RIYADH, 23 August — Saudi authorities are seriously considering whether to stop issuing licenses to new dairy farms. This comes in light of the news that the coming year’s losses incurred by existing dairy farms are likely to be around SR1 billion. Agriculture and Water Minister Dr. Abdullah Muammar has ordered a committee study the general dairy market situation. There are 36 dairy farms in the Kingdom which produce 852 million liters of milk from 75,000 cows. “The dairy market, which has witnessed a massive expansion, needs to be reorganized to achieve a balance between supply and demand,” an official source at the ministry said. He pointed out that if the ministry issued yet more licenses for new farms, it would intensify an ongoing price war. Big farms have already launched a marketing campaign to drive out smaller ones in a bid to reduce their losses, estimated at SR60 million monthly. The source indicated that the losses of dairy farms would reach SR1 billion annually if the ministry did not intervene. The present crisis emerged after a number of companies reduced the price of their dairy products by between 10 and 15 percent, in an attempt to find a market for their excess supply. Meanwhile, the supply in Riyadh by a Saudi trader of additional dairy products, the source of which is unknown, has triggered further controversy. The trader does not own a farm, but he has nevertheless flooded the market with supplies after purchasing the excess products of other farms. The trader insists, however, that his products meet health quality standards. Still, authorized dealers have already lodged a complaint against the trader at the Riyadh Chamber of Commerce and Industry, saying he had caused them heavy losses. The trader said his factory, which is still only partially constructed, supplies quality products that are in demand in the market. “We purchase the products of other companies as part of our enterprise,” he told Arab News. “We then redistribute the products to various parts of the Kingdom by plane,” he added. Dr. Abdul Aali Al-Abdul Aali, director of the department for combating commercial fraud at the Commerce Ministry, said the activities of dairy farms come under the supervision of the Ministry of Agriculture and Water.
