For over half a century, food security has been a strategic issue for Saudi Arabia. More recently, the 2008 food price crisis and the 2020 food supply disruptions gave Saudi decision makers a taste of what the future might look like in a climate-changing world, as two of the most salient issues will be access to drinking water and food – essential resources the kingdom sorely lacks. With 90% of its land unfit for agriculture and 70% of its water coming from desalination plants, water and food security can look like an unwinnable battle for Saudi Arabia.

Yet, over the past few years, with billions of government dollars invested into its agricultural sector, Saudi Arabia has seen an increase in food production, reaching self-sufficiency in various food products. Through a series of technological innovations, improved water management, and foreign land-buying programs, a goal that even 15 years ago seemed like an unreasonable dream, is suddenly becoming feasible.

A Long History of State-Led Agricultural Programs

Agricultural development programs in Saudi Arabia have not always been effective, and the country’s long history of state-led agricultural policies showed policy planners the limits of public subsidies in creating a viable path to food production.

From 1970 to the early 2000s, the agricultural sector’s transformation from small-scale, subsistence-based farms to large-scale, industrialized farms ended up costing more than it was worth: It dried up critical nonrenewable groundwater reserves and consumed massive state resources in the form of land distribution, subsidies, and loans.

The objective of the first development plan (1970-74) was to increase agricultural output by 27% over five years. The establishment of large farms, the importation of farming technology, and the mechanization of a factory-style farming industry brought about the expected results. By the 1980s, Saudi Arabia had become the fifth-largest wheat producer in the world.

Saudi Arabia’s Wheat Production, in Metric Tons and Percentage Growth, 1960-2022

Subsidies played a key role in this outcome. The Saudi government established the Grain Silos and Flour Mills Organization in 1972 to develop agricultural industries and hold a six-month wheat reserve as a strategic food security objective. Not only did the organization subsidize the acquisition of seeds, fertilizers, and irrigation systems and other new technology, it also guaranteed buying back crops at a price far above global market price. Between 1975 and 1980, the Saudi government was offering Saudi farmers $1,000 per ton of wheat, while the international market price at the time oscillated between $99 and $180 per ton. While in 1972 the organization was buying back about 12% of national wheat production, by 1984, it was purchasing 90% of national production, which remained the case up until the 2000s.

Share of Wheat Production Purchased by the Grain Silos and Flour Mills Organization, 1974-99

Based on the projected expenditures of the development plans over multiple years and Saudi government budget data, the buy-back subsidies disbursed for the wheat program amounted to an estimated $15 billion between 1980 and 1994. Buying the same amount of wheat on international markets would have cost less than $3 billion over the same period. The incentive structure for large farmers was so skewed toward selling increasingly more wheat to the government that some farmers started purchasing wheat on international markets to sell it back to the government as if it had been produced locally.

Over time, even as a significant increase in agricultural output ensued, the programs remained heavily dependent on public funding. In an effort to try and rein in wheat production in the early 1990s, the government started imposing quotas on wheat purchased by the Grain Silos and Flour Mills Organization from the largest farms. But the well-organized agricultural lobby managed to get the decision overturned. In 2005, the guaranteed purchase price by the organization was still $500 per ton, while it was sold at around $120 on international markets. It was only in 2008 that, to save water and money, the government announced its decision to wean the sector off wheat production subsidies, with a continuous 12% annual decrease until the subsidies completely disappeared.

From Rent-Distribution to Feeding People

Saudi political priorities have radically changed since the wheat program days. In the early decades of state formation, state-society relations in Saudi Arabia were initially transformed and redefined by what the government could provide to various powerful interest groups whose support was necessary in the nation-building enterprise. Coalition building through rent distribution was a priority to ensure political stability through the process of establishing a modern state. The continuous massive influx of foreign reserves meant old elite groups on which the king’s power initially relied lost their influence, while new economic groups became prominent. As old elites lost their economic prerogatives, they were sometimes compensated for their loss. Saudi Arabia’s land distribution program in the 1970s and 1980s served that purpose. The program facilitated the distribution of formidable rents to a group of merchant families that were struggling to adjust to the new oil-based economic order.

Though the initial intention was to increase Saudi Arabia’s self-reliance in food production, the agricultural subsidies actually displaced traditional farming populations and were captured by merchant families who had lost their economic power. Over the years, thanks to the powerful wheat lobby created by those families who had received large parcels of land from the government’s land distribution program, the allocation of subsidies was increasingly directed toward those large landowners who had formed farming companies. In fact, the agricultural sector was so dependent on public subsidies that, when the government announced the end of the wheat program subsidies, over 40% of farming companies closed.

