Dutch Agro-Food business in the Kingdom of Saudi Arabia and the United Arab Emirates Experiences & Opportunities By: Ahmed Anany & Samar Kadri

The Dutch Agro-Food Complex in Saudi Arabia: wellrepresented but room for growth Saudi Arabia offers ample Opportunity for Investment and Trade The Netherlands has a long history of trade relations with Saudi Arabia. There are plenty opportunities for Dutch business in the country on the short and medium term. The Netherlands can provide knowledge and expertise for requirements to the Saudi economy, and this is why Dutch business can be active in a range of sectors in Saudi Arabia, including agriculture and food, education and training, water management, medical supplies, construction and infrastructure, and energy. The Vision 2030, launched recently, aims to diversity the economy and privatise services, and therefor offers ample opportunities in these sectors. In terms of geography and economy, Saudi Arabia – a member of the G20 – is the largest country in the Gulf region; it is the 13th economy in the world, and thus important for the Netherlands. Many Dutch companies are already active in the Kingdom of Saudi Arabia within the agricultural field. Following the development of the food industry, Dutch businesses played a significant role in developing the Saudi agricultural business and in the improvement of the food security situation, e.g. in potatoes. Food security is dependent on the available natural resources in the world. The intercompetition in using water to produce energy and vise versa and both in producing food highlights the need for innovation and creates possibilities for cooperation between diversified stakeholders in the Netherlands and in KSA. This complex (the so-called waterenery-food nexus) in itself is an interesting area of cooperation between the Netherlands

and KSA, in order to optimise a sustainable use of water and energy with a satifying level of self-sufficiency for domestic food production.

Many Dutch Agro-Food Companies are well-established in KSA Since several decades, Dutch companies are assisting Saudi Arabia in the primary production proces and in many different agro-food industries like poultry equipment (housing, hatching, slaughtering), green houses, dairy equipment and supplies, propagation material (vegetable seed and seed potatoes, poultry parental stock), backery products, and food processing. Much has been done and is still being done in trade between Dutch and Saudi companies. Not only through joint ventures, but also by 100% Dutch ownership the Dutch are active. FrieslandCampina for example is 100% owner of a reconstitution factory in Jeddah. AA Consulting and Engineering has established a branche office in Riyadh, after working with a Saudi partner for decades. Saudi companies as well as governmental parties are sensitive to an operation from within the country, either independent, as JV or in another construction with a Saudi partner.

Dutch companies that are present and active in KSA with a Saudi partner are for example (please note that this list is not exhaustive, but provides an idea):                

Dacom HZPC Koppert Meyn TEC-IB AACE (for Stork) Bom Group Landlife Meijer Prinse Greenhouses Hoogendoorn Stolze RijkZwaan FrieslandCampina Sloten CRV Delta

Other Dutch companies are active with several public and private parties in KSA but do not have a clear and single Saudi partner, for example:  Agrico

 Aviko

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Certhon Dalsem DPC and members EuroChoice GHI

 Harvest House  Holland-Gulf Chamber of Commerce  Intervet  PrivaVanDrie

Wageningen University and Research Institute is an example of a Dutch institute that is active in projects, mainly with the government. RABO International on the other hand is currently invoved in a project with the Agricultural Development Fund. The agro-food team at the Embassy in Riyadh keeps close contact with a large number of Saudi companies, among which:  Al Marai  ASTRA  Al Moghtarra  ENMA  Al Munajem  IYA  Al Tukhaim  ITA  Al Watania  LEHA  Al Rasheed Greenhouses  NADEC  Americana  SAG group  ARASCO  SALIC

Can the Dutch Presence in KSA still grow? The Netherlands is the second largest exporter of agricultural goods in the world, proudly maintaining this position for years. Despite this fact, the Netherlands is only contributing roughly around 2% of all imported food stuff for KSA (annually about € 0.5 billion from the Netherlands on a total import of about € 25 billion). Although trade to KSA is not insignificant, the ratio to the total imported food stuff is unsatifactory to our international reputation. Reasons for this might include the insufficiently known Saudi market in the Netherlands, even though the geographical situation and the business climate are favorable for improvements of this situation. Further opportunities are a consequence of the transition the Saudi agro-food sector is currently going through. Green house cultivation is very much promoted, and water-saving concepts are in favor. In poultry, there is an ever continuing increase in need for production and slaughter capacity. In fin and Crustaceae aquaculture there are large plans to increase production, mainly on shore and in sea. In open field agriculture, there is a huge need for innovative solutions to raise production and quality while decreasing the water

consumption. In this, cereals and fodder are not in the cropping plan and there is also good opportuntiy for new crops and new varieties, e.g. drought and salt tolerant. Another field of opportunity is in the area of healthy food and healthy lifestyle. The KSA government is keen on combatting the above average presence of obesity, diabetic and vitamine D deficiency. The opportunities are there, but the business climate requirs a regular presence of the Dutch company in Saudi Arabia. One of the critical success factors is that a good business relationship and personal relationship go hand in hand, and it is often that good contracts follow a considerable period of investing in that relationship. We presented success stories of three of the active Dutch companies in a previous publication. The Agriculture team to the GCC of the Embassy of the Netherlands is ready to assist you in your business contacts in KSA.

