Wikileaks: Saudis invest in foreign agriculture for food security at home

Viewing cable 08RIYADH1174, SAUDIS INVEST IN FOREIGN AGRICULTURE FOR FOOD

	VZCZCXRO9419
OO RUEHDE RUEHDIR RUEHROV
DE RUEHRH #1174/01 2121320
ZNY CCCCC ZZH
O 301320Z JUL 08
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8891
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHKH/AMEMBASSY KHARTOUM 0021
RUEHNE/AMEMBASSY NEW DELHI 0447

	C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001174 
 
STATE PLEASE PASS TO DEPT OF AGRICULTURE 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: DECL: 09/17/2017 
TAGS: ECON EAGR ETRD EINV PGOV PREL SA
SUBJECT: SAUDIS INVEST IN FOREIGN AGRICULTURE FOR FOOD 
SECURITY AT HOME 
 
Classified By: Charge D'Affaires Michael M. Gfoeller 
for reasons 1.4 (b) and (d). 
 
¶1. (C)  Summary: One of the unintended consequences of the 
dramatic increase in oil prices has been huge inflation in 
basic commodities, including grain.  Food security continues 
to be a concern in Saudi Arabia, especially with regard to 
lower and middle income population, and foreign workers.  The 
Saudi Arabian government (SAG) is seeking alternative sources 
for grain importation, particularly investing in agricultural 
initiatives in third-world and developing countries in return 
for reduced prices on grains.  The SAG also hopes to use 
these investments to help create sustainable development and 
jobs in less-developed countries.  Rising costs of food have 
caused considerable concern among lower income groups, both 
Saudis and guest workers.  If inflation continues unabated, 
it could undermine political stability in the Kingdom.  End 
summary. 
 
¶2.  (C)  On July 27, Econoff met with Taha Alshareef, 
Assistant Director General for Foreign Trade,  and Ahmed Al 
Sadhan, General Manager of the National Office for Industrial 
Strategies, at the Ministry of Commerce.  In this meeting, Al 
Sadhan stated the need for Saudi Arabia to seek alternative 
grain sources in response to rising global food prices. 
Saudi Arabia has 1.76% arabale land, and water scarcity makes 
it impossible to sustain the current levels of grain 
production in the Kingdom. 
 
¶3.  (C)  Saudi concern over food security is not new. 
Historically, all grains have been imported into Saudi 
Arabia, apart from wheat, which was grown in the Qassim 
region using fossil water from the aquifer.  In the 1980s and 
90s, the government employed massive subsidies, the result of 
which Saudi Arabia was even briefly a wheat exporter until 
water depletion drove them to import all grains. 
 
¶4.  (C)  Al Sadhan said the SAG is currently in its sixth 
week of feasibility studies of investing in farms in 
third-world and developing countries, whereby Saudi rials 
would pay the operating costs of the farms and provide 
management; in exchange for local land, labor, and a portion 
of the grain produced (particularly wheat and rice).  He also 
said the countries in which the farms operated could use the 
remainder of the grain produced to ameliorate their own 
rising food costs.  Alshareef noted that private Saudi 
companies have had success with similar ventures in the past. 
 
 
¶5.  (C)  Al Sadhan said this initiative comes directly from 
King Abdullah, as part of his effort to make KSA  a "good 
world citizen" and implement his view that "rich countries 
have an obligation to help less wealthy nations."  However, 
he stressed a desire to maintain a low profile on the 
feasibility study, for fear that target countries might 
inflate the cost of farm-land in anticipation of investment. 
Al Sadhan specifically mentioned Sudan and India as potential 
target countries.  He also suggested the possibility of 
future collaboration with the U.S. farming industry. 
 
¶6.  (C)  Currently the Ministries of Commerce and Industry, 
Foreign Affairs, Agriculture, and Finance are coordinating on 
the feasibility study.  The SAG is also seeking investors 
from the private sector. 
 
¶7.  (C)  Comment: SAG interest in these investments appears 
genuine for the primary purpose of addressing the fundamental 
food security issue, though the driver behind this new 
initiative is the sudden price inflation of basic 
commodities.  Rapid rise of oil prices has caused sudden 
price inflation, but because of variants in income 
distribution, there is the risk of civil unrest if food 
prices become too high, particularly from the lower and 
middle class Saudis, as well as the foreign worker 
population. 
 
¶8.  (C)  Food price inflation could pose a direct threat to 
the social contract between the House of Saud and the bulk of 
the population.  Therefore these programs seem aimed less 
directly at the economy and more at the goal of maintaining 
political stability in the Kingdom.  Although keen to keep 
these projects quiet during the initial fact-finding stages, 
it seems highly probable that upon announcement, the SAG will 
accentuate the public relations angle of sustainable 
development and job development in less-developed countries. 
End Comment. 
 
RIYADH 00001174  002 OF 002 
 
 
GFOELLER