Countries of the World/COUNTRYS.BIN/dp/0307/03077.txt

Text File | 1991-06-25 | 22KB | 360 lines

$Unique_ID{COW03077}
$Pretitle{251}
$Title{Saudi Arabia
Chapter 3E.   Crop Production}
$Subtitle{}
$Author{Darrel R. Eglin}
$Affiliation{HQ, Department of the Army}
$Subject{saudi
foreign
percent
banks
government
commercial
oil
imports
bank
development}
$Date{1984}
$Log{}
Country:     Saudi Arabia
Book:        Saudi Arabia, A Country Study
Author:      Darrel R. Eglin
Affiliation: HQ, Department of the Army
Date:        1984

Chapter 3E.   Crop Production

     Wheat was a major crop and the one most watched by government
officials because of its importance as a basic food. Wheat production rose
from 74,000 tons in 1971 to 158,000 tons in FY 1980 (see table 16, Appendix
A). After 1980 output rose phenomenally. Wheat production reportedly reached
600,000 tons in FY 1983 and was expected to exceed 700,000 tons in FY 1984.
Data were unavailable on other crops and areas planted since 1980. High
support prices presumably caused farmers to switch acreage to wheat and to
extend cultivation to new fields. Better yields may have resulted from
improved seeds, greater use of fertilizers, and more irrigation. Whatever
the reason, wheat production rose markedly and basically met consumption
requirements by 1983.

     Sorghum was the other major crop in terms of area and production. Small
amounts of other grains were also cultivated. The central and southwest
regions were the principal grain areas, although rice was grown in the eastern
oases. Vegetables were grown near most urban areas; intensive production in
greenhouses under controlled conditions proved commercially feasible in
several projects. Dates had long been grown at oases throughout the country,
but by the late 1970s harvesting was affected by the difficulty of obtaining
labor. Moreover, dates were less in demand as urban tastes changed and as a
wide variety of imported fruit became available. In the 1970s acreage of
vineyards and citrus trees increased as farmers responded to changing urban
tastes.

Stock Raising

     In the 1970s increasing incomes in urban areas stimulated the demand for
meat and dairy products, but by the early 1980s government programs were only
partially successful in raising domestic production. Nomads continued to
raise a large number of sheep and goats. Payments for increased flocks,
however, had not resulted in a proportionate increase of animals for
slaughter. Some commercial feed lots for sheep and cattle had been established
and even a few modern ranches, but by the early 1980s a large part of the meat
consumed was imported.

     Commercial poultry farms, however, had grown rapidly. Chickens were
usually raised in controlled climatic conditions and fed a diet mixed for
growth. Production of chicken meat increased from 7,000 tons in 1971 to 40,000
tons in 1981. By the early 1980s chicken had become the meat Saudis usually
served guests, for lamb had become quite expensive. In the early 1980s,
despite the increased poultry output, domestic production met only about
one-fifth of consumption. Eggs produced locally, however, supplied about
two-thirds of demand. A number of commercial dairies had also been established
but supplied about 10 percent of the domestic market.

Fishing

     Historically, fishing and pearling were important occupations in villages
on the Persian Gulf and Red Sea, but neither was particularly attractive to
Saudis. There are a variety of seafoods suitable for commercial fishing in the
country's offshore waters. The potential catch was estimated in the range of
300,000 to 500,000 tons annually. The government encouraged development of
marine resources by private groups through interest-free loans and subsidies
on purchases of equipment. A marine research center was established at Jiddah.
The Saudi Fisheries Company, 40 percent government owned, operated fleets and
processing and retail outlets. In the early 1980s the fishing fleet consisted
of about 1,200 boats on the Red Sea and about 200 on the Gulf, employing a
total of about 4,400 fishermen. In the early 1980s the catch was about 16,000
tons out of about 44,000 tons of seafood consumed in Saudi Arabia.

Forestry

     Forested areas were limited to about 160,000 hectares on the upper slopes
of the mountains of Asir and the southern Hijaz. The country's soil and
climate were not favorable for the growth of trees, and the trees that existed
under the harsh conditions tended to be dwarfed and the wood porous and soft.
Some trees were cultivated as windbreaks and as barriers to the encroachment
of sand dunes, while others, primarily the date palm, were cultivated for
fruit. The wood from all trees was used for construction and firewood, but
the kingdom did not have enough trees for a forestry industry.

Banking and Monetary Policy

     Until the mid-twentieth century, Arabia had no money and banking system
in the usual sense. To the degree that money was used, Saudis trusted only
coins having a metallic content equal to their value (full-bodied coins), for
storing value was a major purpose in their use of money. For centuries
foreign coins had served the local inhabitants' monetary needs. Development of
banking was inhibited by the Quranic injunction against interest. A few
banking functions existed, such as money changers (largely for pilgrims
visiting Mecca), who had informal connections with international currency
markets, and the ubiquitous moneylenders. A foreign bank was established in
Jiddah in 1926, but its importance was minor. Foreign and domestic banks were
formed as oil revenues began to increase. Their business consisted mostly of
making short-term loans for imports and some financing of businesses-catering
to pilgrims.

     The Saudi government issued a silver riyal in 1927 to standardize the
monetary units then in circulation. Unfortunately, a bimetallic standard was
created that added to monetary problems. By 1950 the money situation as well
as the new banks and oil revenues were becoming more than the government
institutions could handle. The king requested and obtained a team of American
financial advisers. The result was the creation of the Saudi Arabian Monetary
Agency (SAMA) in 1952, a modified central bank to conform with Islamic law.

     SAMA's functions included stabilization of the value of the currency
through reserve funds kept separate for monetary purposes and buying and
selling of precious metals for the government account. It was to regulate
commercial banks, exchange dealers, and money changers and acted as
depository for all government funds and paid out those funds for purposes
approved by the minister of finance and national economy. SAMA's charter
stipulated that it would conform to Islamic law. It could not be a
profitmaking institution and could neither pay nor receive interest. There
were additional prohibitions, including one against extending credit to the
government. This latter prohibition was dropped in 1955, when the government
needed funds, and SAMA financed about one-half of the government's debt that
accrued in the late 1950s. SAMA was not authorized to issue paper currency
until 1960 because it was felt that the public would not accept it. During the
early 1950s SAMA issued "pilgrims' receipts" in the various languages of the
pilgrims for the foreign exchange they deposited. These pilgrims' receipts
circulated relatively freely in the kingdom, familiarizing people with paper
notes even though they were not money. In the 1950s SAMA abandoned full
foreign exchange cover for pilgrims' receipts when the government became
pressed for funds.

     In 1966 a major banking control law clarified and strengthened SAMA's
role in regulating the banking system. Applications for a bank license were
submitted to SAMA, which in turn submitted the application and its
recommendation to the Ministry of Finance and National Economy. The Council
of Ministers set conditions for granting licenses to foreign banks,
however. The law also established requirements concerning reserves against
deposits. Several restric