Food security as part of Saudi Vision 2030

We used to hear the phrase “in good times or bad times, food and drinks will enjoy growth.” During the current coronavirus disease (COVID-19) crisis, I would add “pharmaceuticals” as well. During the past few months, we at BMG Financial Group have received several enquiries and are currently in advanced discussions with leading international pharmaceuticals and food companies who are seeking funding from regional markets’ sovereign funds and family offices to meet their global expansion strategies.

For Saudi Arabia, food security has been a national strategic objective for many years and is part of the Saudi Vision 2030. In 2012, the government established the Saudi Agricultural and Livestock Investment Co. (SALIC), which is now part of the Public Investment Fund (PIF) portfolio, with the objective to contribute to agricultural and livestock production and supply for the benefit of the Kingdom.

SALIC’s investment focus is mainly on mass commodities including wheat, barley, corn, soya beans, rice, sugar, vegetable oils, green fodder and red meat. SALIC’s mandate is to make long term profitable investments in countries that have agricultural capacity and a surplus of agricultural goods to be exported.

SALIC participates in agricultural, commercial and logistical investments that cover the supply chain in an integrated manner, starting from agriculture products to handling, shipping, and strategic storage to enhance the productivity and efficiency for adding value.

Last week, SALIC, acquired a 29.91 percent stake in Daawat Foods Ltd. (DFL) from the India Agri Business Fund. DFL is one of the manufacturing and sourcing arms of LT Foods; it houses one of the five manufacturing facilities owned by LT Group in India, and currently contributes around 22 percent of the total production of the group.

It caters largely to the demand from overseas markets and witnessed a revenue growth of over 20 percent over a 5 years period. LT Foods is an 80-year-old consumer company delivering the finest quality rice and rice-based food brands in more than 80 countries. DFL consolidated revenue of around $550 million last year (2019). Its flagship brands, Daawat and Royal, enjoy leading positions in India and the US, with market shares of 29 percent and 45 percent respectively, and have strong market shares in other countries as well. In my opinion, as part of the PIF portfolio, SALIC is becoming a global player in the supply of food goods and related agricultural, commercial and logistical activities. It will continue to pursue strategic investments and partnerships with global leaders in the food security domain.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.