moscow / reuters / A Saudi Arabian investment company has set up a joint venture with SAHO, a Siberian grain producer, to ship Russian wheat and barley to the Middle East and North Africa.
The deal is a rare one between Russia and Saudi Arabia, which consumes about 15 million tonnes of grain per year.
Russia, with abundant farmland and fresh water, is seen as a natural target for Saudi investments aimed at food security, but rivalry on oil and gas, a 2010 ban on Russian grain exports, and, more recently, disagreements over Syria have stymied investment flows.
The venture with Saudi firm Najd Trading and General Contracting will provide a guaranteed sales channel for SAHO, which has 400,000 hectares of land in southern and central Russia as well as its home region of Novosibirsk, the companies said.
“We see a deficit of about four million tonnes of grain in Saudi Arabia, and we would like to cover as much of it as we could,” said Sergei Solousov, chair of SAHO and senior official with Metropol, a Russian investment bank.
Metropol said SAHO, which will own 51 per cent of the venture, aims by 2020 to become one of the top three players in the Russian grain market, which is currently dominated by international players such as Glencore.