Saudi's Tabuk to invest in overseas food production
Riyadh, May 23, 2009
Saudi agricultural company Tabuk Agricultural Development Company (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.
Tabuk shares rose 3.2 per cent by 1055GMT. 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 SR150 million ($40 million) into food production in Africa.
The Jenat consortium includes dairy firm Almarai, Food Products Company and Aljouf Agricultural Development Company, 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 per cent 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 SR1.5 billion ($400 million) in Egypt, chairman Mohammad al-Rajhi told Asharq al-Awsat newspaper. He gave no details.-Reuters