Wikileaks: Food security, agriculture getting spotlight in the Kingdom

Viewing cable 09RIYADH713, FOOD SECURITY, AGRICULTURE GETTING SPOTLIGHT IN

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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 
 
SIPDIS 
 
E.O. 12958: DECL: 05/26/2019 
TAGS: ECON EAGR ETRD EINV PGOV PREL SA
SUBJECT: FOOD SECURITY, AGRICULTURE GETTING SPOTLIGHT IN 
 
THE KINGDOM 
 
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 
agriculture investment. 
 
-- (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 
leaseholders. 
 
¶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 
 
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THE KINGDOM 
 
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 
(ref b). 
 
¶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. 
RUNDELL