Saudi Arabia: Going With The Grain |
|
Share With Members!
In a bid to ensure long-term food security, Saudi Arabia is looking at plans to invest in farms in Thailand, the world's largest exporter of rice.
With international rice prices soaring due to poor harvests last season, and growing concerns by producing countries over maintaining adequate supplies for their own populations, importers such as Saudi Arabia are having difficulties finding sufficient stocks on the global market. Saudi Arabia is one of the world's biggest buyers of rice, importing 960,000 tonnes last year, close to 5% of total global consumption.
Though the shortages may be only of a limited duration, with the UN Food and Agriculture Organisation (FAO) releasing a report in early May saying rice production should rebound after a poor 2007 and could hit record levels this year, Saudi Arabia is taking the long view.
According to media reports, both private sector companies and Saudi officials have held talks with Thai investors about setting up joint ventures to buy up or develop rice farms in Thailand. Under the proposed partnerships, production would be exported to Saudi Arabia, with any surplus shipped on to neighbouring countries in the Gulf region.
Speculation that Saudi Arabia could invest in overseas rice production has been around for a while, though it has been the latest round of price hikes that have prompted action.
In early April, Adnan A Al Naeim, the secretary-general of the Asharqia Chamber of Commerce, said Saudi Arabia was at the mercy of rice producing countries such as India.
"The Kingdom is not a rice-producing country; we are always under the control of exporters who dictate prices," he said in an interview with the local media on April 4. "The best option we have is to become rice producers ourselves by investing in agriculture in countries that still have vast land for rice production."
According to Richard Feltes, senior vice-president and director of commodities at brokerage firm MF Global in Chicago, the move by Saudi Arabia and other countries to buy into agricultural production marks the end of the era of wealthy nations relying on cheap and abundant world surpluses to meet their food needs.
"That is all shifting now," he said in an interview with US media on May 9. "We're going from 'just in time delivery' to what I call 'just in case reserves'. That's because some two dozen food-rich nations, from Argentina to Vietnam, recently imposed export restrictions on staples like soybeans and rice to stem inflation at home, and that has countries like Saudi Arabia fearing the worst."
Saudi Arabia has also been moving on the diplomatic front to make sure its rice needs are met. A number of its main suppliers, most notably India, which provides the majority of Saudi requirements, have imposed bans or restrictions on rice exports as a measure to ensure domestic demand is met and price rises do not hit locals too hard.
In late April, Abdullah Zainal Alireza, Saudi Arabia's minister of commerce and industry, said the government would press New Delhi to resume rice exports to the Kingdom. In March, the Indian government had asked traders to halt exports of most types of rice, though the restrictions did not initially include the high quality basmati variety that forms the bulk of imports to Saudi Arabia. However, supplies of basmati are drying up, with the Indian government imposing a new $200 per tonne export duty.
The Saudi government has stepped in to protect local traders, with Alireza saying on April 19 that he would move to speed up the payments of subsidies paid to rice importers after complaints that the Ministry of Finance had been slow in releasing funds. It has been estimated that the subsidies, which are currently 26 cents a kilogram, would total $120m this year.
There are additional concerns prompting Saudi Arabia to consider offshore investments in agriculture. The country's own farming sector is being scaled back in an effort to conserve limited water resources.
Saudi Arabia's recoverable water reserves are dwindling rapidly, with estimates that existing supplies are only sufficient to last ten years or fewer. Agriculture is the largest user of water in the Kingdom and the government plans to cut back farming production drastically, announcing plans in January to totally phase out its wheat growing programme by 2016 and import all of the country's needs.
Though Saudi Arabia is better placed than most countries to be able to pay inflated international prices for rice and other commodities, and provide price support at home, a move to invest now in grain-producing countries could be the key to a sustainable harvest for the future.
