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Saudis form company for farm investments

Zawya Dow Jones | 24 November 2010

Saudi Arabia\'s Minister of Agriculture Fahd Balghunaim in the Philippines.

Abu Dhabi: Saudi Arabia has created a government company for agricultural investment abroad as the kingdom phases out local wheat production to save water resources and is considering boosting its wheat reserve supply to last one year, the country's agriculture minister said Tuesday.

"The government in Saudi Arabia has created a new company, a totally government company, for investments abroad," Fahd Balghunaim said on the sidelines of a forum in Abu Dhabi.

"Any Saudi private company that wants to invest abroad and who has a feasibility study can present it to this government company, and if it is feasible [the government] will join it," Balghunaim said, adding that the kingdom has prioritised water security over local food production in its food security policy.

"We do not have enough water supply in Saudi Arabia to cover our needs," he said. "That meant we have to move from depending on our local production to producing overseas."

Saudi Arabia, the Middle East's biggest economy, falls into the category of "hyper-arid" countries and has neither major rivers nor lakes. The desert kingdom, like other countries in the Middle East, is facing extreme renewable fresh water challenges and-at the same time-needs to meet very high water consumption levels through costly seawater desalination.

The new government-owned company for investment in agriculture abroad could also team up with private companies looking to invest in agriculture outside Saudi Arabia, Balghunaim said. He said Saudi Arabia was looking at boosting its wheat reserves to last one year, from a current six months supply. "Now, we have a six-month wheat supply and we are thinking of increasing it to maybe one year," he said, adding that the ministry will work within a larger plan involving other government organisations.

Special purposes

Saudi Arabia is still committed to entirely eliminating wheat production by 2016, though it could keep small plots of land for special purposes, such as organic wheat production, Balghunaim said.

"Some small areas will be planted for special purposes, like organic wheat, otherwise we will depend totally on imports," he said.

Balghunaim said that while local farmers may continue to produce wheat, it was unlikely to be "economically feasible" for them given the government will be importing wheat from abroad and selling it at subsidised prices. "The government has decided it will not buy wheat from local production farmers. Whether the agriculture sector will continue to produce wheat or not is up to them," he said.

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