Saudi opening food clusters to boost homegrown supplies

Creative Commons/Province of British Columbia

• Clusters aim to increase integration and cooperation across supply chain
• 11 will launch and be home to manufacturers, labs and service providers
• Saudi currently at 44th place in the 2022 Food Security Index

Saudi Arabia is planning to launch a number of food clusters in an effort to boost its homegrown food manufacturing sector.

Abdulrahman Alromaizan, investment development director at the Saudi Industrial Property Authority (Modon), told delegates during a panel at the Gulfood event in Dubai this week that the semi-government entity was addressing the need to decrease reliance on overseas supplies.

Modon oversees 36 industrial cities across Saudi Arabia.

Alromaizan said it will launch 11 clusters, including one in Jeddah. They will be home to manufacturers, service providers, logistics services, laboratories and ready-built facilities “for the purpose of increasing the efficiency of the factories in the cluster”.

• Ukraine poultry giant signs deal to boost Saudi food security
• PIF and AeroFarms to build indoor vertical farms across Mena

Food clusters are areas devoted to expanding domestic production in a country, increasing integration and cooperation between all parties across the length of the supply chain. They are set up in regions to enhance food security and support the industry at large.

“We anticipate cost reduction per product from 5 to 12 percent by cutting this logistics chain and having integrated services within the cluster,” Alromaizan said.

In the 2022 Food Security Index – which ranked countries according to access to food, crisis risks and resilience of the economy – the UAE was the top-placed Arab country, at 26th.

Qatar was 29th, Bahrain 30th, Oman 41st, Saudi Arabia 44th and Kuwait 47th.

The private sector is “at the heart” of transforming Saudi Arabia’s food processing industry, according to Razan Alaqil, partner and chief advocacy officer at consultancy company Mukatafa.

Saudi’s National Industrial Strategy, which was launched under the Council of Economic and Social Affairs last year, aims to increase the contribution of manufacturing to the country’s GDP to over SAR 895 billion ($238.6 billion) by 2030.

“There is a key focus at a national level by Saudi on food processing,” Alaqil said.

Saudi Arabia’s Ministry of Environment, Water and Agriculture (Mewa) last year announced plans to localise 85 percent of the country’s food industry by 2030.

Dr Ali Al-Sabhan, supervisor general of the Entrepreneurship Department at Mewa said at the time that importing food cost Saudi Arabia SAR 70 billion each year.

“The Saudi government and the Saudi public sector is very keen on ensuring that the private sector is an active partner in developing and working for the future,” added Alaqil.

It was announced this week that Ukraine’s MHP, one of Europe’s largest exporters of chicken, and Saudi Arabia’s Tanmiah Food Company have signed an agreement that aims to improve the kingdom’s food security.

Earlier this month, Saudi’s Public Investment Fund signed a joint venture agreement with AeroFarms, a US sustainable agriculture company, to build and operate indoor vertical farms across the Middle East and North Africa through a newly established company in Riyadh.