© Oxford Business Group 2008
x
DISCLAIMER
Zawya is a distributor (and not a publisher) of content supplied by third parties and subscribers. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by those third parties, including information providers, subscribers or other users of the Service, are those of the respective author(s) or distributor(s) and not of the Company. The Company neither endorses nor is responsible for the accuracy or reliability of any opinion, advice or statement made on the Service by anyone other than authorized Service employee spokespersons while acting in their official capacities. The Company is not responsible for any infringement of intellectual property rights or breach of any applicable law or regulation, including regulation in relation to financial services or the distribution of financial products, defamation, data protection, telecommunications (including regulations relating to excessive use, spamming or other abusive activities) or obscene, offensive or illegal content). Under no circumstances will the Company be liable for any loss or damage caused by a member's reliance on information obtained through the Service. It is the responsibility of member to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content available through the Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
Read the full Member Agreement
http://www.zawya.com/legal/NewsLetter.cfm?name=disclaimer
Zawya is a distributor (and not a publisher) of content supplied by third parties and subscribers. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by those third parties, including information providers, subscribers or other users of the Service, are those of the respective author(s) or distributor(s) and not of the Company. The Company neither endorses nor is responsible for the accuracy or reliability of any opinion, advice or statement made on the Service by anyone other than authorized Service employee spokespersons while acting in their official capacities. The Company is not responsible for any infringement of intellectual property rights or breach of any applicable law or regulation, including regulation in relation to financial services or the distribution of financial products, defamation, data protection, telecommunications (including regulations relating to excessive use, spamming or other abusive activities) or obscene, offensive or illegal content). Under no circumstances will the Company be liable for any loss or damage caused by a member's reliance on information obtained through the Service. It is the responsibility of member to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content available through the Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
Read the full Member Agreement
http://www.zawya.com/legal/NewsLetter.cfm?name=disclaimer
Loading ...
Zawya Comment Policy:
-
Zawya encourages you to add a comment to this discussion. You agree that when you add content to this discussion your comments will not:
1.1 Contain any material which is libelous or defamatory of any person, is obscene, offensive, hateful or inflammatory or causes damage to the reputation of any person or organisation.
1.2 Promote sexually explicit material, violence, discrimination based on race, sex, religion, nationality, disability, sexual orientation or age or any illegal activity.
1.3 Be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence.
1.4 Be threatening, abuse or invade another's privacy, or cause annoyance, inconvenience or needless anxiety.
1.5 Be used to impersonate any person, to misrepresent your identity or affiliation with any person, or be likely to deceive any person.
1.6 Give the impression that they represent Zawya.
1.7 Advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse. - The content posted on www.zawya.com is created by members of the public. The views expressed are theirs and unless specifically stated are not those of Zawya. Zawya reserves the right to review all comments prior to posting and edit or delete any contribution, but Zawya is not responsible for and can not be held liable for any content posted by members of the public on www.zawya.com.
- Zawya is not responsible for the availability or content of any third party sites that are accessible through www.zawya.com. Any links to third party websites from www.zawya.com do not amount to any endorsement of that site by Zawya and any use of that site by you is at your own risk.
- By submitting your comment, you hereby give Zawya the right, but not the obligation, to post, air, edit, exhibit, telecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comments worldwide, in perpetuity.
Community Buzz
Stories
Companies
Most viewed companies by Community in the last 24 hrs
| Company Name | Country | Industry |
| Consolidated Contractors Company | Overseas | Construction and Design |
| Zuhair Fayez Partnership Consultants | Saudi Arabia | Construction and Design |
| Saudi Binladin Group | Saudi Arabia | Construction and Design |
| Saudi Electricity Company | Saudi Arabia | Electric Utilities |
| Barwa Real Estate Company | Qatar | Landlords and Developers |
| Roads and Transport Authority - Dubai | UAE | Regulatory and Administrative Bodies |
| Mubadala Development Company | UAE | Investment Firms and Funds |
| Ministry of Health - Saudi Arabia | Saudi Arabia | Ministries and Municipalities |
| Abu Dhabi Oil Refining Company | UAE | Oil |
| Qatar General Electricity and Water Corporation | Qatar | Electric Utilities |
Projects
Most viewed projects by Community in the last 24 hrs
| Project Name | Country | Sector |
| ENEC - Nuclear Power Plant | UAE | Power and Water |
| Abu Dhabi DOT - Abu Dhabi Metro | UAE | Infrastructure |
| Takreer - Ruwais Refinery Expansion | UAE | Oil and Gas |
| Abu Dhabi Ports Company - Khalifa Port and Industrial Zone (KPIZ) | UAE | Infrastructure |
| Aramco/Dow Chemical - Ras Tanura Integrated Refinery and Petrochemicals Complex | Saudi Arabia | Oil and Gas |
| SATORP - Jubail Refinery and Petrochemical Complex | Saudi Arabia | Oil and Gas |
| Emirates Aluminium (EMAL) - Smelter Complex - Phase 1 | UAE | Industry |
| Dubai Racing Club - Meydan City - Meydan Racecourse | UAE | Real Estate |
| Dubai RTA - Dubai Metro | UAE | Infrastructure |
| IGD - Gasco - Habshan 5 Gas Processing Plant | UAE | Oil and Gas |
after years of over inflated oil pricing, cut off their food subsidies from the US and watch how fast the oil prices drop. [Report Abuse | Email to a Friend | Reply to this Comment]