Saudi's Tabuk signs deals for food investment abroad

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Reuters India | Sat May 23, 2009

RIYADH, May 23 (Reuters) - Saudi agricultural company Tabuk Agricultural Development Co (Tadco) has started preparations to invest in food production abroad, driving up its stock.

Tabuk signed a memorandum of understanding with local partners, a consortium called Jenat and the Arab Authority for Agricultural Investment and Development (AAAID) to set up an agricultural firm to invest abroad, according to a statement posted on the Saudi bourse website on Saturday.

It gave no more details.

Tabuk shares rose 3.2 percent by 1055 GMT.

Food security has topped the policy agenda in the Gulf Arab region following rampant inflation in 2008 that underscored the peninsula's dependence on imports and forced countries to invest abroad to ensure supplies of staples like rice and wheat.

The Saudi agricultural ministry said in March a consortium of Saudi agricultural companies is looking to invest 150 million riyals ($40 million) into food production in Africa.

The Jenat consortium includes dairy firm Almarai, Food Products Co and Aljouf Agricultural Development Co apart from, the ministry said in March.

Saudi Arabia has urged companies to invest in farm projects abroad after deciding last year to reduce wheat production by 12.5 percent per year, abandoning a 30-year-old programme to grow its own, which achieved self-sufficiency but depleted the desert kingdom's scarce water supplies.

The decision has forced many local agricultural companies, which had been growing wheat for the domestic market, to explore alternatives to compensate the resulting drop in their revenues.

Saudi firm Al Rajhi Investment Group is in talks to invest in the agricultural sector in Australia and Tanzania after investing 1.5 billion riyals ($400 million) in Egypt, Chairman Mohammad al-Rajhi told Asharq al-Awsat newspaper.

He gave no details.

(Reporting by Asma Alsharif and Ulf Laessing; Editing by Victoria Main)
Original source: Reuters
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