Saudi Arabia is the largest and a growing market for high value foodstuffs in the Gulf region. All food products are imported by the private sector. The vast majority of food products are subject to a 5 percent import duty while coffee, tea and fresh red meat enter the country duty free. Selected processed food products, however, are assessed higher import duties. In order to protect local food processors and production from competitively priced imports, the Kingdom ties import duties to the level of local production of similar products. As a general rule, a maximum import tariff rate of 40 percent is applied when local production of a food or agricultural product exceeds a self-sufficiency level. Currently, a 40 percent import duty rate applies to fresh, dried and processed dates. Imported ice cream is assessed a 20 percent import duty.
Recently, the Saudi government introduced an agricultural policy aimed at the phased elimination of water intensive agricultural crops such as wheat. In 2009, the Saudi government implemented its 2008 decree which called for a 12.5 percent annual reduction in local wheat production over an eight year period. The government’s goal is to terminate local wheat production by the spring of 2016. Until then, Saudi Arabia will augment the percentage reduction in local wheat production by importing a similar percentage from the international wheat market. The government will maintain the guaranteed purchase price for locally grown wheat at $267 per metric ton until 2016. In 2003, Saudi Arabia eliminated barley production to save water. Grain and forage production place large demands on non-renewable aquifer water, resulting in an imbalance between water recharge and water discharge. The new agricultural policy calls for selective agricultural development to achieve a balance between water and food security.
