Riyadh – Saudi businessmen who met on Monday (2nd) with representatives of the public and private sectors of Brazil, at the Riyadh Chamber of Commerce and Industry, in Saudi Arabia, showed great interest in investment opportunities in agribusiness in Brazil. The Arab country, which has a very dry climate, has adopted a policy of production of food abroad to supply its domestic market.
The businessmen and members of the government of Brazil are in the Saudi capital to participate in the Saudi Agro-Food, a fair in the food sector, and in a trade delegation to the Middle East promoted by the Ministry of Agriculture, Livestock and Supply.
After a series of presentations by the Brazilian delegation, businessman Mohammed Al-Khorayef, who represents two players in the agricultural sector (Al-Khorayef Group and Jannat), inquired about how to promote direct investment in Brazil, what the policy regarding land purchase by foreigners is and whether there are restrictions regarding water use for irrigation. “This is of great interest to us,” he said.
According to him, the companies want to invest abroad in the production of potatoes, maize and other grain. The executive added that they already work in partnership with the Brazilian Odebrecht group in agribusiness projects in Venezuela and Ecuador and are studying business in Angola. The Saudi companies are also starting to operate in Egypt.
The president of the Agricultural Policy Committee at the Riyadh Chamber, Samir Kabbani, in turn, inquired about the Brazilian policy regarding foreigners owning land.
The Agricultural Policy secretary at the Ministry, Edilson Guimarães, said that the treatment given to foreign companies established in the country is identical to that given to companies that are 100% Brazilian. He added that there are no restrictions to the use of water, or to exports of agricultural products. He recalled that agribusiness sustains the trade balance surplus of Brazil.
The head of the International Promotion Department at the Ministry, Eduardo Sampaio Marques, warned, however, that regulations regarding the acquisition of land in Brazil by foreigners is currently being discussed in Brazil and the legislation may be modified in future. The secretary general at the Arab Brazilian Chamber of Commerce, Michel Alaby, in turn, said that the organisation is going to send the Saudi businessmen a study on the matter, in English and Arabic.
Alternatives
The Brazilians, however, presented investment alternatives that do not include the purchase of land. Itambé, the largest Brazilian dairy, for example, wants to find partners interested in closing long-term supply deals and even in establishing joint ventures. According to the Institutional Relations director at the company, Ricardo Cotta, a possibility is the opening of a new industrial unit exclusively to supply the foreign partner’s market. “We are seeking them [partners] in this mission,” said the executive.
Similar proposals were presented by the Soybean Producers Association of Mato Grosso (Aprosoja) and by poultry producer Globoaves.
The vice president of the de Agribusiness department at the Bank of Brazil, Luís Carlos Guedes Pinto, said that the institution makes available a series of instruments to make possible foreign investment in Brazilian agribusiness, among them the formation of a fund for participation turned exclusively to the sector.
According to him, the bank has established a structure of the kind for Brazilian investors and, if there is Saudi interest, a new fund in the same moulds may be formed. On answering a question by businessman Mohsin Shaikh Al Hassan, Guedes Pinto added that the Bank of Brazil “is ready” to finance investment by Saudi companies in Brazil and recalled that large multinationals are already clients of the institution.
Engineer Mohamed Abdullah Al-Rasheed, who presides a company acting in the agribusiness sector, asked about the possibility of partnerships between Brazil and Saudi Arabia to produce in African countries.
Sampaio Marques, from the ministry, said that “the government of Brazil sees this possibility with good eyes”. “We can develop this project,” he stated. President Luiz Inácio Lula da Silva has been signalling towards this “triangular” cooperation as a way of international help for the development of Africa. He has, incidentally, already defended this model while visiting Arab nations.
Marques stated that Brazil already has a project of the kind in European countries, “but there are still some difficulties regarding bringing them all together.”
The ambassador of Brazil to Riyadh, Sérgio Luiz Canaes, recalled president Lula’s visit to Saudi Arabia earlier this year and said that the minister of Development, Industry and Foreign Trade, Miguel Jorge, should head a trade delegation to the country next year.
Michel Alaby, from the Arab Brazilian Chamber, also proposed the establishment of a Brazil-Saudi Arabia Business Council.
*Translated by Mark Ament
