Big farmers flood wheat market

Author: 
By Habib Al-Shammari, Arab News Staff
Publication Date: 
Wed, 2001-10-31 03:00

RIYADH, 31 October — Minister of Agriculture and Water Dr. Abdullah Muammar has accused several large agricultural companies of flooding the wheat market and thereby injuring the interests of small-scale farmers. The companies have produced wheat exceeding the ceiling fixed for each. Another charge is that they sold their excess produce to the General Organization for Grain Silos and Flour Mills.

The ministry had issued licenses to the agricultural companies so they could exclusively produce a fixed quantity of wheat.

The conduct of four major companies amounted to "a violation of the ministry’s instructions and the orders of the higher authorities in this regard. The violations have also led to the wastage of the country’s water resources, as well as the yield in surplus of the current domestic requirements," Dr. Muammar said.

In a letter to four companies involved in the violations the minister said they would face deterrent actions for their "excesses".

The four companies are from Hail, Qassim, Tabuk and Jauf, according to a source in the ministry.

The company officials blamed the General Organization for Grain Silos and Flour Mills (GOGSFM) for making them produce and market the surplus wheat.

In the same letter, the minister — who is also the chairman of the board of directors of the GOGSFM — said the erring companies had been responsible for water in these regions, and had behaved in a way that embarrassed both the ministry and GOGSFM.

The GOGSFM is currently finding it hard to dispose of its surplus quantities of grain. The situation has prompted the GOGSFM to return the excess to farmers and lower the production ceiling of small farmers in time for the next harvest.

The larger companies this year will be allowed to produce up to 20 percent less than last year’s production ceiling. The small-scale farmers will also be hit by the new cut in the ceiling.

The GOGSFM has distanced itself from the responsibility of the surplus production saying that it would not buy grain exceeding the ceiling next year "because the production ceiling fixed by the state cannot be bypassed."

The sources in the agricultural sector fear that the reduction in the quota will discourage the investors and make them quit wheat cultivation.

The farmers are already burdened by the rapidly increasing cost of production in addition to the debt repayment to the Agricultural Bank.

The GOGSFM supplies various varieties of wheat in the local market with prices ranging between SR25 to 35 for a bag of 45 kg. The government used to buy wheat from the farmers at prices profitable to them since the eighties. It also used to offer them interest-free loans.

Later the government cut down the subsidies in a bid to prompt farmers to adopt new agricultural strategies such as the diversification of crops and reduce the water consumption.

A production ceiling was also fixed for each farm. The domestic production of wheat is sufficient to meet the local demand. A source in the sector has said that in the present conditions the government need not create a buffer stock of wheat to counter the consequences of a sharp fall in the global production of rice and other grains due to drought.

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