Speaking on the sidelines of a conference on Tuesday in Abu Dhabi concerning agricultural investment and why Saudi Arabia has decided to phase out wheat production by 2016, Minister of Agriculture Fahd Balghunaim told the media: “We have given priority in Saudi Arabia to the consumption of water and are gradually reducing the production of crops requiring large amounts of water to produce.”
Confirming that the Kingdom is not focusing on any particular countries to invest in and that the choice of investment is an open-decision, Balghunaim added: “I can promise that we will be everywhere in the world.”
To give more incentive for investors to put their money in farmland projects abroad, Riyadh has set up a fund through the Saudi Industrial Development Fund with a capital of SR800 million. In addition, GCC members have struck an agreement to establish national banks in the Gulf member countries for seeds and other agricultural products as well as a monitoring system to control costs, Balghunaim confirmed at the conference.
The move is being seen as one of the best strategies to help growing countries secure food stockpiles rather than paying high costs in imported inflation made mandatory due to unavoidable environmental and climatic conditions being suffered throughout most of the GCC.
Promoting the strategy in a report published in March 2010 by NCB Capital, an investment arm of the National Commercial Bank (NCB), in order to secure food supplies GCC countries are doing the right thing by tapping enormous farming potential in Egypt, Sudan and in other countries to meet the rapid rise in their food needs because of a steady growth in population. The GCC nations are shifting their agricultural policies away from the nationalistic goal of food self-sufficiency towards more flexible and broad-based efforts through agricultural projects abroad to ensure food security. The previous policies were ultimately undermined by acute constraints posed by NCB Capital said in its 28-page study.
Also in the report, NCB Capital advised the signing of agreements between GCC countries for the allocation of land to Gulf investors to set up farm projects.
“These projects could be run as joint ventures under the management of Saudi and GCC companies which could also market their products in the region,” the investment firm said.
According to the latest data, GCC member states are annually forced to import up to 85 percent of their food needs from abroad, mainly from Asia and the Eurozone, making the solution of investing in food growth abroad one of the best alternatives for securing the region’s future food needs.
Since 2008, Saudi Arabia has set up farms in Egypt and Ethiopia to grow some grain items with negotiations ongoing with other countries in the region, such as Syria, Turkey and Ukraine.
