In the 1980s, in moves to diversify the economy, the Saudi government sought to expand the agricultural sector. It was hoped that eventually the nation would become self sufficient for food. This was an ambitious goal considering a majority of Saudi Arabia is desert where the potential for crop cultivation is limited. Still, the Saudis had some success with their plan. Food cultivation expanded in the 1980s, and as oil revenues fell, agriculture's share of GDP rose, stabilizing in the 1990s between 6 and 7 percent. By 1998, agricultural jobs provided work for 12 percent of the labor force.
Less than 2 percent of Saudi Arabian land is used for cultivation. Crops are grown mainly in the southwest of the kingdom, where there is rainfall sufficient for farming, or in areas where oases provide enough ground water for irrigation. Desalinated sea water, which is used for some purposes in Saudi Arabia, is too saline, even after treatment, to be used for farming.
The Saudi government, in its push to increase food production, had by the mid-1990s turned over 2.8 million hectares of public land to the private sector for agricultural use. About a fifth of the land was turned over to individual farmers, while the rest was designated for agribusiness projects or turned over to agricultural companies.
Government involvement in agriculture peaked in the 1980s. With production heavily subsidized, the value added in agriculture grew by 70 percent between 1985 and 1991. (Value added is the increase in the market value of a product at a particular stage of production. It is calculated by subtracting the value of all inputs bought from other firms from the value of the firm's output. For example, the value added by the cotton textile industry is the value of the textiles when they leave the factory minus the value of raw cotton and other materials used in their manufacture.) In the 1991-92 crop year, wheat production rose to an all-time high of 4 million tons, with Saudi Arabia becoming the world's sixth largest wheat exporter. However, earnings from sales were nullified by the high costs of production. The government was spending 5 times the market price to produce a ton of grain.
With the outbreak of the Gulf War (1990-91), agricultural subsidies were reduced and, with funds needed for military expenditures, quotas were imposed on government purchases of grain from local farmers. By 1995-96, the land area devoted to grain production had fallen by over 65 percent. The harvest that year fell to 1.2 million tons. Meanwhile, domestic consumption stood at 1.8 million tons. Although the production of barley and grain had markedly declined by the late 1990s, fruit and vegetable production rose.