Saudis establish agribusiness to invest overseas

FOOD SECURITY: Saudis confirm new agribusiness being set-up. (Getty Images)

An agricultural investment firm owned by the Saudi government will focus on investing abroad to cultivate mainly wheat, rice, sugar and soybeans, a senior agriculture ministry official said on Monday.

The government said earlier on Monday it had approved the establishment of a firm that will invest in projects to ensure food security and help stabilise food prices domestically.

The firm has a capital of 3 billion riyals ($800 million) and is owned by the Public Investment Fund (PIF).

"It will essentially be oriented towards investment abroad as the cornerstone of the King Abdullah initiative for Saudi agricultural investment abroad," deputy agriculture minister Abdullah al-Obaid told Reuters.

"It will start very soon since the capital is ready. It will participate with Saudi investors by granting them financial support for their projects abroad," he added.

Food security has topped the policy agenda in the Gulf Arab region following rampant inflation in 2008 that underscored its dependence on imports and forced countries to invest abroad to ensure supplies of staples such as rice and wheat.

Obaid said the new investment firm would focus on the cultivation of "cereals including wheat, rice, soybeans, sugar, and fish".

Choosing investment destinations would depend on "incentives offered to foreign investors, geographic proximity to Saudi Arabia and political stability".

Several Saudi firms have already started farm investments in countries stretching from Indonesia to Ethiopia after the government decided last year to gradually axe wheat production in a bid to conserve water resources.

In Indonesia, Saudi investors launched agricultural projects worth $1.3 billion last year, Mohamed Abdulkader al-Fadel, who chairs Saudi Arabia's Commerce and Industry Chambers Council, said earlier this month.  (Reuters)

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