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Saudi Arabia Issues Rice Imports Subsidy
Saudi Arabia Issues Rice Imports Subsidy On December 8, 2007, the Saudi Arabian government issued a decree to subsidize rice imports at the rate of $266.67 per metric ton. The decree also increased the government subsidy paid on imported powdered baby milk from $0.53 to $3.20 per kg. The government indicated it decided to introduce the new subsidy scheme to alleviate the financial burden on consumers caused by sharply increased import prices. Saudi Arabia does not produce rice and the country’s annual rice import is estimated at more than one million metric tons. The government did not specify when and how it will implement the new rice subsidy program. Neither the Ministry of Commerce and Industry nor the Ministry of Finance has been able to give more details on the steps to receive payments. There is no information on the effective date of the decree, how the subsidy will be paid, if the subsidy will be applied to rice already in the market or to rice imported after the decree was issued.

The belief in the rice industry is that the government will be selective in the type of rice it will subsidize, limiting application to high quality rice varieties such as American long grain parboiled rice and Indian and Pakistani basmati rice. The subsidy program has the potential to significantly impact imports of high quality rice to Saudi Arabia in calendar year 2008 compared to 2007.

U.S. rice exports to Saudi Arabia for the first nine months of 2007 increased by 53 percent over the same period a year earlier ($51 million vs. $33 million). U.S. rice market share increased this year due to decreased rice exports from India. According to major local rice importers, India reportedly could not meet Saudi Arabia’s rice imports demand in 2007 due to its increased exports to Iran.

Introduction of a rice subsidy program marks the first time in 26 years that Saudi Arabia has supported this commodity. In 1973, Saudi Arabia issued a decree to subsidize staple grains such as wheat flour, rice, and sugar. The subsidy on rice and sugar was lifted in the early 1980s. The subsidy on wheat flour continues. In the past when the government has issued a grain subsidy, it also established a retail price for that commodity. No prices have been announced for this particular subsidy. Local importers expect that subsidy could decrease retail prices of high quality rice by up to 20 percent.
MGR Archive 25.12.2007
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Region Type Price  
Russia Rapan $ 700
USA Jupiter Rice $630
USA Calrose #1 $830
USA Calrose #1 Paddy $480
EU Prices Baldo €660
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