JEDDAH, 9 May 2004 — Saudi Arabia is the single largest consumer of food and drink in the Gulf, accounting for 63 percent of all of the region’s imports.

The Kingdom is the biggest importer and producer of foods, food products and drinks, and the region’s major market for food ingredients. It also accounts for 72 percent of the Gulf’s investment in the packaging sector. Food processing has become a major investment area in this part of the world.

But now, Saudi consumption and production of food and beverages are reshaping its indigenous industry to cope with the demands of a population that is increasing by leaps and bounds.

In response, the government is encouraging foreign investment and privatization. Driven by the private sector, new opportunities are being crated for all, whether producers, processors, distributors or jobseekers. According to official figures for 2001, some 600 companies employed in excess of 54,000 workers. The Kingdom is already on the path of economic reforms with a view to creating jobs through manufacturing. As a result, food processing has become a major investment area. Investment in the area has jumped from $1.7 billion in 1995 to $7 billion, according to the latest figures.

Jeddah witnessed the highest investment in food-related industries. A majority of processing factories and plants are based in and around the city. Sales of soft drinks, juices and health beverages exceed $1.2 billion annually and they are growing at 10 percent per annum. Most of the large Saudi importers and distributors have their headquarters in Jeddah. Eighty percent of all foodstuffs are imported through the Jeddah Islamic Port.

Rapid expansion within the industry has in turn led to an increased demand for all forms of packaging machinery and supplies, from fresh produce packaging to fast-food containers. “This is a market that is not only trying to satisfy its own demands but also aiming to develop its export trade,” Muhammad Alesayi, a veteran in the industry, said. As a result, the Kingdom accounts for 72 percent of the Gulf’s entire investment in the packaging sector.

Rapid expansion within the industry has in turn led to an increased demand for all forms of packaging machinery and supplies, from fresh produce packaging to fast-food containers, from bottling to PEP containers.

With the Kingdom’s encouragement, greater involvement by the private sector and further investment, both domestic and inward, in all areas of production and manufacturing, the Kingdom is expected to continue with its impressive growth that will lure both domestic and overseas investors.

Attractive incentives, readymade industrial sites, low energy costs and availability of inexpensive skilled labor are contributing to the Kingdom’s efforts to realize its goals for domestically produced and packaged foods and drinks.

The Kingdom has also been tightening regulation of import of foods and food products. For instance, it has tightened restrictions on import of genetically modified (GM) foods and asked local importers and exporting countries to use labels to identify such products amid growing concerns in the Untied States and Europe about adverse effects of GM foods on health.

“Saudi policies with regard to GM food imports are clear. They have made it mandatory to have a labeling mechanism for all GM foods to differentiate them from natural food products,” Minister of Commerce Osama Faqih said at a recent seminar.

The Saudi Standards Organization (SASO) has set up a food safety committee that evaluates products causing health hazards. “The committee has issued precautionary measures to be complied with while importing genetically modified food products,” SASO Director General Dr. Khaled Al-Khalaf said.

The Kingdom is raising its food standards through SASO, with a view to raising quality standards, protecting the market and safeguarding the consumer interests. Plans are also under way to establish a regulatory body like the US Food and Drug Administration.

One other aspect of utmost importance to the Kingdom is halal food. The Kingdom has been sponsoring and hosting seminars and discussions on issues related to halal food both within the Kingdom and overseas. Some countries have already issued standards on halal food that have benefited Saudi exporters.

The Kingdom’s exports of food products surged from SR492 million in 1997 to upward of SR600 million in the past year.

Today, Saudi food products are exported around the world. Its top 10 markets include the GCC states, Yemen, Egypt, Jordan, Lebanon and Pakistan.

Meat tops the list of Saudi imports. The seventeen percent of total meat products imported during Haj and Ramadan are valued at more than $7.5 billion. Demand is expected to surge as the Umrah season has been extended from three months in the past to 10 months in recent years.

The Kingdom’s livestock resources cannot meet the growing demand for meat so imports are increasing year after year. The number of cattle in the Kingdom is estimated to be more than 20 million.

More than four dozen fodder factories exist in the Kingdom involving an investment of nearly SR1.5 billion.

The Kingdom, being the largest economy in the Middle East, also has the largest number of food industries in the region complying with ISO standards.