Saudi Arabia's Growing Poultry Industry

Domestic production is steadily increasing, with poultry output achieving a record-breaking 558,000 metric tons in the first half of 2024, a 9% year-over-year jump. However, even this impressive growth covers less than 65% of Saudi Arabia's domestic demand for poultry meat, necessitating continued reliance on imports.

While these growth figures are promising, they also mask significant inefficiencies in the industry. The heavy focus on scaling production often overshadows the urgent need to address systemic issues, such as high feed costs, dependency on imported raw materials, and logistical challenges. Without targeted reforms, Saudi Arabia risks creating a fragile supply chain highly susceptible to external shocks.

While Saudi Arabia aims to expand its domestic production, high operational costs remain a major barrier. Feed accounts for up to 70% of total production costs, and Saudi farmers are largely reliant on imported soy and corn, whose prices are volatile on the global market. During the 2022-2023 agricultural cycle, global corn prices surged by over 20% due to disruptions in supply chains caused by the war in Ukraine. This directly impacts Saudi producers, squeezing profit margins and making it difficult to compete with cheaper imports.

Moreover, water scarcity is a critical issue. Poultry farming is a water-intensive industry, and Saudi Arabia, with its arid climate and limited renewable freshwater resources, faces immense pressure to balance production goals with sustainable water management. The environmental toll of intensive poultry farming could be devastating if not managed carefully. Saudi Arabia’s approach to addressing these challenges seems overly ambitious without a robust sustainability framework. Ramping up production while ignoring resource limitations could lead to long-term damage to the country’s agricultural landscape.

Domestically, companies such as Al-Watania Poultry and Almarai Company are central players in the Saudi poultry market. Almarai, which also dominates the dairy sector, has heavily invested in poultry production as part of its diversification strategy. In 2024, the company allocated over SR1.5 billion (USD 400 million) toward expanding its poultry production facilities. Such investments have strengthened Almarai’s position in the domestic market but also exposed it to risks associated with rising feed prices and stringent regulatory policies. Investors closely watch these developments, as fluctuations in input costs or production volumes could significantly affect shareholder returns.

On the flip side, Saudi Arabia’s push for self-sufficiency also presents investment opportunities in agritech and infrastructure. Global investors eyeing the Middle East are increasingly attracted to initiatives such as advanced feed production facilities, automated poultry farms, and renewable energy solutions for agriculture. This is a critical area where Saudi Arabia could leverage foreign direct investment (FDI) to not only scale production but also modernize the industry with cutting-edge technologies.

This reliance also creates economic risks. A sudden trade embargo or tariff from key exporters like Brazil could destabilize the domestic market, leading to price spikes and shortages. This over-reliance on a few trading partners highlights a critical flaw in Saudi Arabia’s current poultry strategy. Diversifying trade partners and investing in alternative protein sources, such as plant-based or lab-grown meat, could provide much-needed stability to the sector.

​Moreover, the financial implications of Saudi Arabia’s poultry strategy extend far beyond its borders. Global investors, exporters, and financial institutions must closely monitor developments in the industry, as they have the potential to reshape trade flows, impact stock valuations, and create new investment opportunities. Saudi Arabia’s poultry sector is a high-stakes game with significant rewards—but only for those willing to navigate its complexities and address its inherent risks head-on.