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DAMMAM, Saudi Arabia (Reuters) - A group of private Saudi investors plans to invest 375 million riyals to plant wheat, barley and rice in Ethiopia, one of the investors said.
The three investors met Ethiopian Prime Minister Meles Zenawi late last month, Mohamed al-Musallam, who chairs Dar Misc Economic and Administrative Consultancy firm, told Reuters.
"They approved to lease us the farm land. They will exempt us from paying taxes and lease fees in the first years of production and they will allow us to export all our production," Musallam told Reuters.
Food security has topped the policy agenda in the Gulf Arab region following rampant inflation in 2008 that underscored the peninsula's dependence on imports and forced countries to invest abroad to ensure supplies of staples like rice and wheat.
The three investors are setting up a company that will lead the investment. "We have opted for rice, barley and wheat because they are among the crops covered by the (Saudi) government's strategic food security programme," he said.
"We plan to start within one year. We are in the process of assessing best areas and ratios for each crop," Musallam added.
The other investors involved in the project are Yassine al-Jafri and Khaled Zeiny.
"Some of the financing will come from us and ... we can secure some of the financing from private financial institutions or from the Islamic Development Bank," he added.
Saudi Arabia has urged companies to invest in farm projects abroad after deciding last year to reduce wheat production by 12.5 percent per year, abandoning a 30-year-old programme to grow its own, which achieved self-sufficiency but depleted the desert kingdom's scarce water supplies.
State-owned Saudi Industrial Development Fund is granting financing facilities to firms exploring agricultural investments abroad.
Saudi investors have launched agricultural projects in Indonesia worth $1.3 billion last year, Mohamed Abdulkader al-Fadel, who chairs Saudi Arabia's Commerce and Industry Chambers Council, said earlier this month.
The world's largest oil exporter said in January it had received the first batch of rice to be produced abroad by local investors as part of the King Abdullah Initiative for Saudi Agricultural Investment Abroad.