Saudi Arabia liberalises wheat imports for flour mills
Saudi Arabia’s state grain buyer SAGO said on Monday that companies that buy its flour mills will be able to import wheat directly from global markets in a further liberalisation of the country’s grains sector.
Saudi Arabia is selling its entire flour milling business, a long-awaited privatisation that marks one of the first sales of the country’s state-owned assets, part of broader plans to overhaul the economy.
SAGO, one of the world’s largest grain buyers, has until now controlled all the country’s wheat purchases. But after the privatisation of the flour mills they will be able to buy wheat from global markets directly as well as from SAGO, it said in response to a Reuters question.
“The wheat purchase price is a very big factor in the profit margins of flour mills,” a German trader said.
“This freedom would be important in making the mills attractive to purchasers.”
The first part of Saudi Arabia’s milling sector privatisation was completed earlier this month with the sale of two milling firms to Saudi and Gulf investors, while the sale of the two remaining milling companies is underway.
“SAGO’s original plan was to keep the wheat importation with them … their concern being having any shortages in the flour and bread markets,” Hesham Hassanein, a Cairo-based regional grains consultant, said.
“SAGO feels more comfortable with the expertise of the private consortiums who are buying the mills but I’m sure there is a safety net of some large strategic reserves owned and operated by SAGO,” he said.
The privatisation had attracted initial interest from some of the world’s largest agribusiness companies, including Archer Daniels Midland Co and Bunge Ltd, and was seen as a litmus test for other large state asset sales to follow.
Saudi Arabia abandoned a 30-year programme to grow its own wheat in 2008 to preserve water and has since been purchasing the grain from international suppliers.
Source: Reuters (Reporting by Maha El Dahan, additional reporting by Saeed Azhar in Dubai and Michael Hogan in Hamburg, Writing by Nadine Awadalla editing by Louise Heavens and Jane Merriman)