About a decade ago, Saudi Arabia produced less than half of the poultry meat it consumed. Today, it is close to meeting seven-tenths of demand locally, while investment in the sector is heading toward 17 billion riyals. But moving from 45% to 70% was the relatively easier part of the story; every additional percentage point of self-sufficiency requires factories, feed, financing, cold chains, slaughterhouses and the ability to compete with chicken from one of the world’s most efficient producers. The remaining gap, then, is not simply 30% of the market—it is a test of the economics of localization itself.

In the refrigerator of any Saudi store, chicken looks like a simple product.

But behind the package is an industry that brings together agriculture, processing, refrigeration, energy and international trade in a single chain. That may be why poultry is the best sector for understanding the new phase of Saudi food security: not producing everything locally regardless of cost, nor leaving the market entirely to imports, but determining where local production can be competitive enough to reduce reliance on overseas suppliers.

The figures show how quickly this transformation is happening. According to the report “The Food Industry in the Kingdom of Saudi Arabia,” self-sufficiency in poultry meat rose from about 45% in 2016 to nearly 70% in 2024, with targets of 80% and then 90% by 2030. Supporting this expansion is local production estimated by the report at around 1.3 million tonnes a year, alongside approximately 453,000 tonnes of table eggs.

This is no small increase in production.

It is a redistribution of billions of riyals between domestic producers and overseas suppliers.

When imports become an industrial opportunity

In economics, imports can be viewed in two ways.

The first is as a cost: money leaving the country to buy a foreign product.

The second is as a ready-made map of demand.

If the Kingdom imports large quantities of poultry every year, that means the market is already there. A domestic producer does not need to invent a new consumer; it only needs to replace some of the imported product with one that consumers will accept in terms of price, quality and availability.

That is the logic of import substitution.

The term simply means producing domestically a good that the economy used to buy from abroad.

But import substitution is not an economic success merely because the product is now made locally. If it remains significantly more expensive, localization may simply turn into a different bill paid by consumers or the public purse.

The real test is this: can the domestic industry gradually approach the efficiency it needs to compete?

Saudi Arabia’s poultry sector is trying to answer that question on a large scale.

Why 17 billion riyals?

The report sets out an investment plan of around 17 billion riyals for the sector, with financing from the Agricultural Development Fund that can cover up to 70% of investment costs for some projects involving advanced technologies.

But where does that money go?

Not just toward buying more chickens.

A modern poultry industry needs farms, hatcheries, feed, climate-controlled poultry houses, ventilation and cooling systems, automated slaughterhouses, processing and packaging lines, warehouses, refrigerated transport, laboratories and biosecurity systems.

Biosecurity refers to measures that prevent diseases from entering farms or spreading between them. In an industry with large numbers of birds housed in concentrated spaces, a single health incident can quickly turn into a major operational loss.

That is why poultry is more capital-intensive than it may appear.

In other words, it requires substantial investment in assets and technology before the first kilogram is sold.

In this context, the 17 billion riyals are not a bet on Saudis’ appetite for chicken; that demand already exists. They are a bet that building more efficient domestic production capacity can capture a larger share of the demand currently served by imports.

The remaining 30% is harder than the first 25%

Moving from 70% to 90% may look like a continuation of the progress from 45% to 70%.

Economically, however, that is not necessarily the case.

In many industries, the first stages of expansion are the most straightforward: projects in the best locations, the most efficient companies, strong local demand and a clear import gap.

As self-sufficiency rises, the industry starts pursuing the harder part of the market.

That is where the concept of marginal cost comes in.

It is the cost of producing the next additional unit.

If the first million tonnes benefit from the best assets, the largest companies and the most efficient production locations, producing additional volumes may become more expensive if it requires new investment, more feed or a broader logistics network.

This is an economic inference from the nature of expansion, not a figure cited directly in the report.

That is why reaching 90% will matter for more than simply raising the self-sufficiency rate.

It will show whether the industry can expand while maintaining its unit economics.

The real competitor is in Brazil

The Saudi producer is not competing in a vacuum.

The report notes that the Kingdom remains one of the world’s major poultry importers, with Brazil serving as the main source of imports. In its foreign trade section, the report cites approximately $847 million in poultry imports from Brazil, while elsewhere it refers to a broader poultry import bill of around $1.3 billion. The two figures should be read as estimates with different scopes in the report, not as identical figures.

That is where the difficulty lies.

Brazil does not sell chicken to Saudi Arabia because it is geographically close.

It does so because it has built one of the world’s strongest animal-protein industries around scale, feed, production chains and exports.

In its international comparison, the report points to Brazil as an example of how to dominate the protein industry through scale and cost.

That means it is not enough for a product to be Saudi-made.

It must come close enough in cost and quality to the product that crosses an ocean before reaching a Saudi store shelf.

It is a tough comparison, but it is also what gives localization’s success economic significance.

Feed: local chicken may still be fed from abroad

Here, another paradox emerges.

Chicken can be produced locally even if some of its inputs come from abroad.

The report notes that Saudi Arabia’s food model relies on intensive domestic production in strategic sectors such as poultry, while importing some water-intensive inputs such as feed and grains.

This changes what “self-sufficiency” means.

Greater self-sufficiency in poultry does not mean complete independence from global trade.

If grain prices rise or supply chains are disrupted, the cost of locally produced chicken can rise too.

But there is an important difference between importing feed and importing finished chicken.

In the first case, rearing, processing, packaging and distribution take place in the Kingdom, creating jobs and domestic industrial value.

In the second, a larger share of the value added arrives ready-made from abroad.

