DUBAI, 10 May 2008 — Saudi Arabia, one of the world’s top rice buyers, is likely to start investing in rice farms in Thailand by the end of 2008 in a move to boost security of food supply, industry sources and traders said yesterday.
“A number of private companies and Saudi officials already met last week with Thai investors to discuss possible partnerships,” said a Gulf industry source, who asked to remain anonymous.
“Those interested will be looking at meeting domestic demand and then exporting to neighboring countries, mainly the United Arab Emirates,” he said.
India, the world’s second-biggest rice exporter in 2007, banned all non-basmati rice shipments in March, one of a series of protectionist measures worldwide that triggered a wave of panic buying, causing benchmark Thai prices to nearly treble.
Last year Saudi Arabia imported 960,000 tons of rice, making it the world’s sixth biggest rice importer, according to US Department of Agriculture data.
Around 70 percent of the Kingdom’s rice imports were basmati rice, while Thai rice accounted for 10 percent, traders said.
The Saudi Cabinet on Monday approved plans to coordinate state and private sector activities, and to increase Saudi investments overseas in fisheries, livestock and food production, Saudi Press Agency reported, without identifying any countries.
“Saudi Arabia is trying to get companies to invest together in rice farms in Thailand, and they are aware that companies here do not want to invest independently,” one dealer said.
“We are expecting a decision to be taken before the end of 2008, and most likely this decision will be a yes,” he said.
The population of the Kingdom, the world’s largest oil exporter, could more than double to 53 million within about 30 years from 25 million now, John Sfakianakis, chief economist at Saudi-British Bank (SABB) bank said on Wednesday.
“Saudi Arabia is caught between a rock and a hard place. The government knows they have to feed the increasing population, but on the other hand they cannot increase domestic agricultural output because of the country’s scarce water supplies,” a Saudi rice importer said.
“So sooner or later they will be forced to grow rice and other crops on foreign lands. Many here don’t like Thai rice, but if the world is facing food scarcity, then a taste change is the last thing we should worry about.”
