This is quite big and exactly the kind of trade oriented investment in the value chains of developed agro markets that I have anticipated in the conclusion of Oil for Food.
Saudi government owned company SALIC teams up with international grain trader giant Bunge to buy a 50.1% stake in the former Canadian Wheat Board, which the Canadian government has now privatized. The other 49.9% will be owned by Canadian farmers.
SALIC was founded in 2012 in the wake of the King Abdullah Initiative for Agricultural Investments Abroad (KAISAIA).
I would expect more of this kind of investment rather than the widely publicized land investments in food insecure developing countries that have made media headlines, but have often not been implemented.
Martin Keulertz and I are dealing with the aspect of food trading companies and value chain investments in a forthcoming article in the fall issue of International Development Policy.
The Saudi Cabinet has greenlighted projects under the King Abdullah Initiative for Agricultural Investments Abroad (KAISAIA), which means that projects financed by the initiative may finally get on their way. Up to 60 percent of the financing will be provided by the government. Target countries need to agree to allow export of at least 50 percent of the crops.
According to the Saudi Minister of Agriculture Fahd Balghunaim, the Saudi Ministry of Agriculture wants to hand over the file of foreign agricultural investments to the Saudi Company for Agriculture Investment and Animal Production (SCAIAP).
Currently the file is handled by the Minister of Commerce and Industry in the lead (chairman) and the Minister of Agriculture as his deputy. The undersecretaries of the Ministries of Agriculture, Commerce, Finance and Foreign Affairs are also part of the team.
The decision would mean a considerable upgrade of SCAIAP, which is held by the Public Investment Fund, which is in turn run by the Ministry of Finance. So far there have not been disbursements of SCAIAP funds even it has been launched in 2009 already.
This has led to complaints by the private agro-business community of Saudi Arabia in the past, which is supposed the primary beneficiary of SCAIAP funds.