That is why the report repeatedly emphasizes the distinction between importing inputs and importing finished products.

The former can be part of a domestic industrial model.

The latter means the industry itself has remained outside the country.

From farm to slaughterhouse: integration changes the equation

Like dairy, poultry is an industry that benefits from vertical integration.

That means a company does not rely on a separate supplier at every stage, but controls several links in the chain: feed or part of it, hatcheries, rearing, slaughter, processing, packaging and perhaps distribution.

The report names several local players, including Al Watania and Al-Fakieh, as well as Almarai through its poultry business, Tanmiah and Astra. It also describes Tanmiah as an integrated player in poultry, feed and food services, directly benefiting from the protein-localization agenda.

The advantage of integration here is not just scale.

It reduces the points of disconnection between stages.

When a company controls hatcheries, rearing and processing, it can coordinate volumes, specifications and timing more precisely.

But, as in dairy, integration comes at a cost: more capital, more assets and more risks retained on the company’s balance sheet.

Integration works when a company can operate the chain at a high level of efficiency.

Simply owning it is not enough.

Poultry is a fast-turnover business—and that matters to lenders

From a financing perspective, poultry has an attractive feature: its production cycle is much shorter than that of agricultural sectors that take years to generate returns.

That does not mean the investment is simple, but it does mean that working capital turns over relatively quickly.

Working capital is the money a company needs to run its day-to-day operations: buying feed, paying wages, running farms and waiting until the product is sold and the revenue collected.

The more regular the production and sales cycle, the more predictable the cash flows become.

That is one reason the food sector as a whole is suited to a range of financing instruments—a point the report emphasizes in its discussion of development loans, murabaha, sukuk and structured finance.

But cheap financing cannot turn a weak project into a good one.

It lowers the cost of capital.

Operational efficiency remains the decisive factor.

70% financing does not mean 70% profit

The figure indicating that some modern projects may receive financing covering up to 70% of investment costs may sound generous.

But it is important to understand it precisely.

Financing is not necessarily a grant, nor does it mean a project automatically becomes profitable.

If a project costs 100 million riyals and receives financing covering 70 million, its owner needs to provide less of the capital from their own resources, but must still operate the project and generate enough returns to service the financing.

The government’s rationale is clear.

If the goal is to increase domestic production quickly, lowering the cost of capital helps companies build new capacity that would otherwise take longer or be more difficult to deliver.

But the ultimate results should be visible in three things: higher productivity, competitive costs and a product the market can buy without permanent reliance on support.

The biggest battle may be on the farm

When consumers think of chicken, they see the finished package.

But a large share of the industry’s economics is determined before the slaughterhouse.

Feed is a major input, while mortality rates, growth speed, feed-conversion efficiency, energy and cooling, and disease all affect the cost of each kilogram.

That is where technology matters.

Every small improvement in efficiency is multiplied across millions of birds.

If a bird needs slightly less feed to reach the same weight, the financial impact can be substantial at the sector level.

And if mortality falls by one percentage point, that means more product to sell instead of costs to write off.

That is why modern poultry projects are linked to automation, environmental monitoring, data analysis and biosecurity.

In this case, technology is not a marketing feature.

It is a tool for lowering unit costs.

The 17 billion riyals are about more than self-sufficiency

The goal may look like replacing imported chicken with locally produced chicken.

But the economic impact is broader.

As production expands, it creates additional demand for packaging, refrigerated transport, feed, veterinary services, equipment, maintenance and logistics.

These are known as the industry’s backward and forward linkages.

Backward linkages are the activities that supply a project with its inputs.

Forward linkages are the activities that take its output to the next stages or to consumers.

That is why a riyal invested in a large factory or farm can generate activity beyond the company itself.

This is the logic the report applies when it describes the food industry as a driver of local content, not merely a substitute for the import bill.

But reducing imports is not an absolute goal

It is easy for self-sufficiency to become a contest: 70% is better than 60%, 90% is better than 80%, and 100% is better than all the rest.

But that is a dangerous oversimplification.

In a country with limited water that relies on foreign sources for some inputs, every expansion of domestic production must be weighed against its true cost.

If moving from 90% to 100% requires draining resources or providing very high levels of support, retaining some imports may be the more efficient option.

This is consistent with the broader philosophy the report calls “smart food security”: domestic production where there is a competitive advantage or strategic sensitivity, imports where they are more efficient, alongside diversified supply sources and investment in the supply chain.

The success of the poultry sector, then, will not be measured by the highest possible percentage alone.

It will be measured by the share that can be sustained economically, environmentally and operationally.

The final 20% is the real test

Saudi Arabia has already come a long way.

Self-sufficiency rose from around 45% in 2016 to nearly 70% in 2024, with production exceeding one million tonnes and an investment plan worth billions of riyals.

The next phase is more difficult because the challenge is no longer simply a lack of domestic capacity.

The challenge is cost.

Feed.

Energy.

Disease.

Farm efficiency.

Productivity.

And the price of imported chicken when it reaches a Saudi port.

If the sector can raise self-sufficiency to 80% or 90% while approaching the economics of global producers, it will have achieved more than a reduction in imports: it will have proved that localization can become a sustainable industrial advantage.

But if every further increase in the rate requires more support than the last, the rate itself will become less important.

That is why the 17-billion-riyal bet is not on how many chickens the Kingdom can raise.

It is a bet on the cost of the next Saudi chicken.

The move from 45% to 70% proved that the Kingdom can build a large poultry industry. Moving from 70% to 90% will test whether that industry can be both large and competitive.