Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
65
Al Rajhi International Investment Company in 2010 announced plans to spend at least $400
million to produce wheat, corn and sorghum in Egypt and Sudan over the next several years. The
firm has started the cultivation of 42,000 hectares in the Egyptian Toshka project and expects
the first harvest by the end of May 2010. In addition, the company has an ongoing project in
Sudan to cultivate sorghum on more than 50,000 hectares. Jenat, a consortium formed in March
2009 by four Saudi companies (TADCO, Almarai, JADCO and Food Products Co), announced
plans to invest $40 million in Sudan and Ethiopia to produce wheat, barley, and animal feed.
Other major investment plans include Saudi Star Agricultural Development, owned by Saudi
investor Sheikh Mohamed Al Amoudi. In 2011 the company said it plans to invest $2.5 billion by
2020 to develop a rice production project in Ethiopia. The company has leased 10,000 hectares
in Ethiopia’s western Gambella region for 60 years at a cost of 158 birr ($9.42) per hectare
annually, and It plans to acquire a leasehold for an additional 290,000 hectares. The project is
just one of many in Ethiopia, which plans to lease some 3 million hectares to private investors
over the next several years. 86
In related developments, the Saudi Government announced the establishment of the Food and
Agriculture Company with an initial capitalization of SAR 3 billion ($817m), while the Islamic
Development Bank (IDB) in 2011 announced a partnership with Dutch asset manager Robeco to
launch a $600m Saudi-based food and agriculture fund to invest in projects that promote food
security for the Kingdom. The perceived need to invest abroad to ensure food security and to
diversify investments among a wider pool of countries has become more pressing and
governments worldwide are acutely aware of both the political and the budgetary impacts of
volatility in prices for essential food commodities.
As Figure 29 illustrates, Saudi Arabia is not the only Gulf country pursuing large-scale
international investments in agricultural production. In 2012 Qatar’s Crown Prince (now Emir)
Sheikh Tamim bin Hamad bin Khalifa al-Thani issued a decree this year to organize the Qatar
National Food Security Program (QNFSP), to address "one of the most pressing challenges that
Qatar is facing,” that of food security. Qatar imports about 90 percent of its food, but the QNFSP
aims to achieve 60 percent self-sufficiency by 2024, using advanced technologies for water
conservation and greenhouse and hydroponic cultivation.
There are economists and agricultural experts questioning the economical feasibility of Qatar's
plans given the small size of the population. "It is claimed that Qatar doesn’t have much land it
can put into production, and much of it is desert.87 In addition, Qatar has a very small
population. The country imports almost the entire amount of cereals that they need for domestic
consumption, approximately 200,000 tonnes a year, which they cannot produce themselves in
an efficient manner. The country must be focusing its investment on agricultural land in more
temperate climates, instead of trying to become self sustainable, at prohibitively high and
unsustainable investment costs.
86 Blomberg (2011), “Saudi billionaire's company to invest $2.5bn in Ethiopia rice farm,” March 23, 2011.
87 Abdolreza Abbassian, Senior Economist at the UN Food and Agriculture Organization in Rome