Commerce and Industry Minister Tawfiq Al-Rabiah has approved the establishment of a new East Asia Agricultural Development and Investment Company with a capital of SR 100 million ($26.6 million).
The new company is based in Riyadh as a closed joint stock entity and 70 percent of its capital has already been paid up by its founding members. Its 10 million equities are each of SR 10.
The company will invest in farming and establish agricultural projects for crops such as rice, barley, fruits, olives, vegetables, cattle feed and all other agricultural products.
A ministry statement said its decision is part of the government's policy to boost economic activities in various sectors by raising the competitiveness of the national economy in order to face regional and international challenges, the ministry said in a statement.
The announcement came as Agriculture Minister Fahd Balghonaim told a conference in Riyadh that his ministry was keen on cooperating with Saudi private investors to strengthen the King Abdullah Initiative for Agricultural Investment Abroad.
Highlighting the Kingdom's efforts to ensure food security, Balghonaim called on investors to take full advantage of the loans and other facilities provided by the Agricultural Development Fund (ADF) to finance Saudi farm projects outside the Kingdom.
"The factors that have encouraged investment in farms abroad include the need for increased food commodities to cope up with the needs of the growing population and urbanization," Balghonaim said at the second Forum for Agricultural Investors Abroad.
The minister pointed out that Saudi Arabia had started running farms abroad to strengthen its national policies to counter the challenges faced in terms of food security.
"The policy involves building up a strategic reserve of staple food resources in the Kingdom," the minister said, adding that the farms will focus on seven crops.
The ministry has set up an action team to undertake the successful implementation of the initiative.
"Over the past several years a number of wealthy countries importing food have been showing increasing interest in running agricultural farms of their own in countries that are rich in agricultural resources and have welcomed foreign investments," the minister said.
"The ministry is working in coordination with Saudi embassies abroad to sign framework agreements to protect Saudi investments with the countries where such farms will be established," the minister said and assured that Saudi investors' interests will be protected.
The action team has completed identifying the target countries for investments and the crops that could be raised in those countries in addition to making framework agreements with those countries for collaboration in agriculture, and livestock and marine resources, he said.
The ministry is also coordinating with the ADF for financing the projects and with the Saudi Agricultural and Livestock Investment Co. for investments.
He stressed that a number of Saudi agricultural investments in Africa, including Egypt, Sudan, and Ethiopia, had produced fruitful results.
Khaled Al-Muqairen, deputy chairman of the Riyadh Chamber of Commerce and Industry, said the forum would also present the experience of some Saudi agriculture investors in foreign countries.
The presentation will enable the participants to learn about the difficulties and challenges that the investors might face and also the ways to ensure the protection of their investments in those countries.