Demand and Supply in Saudi Arabia's Green Fodder, Livestock, and Meat Markets

This report analyzes the impact of the ban on green fodder cultivation in Saudi Arabia on the demand and supply of livestock and meat. The ban has led to a shortage of green fodder, which has affected the health of livestock and reduced domestic production. As a result, the demand for butchers has increased, and the import of livestock has risen to maintain a balanced livestock production. The reduced demand for fresh meat is likely to have an impact on the meat market in Saudi Arabia.

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Demand and Supply

Supply
Equilibrium
Demand
P
Q Quantity
Price
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Introduction
Demand and supply is defined as two major economic aspects that is also regarded as the
backbone of the economy. The total quantity of a commodity or service that is desired by
individuals is referred to as demand (Esper et al., 2010). On the other hand, the total quantity that
is offered by a market is referred to as supply.
Figure 1: Demand and Supply
(Source: Esper et al., 2010)
The diagram illustrates demand and supply that acts as the major forces behind allocating
resources. The report will provide an overview about the same market however, it will deal with
a single raw material. The first market will provide a summary about the green fodder market in
Saudi Arabia thus providing a demand and supply analysis about the ban on green fodder. The

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second market will reflect on the impact of green fodder ban on livestock that will be followed
by meat market in Saudi Arabia.
Market 1: Green Fodder
Summary
In order to reduce water consumption, Saudi Arabia has put a ban on cultivation of fodder in this
year. As a result, the total production of green fodder reached a total of 10.34 million however,
the ban has slashed the production by 65 percent. The major cause for banning the production
has been the fact that green fodder crops used up to 17 billion cubic meters of water yearly
(Saudi Gazette, 2018). The ban will save approximately 9 billion cubic meters of water. In other
words, the country has been targeting to save water thus targeting agricultural farms that
cultivates green fodder as well as other unsustainable crop. As a result, the country has decided
to reduce the cultivation of green grass with the help of a Cabinet decision in order to save
precious water.
Demand and Supply Analysis
The ban on green fodder has led to shortage in the market that increased imports in order to meet
the requirements in dairy companies.
Figure 2: Supply Shortage

P1
P
S1
S
Q1 Q2
4
(Source: Ding, Hayes and Widhalm, 2011)
The graph illustrates supply shortage where the supply curve shifts from S to S1. The scarcity of
fodder is likely to have an impact on livestock that in turn will increase the total number of cattle
sellers due to increase in demand, thus raising the competition. The non-availability of fodder in
adequate quantities, will also affect health of livestock. This in turn will also affect the
production of dairy commodities such as milk (Ding, Hayes and Widhalm, 2011). The shortage
of good quality fodder, most important source of nourishment to farm animals, could affect their
health. Rising cropping strength to push up land efficiency produces additional pressure on the
land that leads to crisis such as soil degradation as well as diminishing water levels. The huge
deficit is also likely to have an impact on milk production of the country as well as animal
husbandry.

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Market 2: Butchers
Demand and Supply Analysis
The health of the livestock is likely to get affected due to shortage of green fodder that in turn
reduces their activities. As a result, domestic production is likely to be deteriorated thus
increasing the imports of livestock commodities. The demand for butchers are likely to increase
as the import of livestock will be raised in order to maintain a balanced livestock production.
Although the supply of meat in Saudi Arabia will be reduced however, it will lead to
deteriorating self-sufficiency of food. The demand has mostly increased as far as consumption of
livestock commodities is concerned (Argaam, 2018). This is because; the individuals have turned
out to be health conscious thus preferring foods that are rich in protein. They consider the rich-
in-protein meats healthier as compared to cereals that are rich in carbohydrates.
Market 3: Market for meat
Demand and Supply Analysis
The demand for meat is likely to reduce, as the customers are likely to prefer imported meat or
fish rather than purchasing fresh meat. In other words, imported meat will act as a substitute for
fresh meat.

D
P1
P2
Q1 Q2
D1
D2
Fresh Meat Imported Meat
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Figure 3: Substitute Goods
(Source: Bowles and Polania-Reyes, 2012)
The diagram shows that with the reduced supply, the price of fresh meat is likely to increase. As
a result, the demand for imported meat will rise. In this case, both the types of meat will witness
high cross-elasticity of demand. This indicates that they are close substitutes of each other rather
than weak substitutes. This indicates that this substitute will be able to satisfy demand of the
customers completely. The reduced demand for fresh meat is however, like to have an impact on
the meat market in Saudi Arabia (Bowles and Polania-Reyes, 2012). The supermarkets will rip
the benefits, as they will sell packed imported meat to the customers at a considerable lower
price.
Conclusion
It could be concluded that Saudi Arabia has been targeting to save water thus targeting
agricultural farms that cultivates green fodder as well as other unsustainable crop. Rising
cropping strength to push up land efficiency produces additional pressure on the land that leads

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to crisis such as soil degradation as well as diminishing water levels. The demand for butchers
are likely to increase as the import of livestock will be raised in order to maintain a balanced
livestock production. It could be inferred that the reduced demand for fresh meat is however, like
to have an impact on the meat market in Saudi Arabia. The country has considered the
proportion of subsidies before making the agro-based commodities available.

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References
Argaam, 2018. Saudi Arabia bans green fodder cultivation to conserve water. [online] Available
at: <https://www.argaam.com/en/article/articledetail/id/568056> [Accessed 23 December 2018].
Bowles, S. and Polania-Reyes, S., 2012. Economic incentives and social preferences: substitutes
or complements?. Journal of Economic Literature, 50(2), pp.368-425.
Ding, Y., Hayes, M.J. and Widhalm, M., 2011. Measuring economic impacts of drought: a
review and discussion. Disaster Prevention and Management: An International Journal, 20(4),
pp.434-446.
Esper, T.L., Ellinger, A.E., Stank, T.P., Flint, D.J. and Moon, M., 2010. Demand and supply
integration: a conceptual framework of value creation through knowledge management. Journal
of the Academy of marketing Science, 38(1), pp.5-18.
Saudi Gazette, 2018. Agricultural farms fall into ambit of inspections. [online] Available at:
<http://saudigazette.com.sa/article/537987> [Accessed 23 December 2018].