Saudi and Brazil sow seeds to partner on food security

Suamy Beydoun/AGIF via Reuters Connect

• 25 MoUs signed at Brazilian-Saudi Investment Forum
• Food, healthcare and aerospace among industries to benefit
• Bilateral trade worth $3.6bn in 2021

Saudi Arabia is intensifying its trade and investment ties with Latin America in pursuit of food security and green energy, as a ministry-led delegation hunts for opportunities in Brazil, Chile, Costa Rica, Argentina, Panama and Paraguay.

A visit to São Paulo earlier this week by Khalid al-Falih, Saudi minister of investment, coincided with a Brazilian delegation visiting Riyadh and reflects growing economic ties between the kingdom and the Americas. 

Saudi Arabia has enjoyed strong growth in the non-oil sector in recent years and is looking to unlock more than $3 trillion in investment opportunities through its National Investment Strategy.

• Defence giant leads UAE charge into Latin America
• Saudi venture buys 10% of world’s largest copper maker
• PIF unit buys $339m stake in Brazilian food processor

In Brazil a total of 25 memoranda of understanding were signed. These were in industries as diverse as petrochemicals, food processing, tourism, healthcare, real estate, aerospace and defence. 

Al-Falih said in comments published by the Brazil-Arab News Agency that green energy and food security are key areas in which Saudi Arabia is interested in investing, alongside automotive, transport and logistics, infrastructure, ecotourism and entertainment.

“Why couldn’t we become a top five investor in each other’s economy?” Al-Falih said at the forum. “I believe we could, should, and it is feasible.

“This is the goal of each delegation member, both public and private sector.”

Two Brazilian businesses have agreed to set up regional headquarters in the kingdom as part of Riyadh’s ongoing initiative to attract more international companies.

Civil construction outfit OEC said it will set up one from which to explore opportunities with Saudi firms. Light Capital also signed an agreement with the Ministry of Investment to set up a base from which it will explore payment systems in the Middle East.

Two major deals between Saudi and Brazilian companies were signed last month.

Manara Minerals, a joint venture between Saudi Arabian Mining Co, better known as Ma’aden, and the sovereign Public Investment Fund, will acquire a stake in a subsidiary of Brazilian sustainable mining firm Vale.

Meanwhile, Saudi Agricultural and Livestock Investment Company (Salic) has invested in Brazil’s food processor BRF as part of its drive to boost food security in the kingdom.

In 2021, bilateral trade amounted to $3.6 billion. Brazil said it exported $1.6 billion worth of goods to Saudis in the first half of 2023, including poultry, sugar, soybean, maize and wheat.

A developing relationship

Marcos Casarin, head of Latin America macro research at Oxford Economics, told AGBI that trade between Brazil and GCC countries is relatively small, but is growing. 

“Taking Saudi as an example, of its more than $150 billion in exports per year just $2 billion go to Brazil – mostly oil and chemical products,” Casarin said.

“The news that trade between the two regions is growing fast is testament of Brazil and the GCC’s diversified trade relationships.”

Brazil is a major food exporter to the GCC region. Carlos Fávaro, Brazil’s minister of agriculture, livestock and food supply, visited Riyadh on Sunday, accompanied by a delegation that included agricultural business entrepreneurs. 

Fávaro met Saudi Arabia’s environment, water and agriculture minister Abdulrahman al Fadley to discuss a joint partnership in agriculture which could include private sector firms from the kingdom investing in Brazil’s sustainable food production programme. 

Further talks with Salic are planned to identify interested Saudi companies.

The project, designed by Brazil’s Agriculture Ministry, envisages the recovery and conversion of up to 40 million hectares of grazing land in Brazil, which could potentially double the country’s production area without deforestation.

Tatiana Riera, CEO of the Brazilian Trade and Investment Promotion Agency, who was part of the delegation, said a “robust” plan of how to further tap into the Saudi market together with partners from the private sector was being put together.

Rafael Solimeo, head of the Arab Brazilian Chamber of Commerce, added: “Saudi Arabia is the Arab world’s largest economy, accounting for 25 percent of the region’s gross domestic product.

“It makes a lot of sense that this mission has come to talk to this major client of Brazil.”

Referring to al-Falih’s visit, Solimeo said: “They’re in Brazil seeking to invest and attract investments, and we’re in Saudi Arabia at the same time, [doing the same].”

The group also met with Fahad Alajlan, president of King Abdullah Petroleum Studies and Research Center, where they discussed cooperation on sustainable agriculture and biofuels.

Brazil is growing its trade across the wider Arab countries with exports rising by more than 10 percent during the first four months of the year, according to the Arab Brazilian Chamber of Commerce.

Exports totalled $5.7 billion compared to $5.2 billion during the same period in 2022, with the UAE, Saudi Arabia, Egypt, Kuwait and Iraq being the key markets.