Saudi Arabia set to become a key wheat flour exporter if government controls relax further

Flour mills across the Middle East are bracing for intensified competition from Saudi Arabia in the export market as expectations grow that the government will loosen its control over wheat procurement.

“It’s quite a concern for us,” a UAE flour mill said. “Once public organizations have slowly been turning into the private realm, which means they’ll be better managed for profit moving forward.”

Flour mills in Saudi Arabia procure all their wheat from the government body responsible for food security in the Kingdom of Saudi Arabia, the General Authority for Food Security (GFSA).

However, 2025 is expected to be the year when the government’s control over wheat purchases comes to an end, which means mills would take charge of imports themselves rather than buying from the GFSA, according to the source.

“This would allow the mills to procure higher volumes and could become big players in the export market for East Africa and the wider GCC,” he said.

Concerns over this change stem from Saudi Arabia’s advantages over neighboring markets, particularly the country’s cheap operating costs and location.

“Strategically speaking, [flour mills in Saudi Arabia] are very well located. They are directly on the Red Sea and the Gulf and have good port infrastructure. They also have cheap energy and state-of-the-art equipment, making them very competitive when it comes to price and cost,” Independent Milling Sector Consultant Fabien Varagnac told S&P Global Commodity Insights.

However, the country will also need to face the challenges associated with transitioning from the public to the private sector.

“There are big challenges to overcome because [Saudi flour mills] have been evolving for a long time in a regulated and public sector environment. They aren’t used to competition, so this will be a big challenge for them. Although they are investing a lot and hiring top-level talent from all over the world to put in the internal process, it takes time to acquire the expertise required.”

No time frame or certainty as to when the Saudi Arabian government’s controls over wheat procurement would loosen has been announced, but mills in neighboring countries are closely monitoring the situation as “it could affect future business,” the UAE mill said.

In November, GFSA agreed to allow licensed flour milling companies to export flour to international markets. This follows the completion of flour milling sector privatization in 2021 as part of the Kingdom of Saudi Arabia’s Vision 2030.

Saudi Arabia’s wheat imports are to reach 4.25 million mt in the marketing year 2024-25 (July-June), up 2% from the previous year at 4.16 million mt, according to a semi-annual report by the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA) released Oct. 21.

Tags: Saudi Arabia, flour