Viewing cable 09RIYADH713, FOOD SECURITY, AGRICULTURE GETTING SPOTLIGHT IN
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PP RUEHDE RUEHDH RUEHDIR RUEHROV
DE RUEHRH #0713/01 1471305
ZNY CCCCC ZZH
P 271305Z MAY 09
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC PRIORITY 0861
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHAN/AMEMBASSY ANTANANARIVO 0007
RUEHC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 000713
E.O. 12958: DECL: 05/26/2019
TAGS: ECON EAGR ETRD EINV PGOV PREL SA
SUBJECT: FOOD SECURITY, AGRICULTURE GETTING SPOTLIGHT IN
REF: A. 08 RIYADH 1174
¶B. ANTANANARIVO 356
¶C. USDA SA9010
Classified By: Acting Deputy Chief of Mission Sandra Muench for reasons
1.4 (b) and (d).
¶1. Key points:
-- (U) Saudi Arabia is increasingly looking for agriculture
investment opportunities abroad, mostly in Africa.
-- (U) The creation of a state-owned agriculture investment
company, the Saudi Company for Agricultural Investment and
Animal Production, was announced last month, though it has
not yet actually invested any funds.
-- (U) Perhaps spurred by SAG investment incentives, private
investment groups are also interested in foreign
-- (C) Although official figures show inflation is down,
Saudi officials remain concerned about a possible
resurgence, particularly around Ramadan.
-- (U) Food security and foreign agro-investment are gaining
increased attention in the Kingdom both in the
media and at official events.
(C) Comment: The SAG's increased attention to agriculture
and food security signals both the government's concern about
rising commodity prices as well as its growing budgetary
realism, after decades of fruitless domestic agricultural
schemes. While greater investment in foreign agriculture may
prove a useful diplomatic tool to build relations between
Saudi Arabia and select developing countries, such investment
will have to contend with political instability in host
countries as well as potential resentment against Saudi
¶2. (U) Saudi Arabia is placing renewed focus on agriculture
and food security, establishing an agriculture fund and
highlighting food production and security at the recent
Global Competitiveness Forum held in Riyadh. On January
26, the Cabinet approved the Agricultural Development Fund
(ADF) regulation, which is to have a budget of 20 billion
riyals. The fund will provide easy loans and credit to
agricultural facilities, water preservation facilities, and
environmental protection groups. King Abdullah also met
January 26 with Commerce Minister Abdullah Zainal Ali Reza,
who is heading a ministerial team to establish the King
Abdullah Initiative for Saudi Agricultural Investment
Abroad (KAISAIA)(ref A). According to the Saudi Ministry of
Foreign Affairs website the initiative "aims at realizing
national and international food security, building
integrative partnerships with countries all over the world
that have high agricultural potential to develop and manage
agricultural investments in several strategic crops at
sufficient quantities and stable prices in addition to
ensuring their sustainability."
¶3. (U) The Saudi Arabia General Investment Authority (SAGIA),
also recently hosted the Global Competitiveness Forum in
Riyadh, a massive conference with over 500 attendees and
high-profile attendees such as former President of Ireland
Mary Robinson, former Prime Minister of Canada Jean Chretien,
and U.S. Gold Medal Olympian Michael Phelps. Food security
and environmental protection were both featured prominently
on the agenda. Panelists included Thorlief Enger, former CEO
of Yara International, Peter Brabeck Letmather, CEO of
Nestle, Gary Winnick of Pacific Capital Group, and others.
All panelists agreed that the food crisis and the environment
are linked, and cited increased demand for food, both
quantitative (more people on the planet) and qualitative
(more people eating more meat, fewer cereals) and reduced
production of fertilizer due to the economic crisis, as
contributing factors to the crisis.
¶4. (U) In February, the SAG signed its first bilateral
agreement with Ethiopia to facilitate Saudi investments in
the Ethiopian agricultural sector. Shortly thereafter, the
SAG announced it had received the first batch of rice
produced under KAISAIA from Ethiopia. Rice is a staple grain
in Saudi Arabia, in 2008 Saudi rice imports were estimated at
1.4 million metric tons, up 43 percent from 2007.
¶5. (C) On April 14, the Kingdom announced the launch of an
$800 million state-owned company called the
RIYADH 00000713 002 OF 002
Saudi Company for Agricultural Investment and Animal
Production (SCAIAP). This entity will partner with private
sector groups to identify possible investment opportunities
for farmland abroad. Although SCAIAP has not yet committed
to any investment, it is already undertaking feasibility
studies in Sudan, Indonesia, Ethiopia, and other
countries, speaking both with private landowners as well as
local governments. In addition to livestock and fisheries,
the group is targeting crops such as rice, wheat, barley,
corn, soya, alfalfa, and sugar.
¶6. (C) On May 13, Ahmed al-Sadhan, Director of Foreign
Agriculture Investment at the Ministry of Commerce and
Industry told Econoff that the goal is to obtain long-term
leases of 30-90 years with partner countries, and in addition
to growing crops, create jobs, strengthen diplomatic ties,
and even hopefully create a grain surplus which could be sold
by the local government. Al Sadhan said fears of rising
inflation, especially around Ramadan, make this project a
priority for the Kingdom.
¶7. (C) Some private firms have already invested abroad.
According to Mohamed Abdukader al-Fadel, chair of the Saudi
Arabia Chambers of Commerce and Industry, Saudi private firms
invested an incredible $1.3 billion in Indonesia alone in
¶2008. A consortium called Jenat, including the Tabuk
Agricultural Development Company (TADCO), the dairy firm
Almarai Food Products Company, and the Aljouf Agricultural
Development company have already launched a 70 million SAR
farming project in Egypt, and they are looking to Sudan and
Ethiopia to invest an additional 80 million SAR. Hail
Agriculture Development Company (HADCO) announced its
intention to invest $45.3 million in Sudan to grow wheat and
corn. A group of Saudi private investors: Mohamed
al-Musallem of the Dar Misc Economic and Administrative
Consultancy Firm, with partners Yassine al Jafri and Khaled
Zeiny, announced a plan to invest 375 million SAR in a rice
farm in Ethiopia. Other private investors reportedly visited
Madagascar at the beginning of may to discuss agro-business
¶8. (C) The SAG is prepared to offer incentives to these
groups in the form of soft loans, credit, and infrastructure
assistance such as offering services to build irrigation
channels, sanitary drainage networks, and other support
services, Al Sadhan said. Under the auspices of the new ADF
the Ministry of Agriculture has also teamed up with the
Wageningen University in the Netherlands to create a National
Center for Agricultural Information.
¶9. (C) Despite developing the initiative, the SAG has yet to
directly invest in any agricultural programs, so far letting
the private sector do most of the heavy lifting. Al-Sadhan
said this is because the SAG strategy has not yet
been fully developed but next steps will include having the
Ministerial Committee finalize a request to retain a
consulting firm, such as Bain or Booz Allen Hamilton. Al-
Sadhan also expressed fears that direct SAG investment may
create a public perception of a rich country exploiting
poorer nations, especially as land prices are certain to rise
in response to Saudi and other foreign investment. He cited
Ukraine as a country where this had already happened.