Market Trends of saudi arabia red meat Industry
The government is providing various financial subsidies to encourage local production
- Of all the countries in the Middle East, Saudi Arabia accounts for a major share in the production of beef, with 7.00% in 2022. The overall production of beef in Saudi Arabia decreased by 2.44% from 2017 to 2022. Hence, the production is likely to be boosted by various government initiatives and policies, such as government assistance to lower the cost of producing red meat in the Kingdom of Saudi Arabia through direct financial subsidies based on monthly production, interest-free loans, and rebates for the purchase of cattle equipment. Using more than 70% local content is required of caterers who provide food to government institutions (hospitals, schools, and universities). Easy access to labor, approval of foreign suppliers, and a streamlined licensing and permit process will allow for faster industry localization.
- Beef production is predicted to increase from 2023 to 2029 because consumers demand more premium beef, which is grass-fed and locally produced. Most Saudi Arabian consumers prefer fresh meat over frozen and processed forms. The market is seeing a relaxation of regulations, like an increase in the shelf life for chilled beef sold in Saudi Arabia by 50 days to the new standard of 120 days by the Saudi Food and Drug Authority.
- Out of the total meat produced in the country, beef accounted for only 3.54% in 2022. Private and government entities are taking various initiatives to uplift local production in the country. The partnership by Saudi Agricultural and Livestock Investment Co. (SALIC) with Brazil's Minerva Foods to set up a joint venture for the processing and export of beef is expected to enhance operating synergies, reduce risks, and contribute to an increase in the production of beef.
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Initiatives to increase local production are expected to optimize the prices during the forecast period
- The overall price of beef in Saudi Arabia increased by 5.26% from 2016 to 2022. In 2022, the price per kg of beef was around USD 4, an increase of 0.96% from 2021. The price increase was mainly due to the implementation of value-added tax (VAT) in 2018. The introduction of value-added tax, along with rising inflation from 2019, led to an increase in the prices of beef and associated costs like production prices, feed prices, manufacturing prices, and export prices since 2019.
- The increase in food prices across different channels raised the consumer price index. With the VAT raised from 5% to 15%, transportation prices increased by 19.3% compared to the previous year. The Cabinet enacted Decision No. 599 to amend the Harmonized Tariff Schedule and increase customs duty rates, which increased the landing cost of beef, and the new tax rate of 7-25% levied on the prices resulted in a spike in 2021.
- Beef prices in 2022 increased because of an 11.5% rise in the wholesale price index (WPI) compared to the previous year. The number of live animals, like cattle, in Saudi Arabia also increased by 9%, and the associated costs, like producer prices, also soared to 151 base points compared to 2021. Due to increased local demand, the Saudi Food and Drug Authority (SFDA) lifted its suspension on Brazilian meat imports in 2021. Saudi Arabia is attracting foreign investors to boost local production, thus reducing the prices. Productivity-adjusted wages in the country do not include the annual recurring charge of USD 1.23/hour for a work permit, resident identity (iqama), and health insurance, which is likely to reduce the production charges for manufacturers.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- The price of mutton in the country is dependent on various external factors as the country imports most of its mutton
- Comparatively lesser investments and a supportive regulatory atmosphere to boost the production
