Saudi Arabia, whose phasing out of wheat production subsidies has turned it into a major importer of the grain, may become a major buyer of forage too, in a drive to further conserve scarce water resources.

Saudi Arabia may reduce import restrictions on forage crops in an effort to stem their growing popularity among domestic farmers – who have seized on them as an alternative to the wheat of which output is to be phased out completely by 2016.

The country is set for a 700,000-tonne crop this year - the lowest in 30 years - as its efforts to ditch domestic production of the grain, to save water, bear fruit, the US Department of Agriculture's Riyadh bureau said.

The kingdom, which relies on irrigation, largely from non-renewable reserves, for all its wheat output in the 1980s paid farmers six times the global price for growing wheat, helping output grow above 4.0m tonnes by the early 1990s.

However, farmers have responded by growing fodder crops instead – many of which consume more water.

Forage prospects

"Many Saudi farmers switched from wheat cultivation to producing forage crops, such alfalfa and Sudan grass, which consume three times the amount of water needed for wheat production," the USDA bureau said in a report.

Farmers planted 187,000 hectares with forage crops in 2011, some 24% more than in 2007, before the country began its campaign to curtail wheat production.

"The Saudi government is considering issuing a new decree to phase-out forage production, open the importation of forage crops," the report said.

The bureau estimated the market at 4m tonnes, representing a potentially huge market.

In hay, the US is the world's top exporter, with volumes of some 3m-4m tonnes, with Australia second place, with levels typically roughly half that.

Wheat imports

The bureau's comments came as it forecast at 2.7m tonnes Saudi Arabia's wheat imports in 2013-14, a rise of 38% year-on-year, if 200,000 tonnes below the record set in 2011-12.

The recovery in volumes will be fostered by, besides a weaker domestic harvest, prospects of better crops in the Black Sea, the country's primary source of feed wheat, whose poor production last year prompted Saudi Arabian buyers to switch to buying in extra barley.

Some 500,000 tonnes of feed grain demand are seen switching back to wheat from barley, adding to the 2.2m tonnes estimated as necessary for food demand.

Canada, Germany and the US have historically been major suppliers of milling wheat to Saudi Arabia, although all three have been eclipsed so far in 2012-13 by Lithuania and Poland.

Saudi Arabia has this season ordered its first soft wheat imports, for food use, in more than three decades.

Water shortage

Saudi Arabia's efforts to save water are being fuelled by population growth which is supporting demand for water, and requiring supplies to be met increasingly from expensive desalinated supplies.

The desert kingdom's largest bank, National Commercial Bank, earlier this month said that demand for  desalinated water had being rising by more than 6% a year, more than twice the rate of population growth.