Two listed Saudi companies plan to invest in either farming or agribusiness abroad under a state-sponsored plan to ensure steady food supplies.
Saudi Arabia has urged companies to invest in farm projects abroad after deciding last year to reduce wheat production by 12.5 per cent per year, abandoning a 30-year-old program to grow its own which achieved self-sufficiency, but depleted the desert kingdom’s scarce water supplies.
The decision has forced many local agricultural companies, which have been growing wheat for the domestic market, to explore alternatives to compensate the resulting drop in their revenues.
Tabuk Agricultural Development Co. (Tadco) is “looking into joint-venture proposals from firms abroad and mulls relocating some of its activities to countries offering comparative incentives for investment,” it said in its annual report published over the weekend.
Tadco managing director Saad Mohammed al-Sawat could not be reached for further comment.
The company produced about 51,000 tonnes of wheat, about 63,000 tonnes of livestock feed and about 38,000 tonnes of other farm products such as potatoes, onions and fruits, data from the report showed.
Another company, Aljouf Agricultural Co., said its board of directors had recommended investments in agricultural projects or agribusiness industries abroad.
Aljouf produced 119,000 tonnes of wheat and some 32,000 tonnes of livestock feed and about 50,000 tonnes of fruits and vegetables in 2008, according to its annual report.
Aljouf managing director Abdulaziz al-Shuaibi could not be immediately reached for comment.
Hail Agricultural Development Co. 6030.SE (Hadco) last month said it would invest about $45.3 million in the next two years developing 22,830 acres (9,239 hectares) of farmland in northern Sudan and will look at investing also in Turkey and Kazakhstan.
State-owned Saudi Industrial Development Fund is granting financing facilities to firms exploring agricultural investments abroad. It has agreed to contribute about 60 per cent of the cost of Hadco’s project in Sudan.
The world’s largest oil exporter said in January it had received the first batch of rice to be produced abroad by local investors as part of the King Abdullah Initiative for Saudi Agricultural Investment Abroad.