07/11/2009
Saudi Overseas Agricultural Investments
Gain Momentum
SAUDI Arabia's plan for agricultural investments abroad under the food security program initiated by the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz, is gaining momentum with many investment proposals being considered in a number of countries.To support Saudi individuals and firms intending to invest abroad, Saudi government has already announced the establishment of a SR 3-billion firm, the Food and Agriculture Company and formed various committees including an important one, the technical committee.
These committees have set out various criteria for crops and countries, which are targeted for investments. Concerned committees have already visited several countries, evaluated their potential resources, such as water, cultivable lands, preferable crops, policies & regulations, ports and logistics, said Mr. Samir Ali Gabbani,President, National Agriculture Committee at the Council of Saudi Chambers, in an exclusive interview with the Saudi Commerce and Economic Review . "Geographical proximity to Saudi Arabia and political stability of these countries have also been considered carefully by these committees,” he added.
The 100% government owned Food and Agriculture Company will act as an executive arm for the King's initiative and will work with Saudi companies and their foreign counterparts in many ways in order to make the Saudi food security program a success. "This initiative has been undertaken to secure food supply sources with the objective of building strategic food reserves for the Kingdom's future needs," observed Mr. Gabbani.
He urged Saudi investors to reap benefits of this promising initiative and fully utilize its potential for profitable investments abroad. He noted that there will an "off take" agreement on how and what basis the Saudi government will purchase crops produced by Saudi investors overseas. "There are several ideas being debated on the issue and we look forward to finding an acceptable one very soon," he said.
The main crops, Mr. Gabbani pointed out, targeted by the Saudi investors to be produced in foreign countries are rice, corn, barley, wheat, sugar, maze and forage crops.There will also be investments in the production of poultry, fish and livestock.
He disclosed that a new privately owned firm, International Agriculture and Food Investment Company (Agroinvest), has also been launched in compliance with the King's initiative to look for agricultural investment opportunities overseas. The SR 2-billion company is a joint enterprise between major experienced and successful Saudi investors in the agriculture and food industry. It is now nearing completion a feasibility study to identify possible agricultural investment opportunities for Saudi companies in Turkey and several African countries.
Agroinvest will also be investing locally in the cultivation of agricultural products as well as in food industry in compliance with the new strategies set out jointly by the Ministry of Agriculture, Ministry of Water and the Agricultural Development Fund. These investments will aim to utilize the expertise of existing local companies in the areas of sophisticated technologies such as glass houses crops, poultry, livestock and other less water consumed agricultural products. These crops are to be cultivated in accordance with the agriculture reformed strategy.
Mr. Gabbani talked about the reasons behind the King's initiative for food security program. It has been initiatedin the wake ofsharp price increases in agricultural crops and other food products in the international markets during the past years. This steep rise in food products was attributed to a number of factors including population growth world-wide, economic growth in the "Chinda nations" (China and India), which has significantly raised purchasing capacity of more than 2.5 billion people in these two countries, increase in oil prices, draught in China and sub-Sahara region. In addition, the new Saudi agricultural policy and other reforms undertaken based on the new water studies, have all led to the long-term strategic initiative to invest abroad for the cultivation of agricultural products particularly those which consume large quantity of water.
Mr. Gabbani highlighted the establishment of the newly formed National Information Center, which is desperately needed to provide information for the people and companies engaged in the agriculture sector. The Agriculture Committee and the Ministry of Agriculture and the then Agriculture Bank have long been discussing the need for setting up such a center in the Kingdom.
This is an important center established bythe newly reformed agricultural bank known now as Agricultural Development Fund. Mr. Gabbani complimented Eng. Abdullah Al-Rubian, Chairman of the Agricultural Development Fund, for his personal efforts to set up the center.