Land Distribution

Following the 2007-08 food price crisis and the Saudi government’s wheat subsidy cut announcement, King Abdullah bin Abdulaziz launched the Initiative for Saudi Agricultural Investment Abroad. While, for decades, the wheat program enriched small interest groups to the detriment of its larger goal, the king’s new plan reclaimed the initial objective of ensuring the country’s food security through new means. The central idea was to encourage buying farmland in the United States, Asia, and Africa, with subsidies for irrigation systems, seed buying, and machinery to be brought to those Saudi farms abroad. If interest groups were capturing the agricultural sector at home, then developing food production abroad was the answer.

However, this plan encountered many unexpected obstacles. International organizations denounced this strategy as a speculative land grab and raised concerns over whether poor countries would still have enough farmland left to feed themselves in the future. Local populations, labor laws, the Saudi farms’ use of vital groundwater reserves in Arizona, and even riots all made the initiative hard to implement. Then, with the Russian invasion of Ukraine and the effects of the war on wheat exports, it became obvious again that the kingdom’s food security could only be secured on its own territory.

On the Road to Innovative Farming

Food security has become an even more pressing issue for the Gulf. According to the United Nations, over the next 30 years, climate change will increasingly endanger the world’s food supply, and countries that will not be able to rely on their own production to feed their populations will be most exposed to international food supply chain disruptions and dramatic price shocks. When crops start failing due to extreme weather events, net food importers are fearing large food-producing countries will impose bans on food exports, thus making food largely unavailable to importers, even those with enough money to purchase food at exorbitant prices. This will leave countries like Saudi Arabia (and the Middle East more generally), severely exposed to food shortages, as it currently relies on food imports for up to 80% of its national food consumption. Due to rapid population growth, the kingdom’s overall food imports have also rapidly grown. While the government has kept import sources diversified and relatively balanced, the sheer amount of food required to support the growing population is driving the urgent necessity to produce food locally.

Saudi Arabia Food Imports, 1995-2021

Over the past few years, Saudi Arabia has achieved some important milestones in food production. Saudi production of dates, eggs, dairy, and other products has exceeded local demand, and the country has started exporting food products, mostly to its neighbors. The challenge remains, of course, the production of fruits and vegetables that cannot grow in severe weather conditions, and the country is actively working on addressing those limitations. 

Saudi Food Export Partners, 2021 

Though the wheat program was deemed inefficient in terms of cost and unsustainable in its drain on water, it led to important lessons learned and a push for technological advances to make food production feasible without depleting nonrenewable water supplies. Since 2017, Saudi Arabia has invested billions of dollars in next generation farming technologies, including vertical farming, hydroponics, and artificial intelligence.

For example, Saudi startup Mishkat Agritech Farms, established in 2017, has teamed up with Schaduf, an Egyptian urban farming company, to developed the first hydroponic, vertical farm in Jeddah, with plans to expand to other cities around the country. Using bumble bees to pollinate plants inside its greenhouse, and staying away from pesticides, it aims to reduce water use by 80% and bring to zero the current 40% rate of food waste that comes with food imports.

On the Naeem farms website, another innovative agricultural project, Saudi customers can build their farm-to-table fruit and veggie basket produced locally and get them delivered to their doorstep.

Many other similar partnerships are being established through the Saudi Public Investment Fund with U.S. and European firms to develop indoor vertical farming in the kingdom and across the region. For example, on the outskirts of Neom, the high-tech Dutch greenhouse company Van Der Hoeven was awarded a $120 million contract to create two test facilities to grow crops in the desert. It is using AI technology developed by research centers, such as the University of Bonn’s PhenoRob, to monitor crop disease, weeds, and water needs.

Vision 2030 works as a guide to achieve the leadership’s stated ambition to transform Saudi Arabia into a regional food hub. Institutions such as the Agricultural Development Fund, National Development Fund, Saudi Agricultural and Livestock Investment Company, Ministry of Environment, Water and Agriculture, and General Food Security Authority are all working together to implement the agricultural plan of Vision 2030.

Chances are that, for the foreseeable future, large amounts of public funding will be necessary to support the development of the agricultural sector in Saudi Arabia. Yet the Saudi authorities’ choice is much clearer than it was back in the wheat program days: It is not about coalition building, rent distribution, or state formation anymore. It is now about ensuring that Saudi Arabia’s rapidly growing population will be able to consistently access food in the coming decades.