poultry meat is shipped to

Saudi Arabia.

7. Laboratory Test: All poultry meat and products imported will be checked and tested at Saudi

ports of entry to ascertain that they meet all of the above requirements.

Exports

The estimate of total Saudi chicken meat exports for 2018 is reduced to 10,000 MT due to the import

ban imposed on Saudi exports by the GCC countries. This was due to the discovery of H5N8 cases in

Saudi Arabia from the end of December 2017 until March 2018.

The Saudi government maintains a $533 per MT export tax on exports of poultry to recover part of the

production subsides that it provides to domestic chicken producers. The export duty, which was

imposed at the end of 2012, apparently made Saudi chicken meat prices more expensive in export

markets. However, some consumers in the importing countries are willing to pay the higher price

because it is fresh and guaranteed Halal.

Stocks

There are no government programs to hold strategic poultry stocks in Saudi Arabia. For PS&D table

calculations we set beginning and ending stocks at zero – holding them constant.

Policy

The Saudi government has targeted increasing Chicken meat production to meet 60 percent of domestic

consumption by the end of 2020 to help meet the Kingdom’s food security strategic goals. Some poultry

analysts question if the Kingdom will be able to achieve this ambitious goal. It will require (1) very

large investments to expand poultry production capacity, (2) implementation of a unified biosecurity

system to help reduce chicken mortality rates, and (3) a large increase in the imports of subsidized

poultry feed. It is a very costly endeavor to undertake during a period of reduced revenues from oil

exports. Reduced oil revenues have already compelled the government to reduce subsidies on animal

feed imports by up to 62 percent, and increase the cost of electricity, water, introduce a five percent

value added tax, and raised gasoline prices.

The Kingdom has encouraged the establishment of new chicken farms and the expansion of existing

ones by offering various types of production support. These include subsidies for animal feed, interest-

free loans, and rebates on the purchase of certain poultry equipment. The current list of animal feed

products eligible for import subsidies includes 31 feed ingredients, such as yellow corn, soybean meal,

distillers’ dried grain with solubles (DDGs), corn gluten feed (CGF) and sorghum. The import subsidy

rates are calculated according to the energy and protein levels of each feed ingredient. Poultry analysts

estimate that locally produced chicken meat receives about $0.50 per kg of government subsidy on

average.

Marketing

Saudi Arabia has an extensive infrastructure for poultry meat distribution. Poultry producers and

importers generally have adequate storage facilities, including refrigerated trucks and cold storage.

Poultry meat and products are available in both wholesale and retail outlets throughout the Kingdom.

Major poultry farms and importers sell their products to retailers, wholesalers and directly to consumers

through their own nationwide cold store outlets. Consumers may purchase poultry meat in cardboard

boxes containing ten chickens from wholesalers or in individual pieces from retail stores and

supermarkets. Commercial customers purchase their poultry supplies either from importers/distributors,

poultry farms, or both.

Note: MEWA classifies poultry production farms as either specialized (commercial) or traditional.

Commercial farms account for 99.8 percent of total Chicken meat produced in Saudi Arabia. As such,

the PSD table in this report includes only chicken meat produced on commercial farms.

Chicken Meat Production, Supply and Demand Data Statistics:

Saudi Arabia (in 1,000 MT RTC)

Attribute

2017

2018

2019

Production

600

650

700

Total Imports

790

575

675

Total Supply

1390

1225

1375

Total Exports

Human Consumption

1350

1215

1365

Total Dom. Consumption

1350

1215

1365

Total Use

1390

1225

1375

Total Distribution

1390

1225

1375

Not Official USDA Data

Turkey Meat

Saudi Arabia’s turkey meat imports are very small. In 2017, Saudi turkey meat imports totaled 2,549

MT, a decrease of approximately 17 percent on a year earlier. In 2016, total imports were 2,920 MT.

Brazil supplied about 35 percent of imported turkey meat in 2017, followed by Turkey with about 28,

France with about 14, the U.S. with 8 percent and Belgium with 17 percent. Most imported turkey meat

is used to process value added products such as salami, bologna, smoked turkey breast, and honey

roasted turkey. The rest is imported for distribution to up-scale supermarkets for Thanksgiving and New

Year’s holidays.

Saudi Turkey Meat Imports

Exporting Country

2016

2017

Brazil

1,301

880

Turkey

750

724

Belgium

503

185

France

317

347

United States

216

Other

Total

2,920

2,549

Source: Global Trade Atlas

In the past few years, the U.S. share of the turkey meat market has been falling because of the

difficulties that U.S. turkey meat producers face meeting SFDA’s animal protein free feed requirements.

Suppliers’ data for Jan-Aug 2018 shows exports to Saudi Arabia of 1,300 MT of turkey meat, a

reduction of 13 percent compared to the same period last year. While Brazil exported about 49 percent

of total turkey meat exports in the first eight months of this year, there are no imports from the U.S.

Total turkey meat imports is estimated at 2,000 MT for 2018.

Table Eggs

Saudi Arabia is a surplus producer of table egg and has been exporting eggs for more than two decades.

Currently available data shows that the Kingdom produced more than 5.1 billion table eggs in 2017, an

increase of 3 percent compared to 2016. The 2017 production provided Saudi Arabia with a 114 percent

self-sufficiency rate. In 2016, the Kingdom exported about 760 million pieces of table eggs, mostly to

the GCC countries, which represented about 15 percent of the Kingdom’s total table egg production.

The Saudi table egg sector is highly developed and has been relatively more successful than the chicken

sector.