Saudi investment strategy focuses on agriculture

The Kingdom not only produces 830,000 tonnes of dates a year but is also self sufficient in crops such as wheat while it also sells dairy products, vegetables, eggs, fish and poultry to other Middle East markets.

Since the early 1970s the amount of arable land has grown from 150,000 hectares to more than 2 million hectares through methods such as centre pivot irrigation that draws underground water as well as an extensive dam building programme to retain rainfall.

Much of the development has been based on generous levels of subsidies especially for wheat cultivation though this assistance is being phased out as a result of the Kingdom joining the World Trade Organisation a year ago.

Big employer

While some restructuring is inevitable, agriculture is likely to remain crucial in order to reduce food import costs and provide employment. The Saudi Ministry of Agriculture is setting up regional administrative centres to develop farming resources in Tabuk, Jazan, Eastern Province and Medina.

Strong investor interest in the sector has been generated with more than 500 applications from local and international concerns for investments totalling $4 billion in agricultural and fish farming ventures.

Arabian Shrimp Company, an offset venture, is already developing a 5,000 hectare integrated shrimp farm on the subhka coastland north of Jazan. First production is due to enter the local and international markets before the end of 2006.

Interest has been spurred by the government offering low cost leases on huge swathes of land for crop cultivation in Jazan and the Tihama plains.

Another major impact of the growth in food production has been felt in associated industrial sectors in particular the food processing industry such as flour mills, wheat and dairy products as well as boosting fertiliser and insecticide production.

Prince Abdulaziz Mousaed Economic City

The new Prince Abdulaziz Mousaed Economic City to be developed near Hail and located on the crossroads of many of the Middle East's trade and transport routes is also pivotal to the Kingdom's agriculture strategy.

The planned $8 billion development will create the Gulf's largest agriculture and processing hub with a dry port near a new international airport providing warehousing, handling and transport services linking road, air freight services to a new railway system.

According to Abdullah Al-Dabbagh, chairman of Saudi Arabian General Investment Authority, the new city will represent "the largest project of its kind in the Middle East for logistic and transportation services,"

There is expected to be considerable potential for pre-packaged foods and other agricultural-related industries in the new development. Agriculture accounts for 90 per cent of the corn, 33 per cent of the potatoes and tomatoes as well as 30 per cent of the barley grown in the Kingdom with total crop production of more than 800,000 tons a year.