Opportunities for the Dutch in the United Arab Emirates The UAE and the Netherlands are important trade partners. Dutch export to the United Arab Emirates exceeds the Dutch exports to India. In 2014, mutual trade between the Netherlands and the UAE was valued at around €3.5 billion (USD 3.81 billion). While the Kingdom of Saudi Arabia is the Netherlands’ biggest trading partner in the Gulf region with €6 billion, the UAE is the largest export market with nearly €2.4 billion. Almost 40 per cent of all the Dutch exports to the Gulf region go to the UAE.

Agro-Food Business between the Dutch and the Emirati’s Dutch and Emirati agriculture and food companies have a long-lasting and mutually beneficial working relationship that is built on trust and commitment, reliability and proven know-how. Agri-food is one of the main exports to the GCC as 80-90 % of food products are imported due to the limited agri resources in the region. For instance, over 60 Dutch companies attended Gulfood 2016. Currently, an estimated 220 Dutch companies are based in the UAE specially the oil and gas industry, agriculture, aerospace and dredging.

The Netherlands exports a significant amount of machinery to the UAE. Overall, trade between the two countries covers a plethora of services and goods, from high-tech machinery to supermarket groceries. The main sectors in which Dutch companies are active are the oil and gas industry, agriculture, aerospace, and dredging. Lucrative investment opportunities for Dutch investors exist in the UAE in renewable energy, innovative

technologies, and green products and services. Moreover, the country is an ideal base for access to certain key markets in Asia and Africa.

Business Opportunities in the positive UAE Agro-food Market The UAE is a fantastic market characterized by excellent infrastructure, modern business practices and low barriers to market entry, by regional and global standards, which explains why it has become one of the top markets for Dutch exports in the MENA region. Attractive living conditions in the cosmopolitan cities of Dubai and Abu Dhabi also play an important role in explaining the level of Dutch investment in the country, particularly the decision of many companies to place their regional headquarters in the UAE. Moreover, the UAE is a regional leader in innovation and sustainability, acting as a model to guide the region’s future development. We encourage Dutch companies to establish themselves in the UAE, based on solid Dutch expertise and experience. The Netherlands is a highly innovative nation that can offer the UAE a unique combination of technological strength, problem-solving aptitude. Dutch companies can leverage on these strengths to invest and establish themselves in the UAE.

Opportunities to do business in the UAE are not withheld by global economic difficulties or regional instabilities in the Middle East and North Africa and the economy proves to be resilient. The location of the UAE is strategic and accessible for major regional markets; it is often seen as a gateway to other GCC countries:  

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The country’s currency, the dirham, being pegged to the dollar, is secure and freely convertible. There are no restrictions on profit transfer or capital repatriation and financial risk is minimal. There are no corporate or personal taxes and bilateral investment treaties are in place. Import duties are less than four per cent for virtually all goods.

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Labor costs are competitive. The infrastructure is well developed and the working environment is stable. As a member of the World Trade Organization (WTO) and as a party to various regional free trade agreements throughout the GCC, the UAE has low rates of tariffs. Import duties are normally charged on products imported into the UAE (outside of the free zones), at rates, which can vary according to the nature of the import. There are no duties or tariffs on exports. The UAE does not generally have any currency exchange controls and restrictions on the remittance of funds. There is no federal corporate or income tax levied in the UAE (exception oil companies and foreign banks). There is currently no value added tax or sales tax in the UAE, although the imposition of a GCC-wide value added tax has been widely discussed for the last several years.

Agriculture & Food in the GCC The government’s food security policy is aimed at more efficient water use, crop diversification and reduction of food waste. The agriculture in the UAE contributes less than one percent to the economy while using more than 60 percent of the country’s water. The amount of water available per person is continuing to decline and it is a major constraint to food production. Sustainable agriculture is still relatively new in the Gulf States. The government in Saudi Arabia, for example, only started considering it at the end of the last century. A whopping 85% of all fresh water is used by the agricultural sector, so there is high demand for knowledge about water-efficient farming methods. One example of cooperation between the Gulf States and other countries is the introduction of Dutch high-tech greenhouse systems. Wageningen UR designed the Estidamah Project in Riyadh and the Bani Yas Greenhouses in Abu Dhabi. Both greenhouse systems were built by Dutch greenhouse builders. So-called pad and fan greenhouses have proven popular in the Gulf region The country looks at maximizing its water productivity by using alternative and nonconventional water resources such as treated wastewater and saline water in agriculture which is great opportunities for Dutch companies. There is widespread realization on political level that water management is required for further successful development of the country. Replacement of the current resources is an important strategy and the UAE need policy-making for water and soil usage. , Dutch companies are known as Europe’s leading experts in wastewater treatment and hold close ties to high performing universities in the Netherlands. Therefore, opportunities for Dutch business in the UAE can be found in water resource management and technology innovations that focus on water saving and reuse of wastewater. There are opportunities in

the agricultural sector for Dutch businesses that focus on water-saving technologies and improved irrigation techniques. Other opportunities for Dutch companies exist in wastewater treatment and treated sewage. Instead of disposing the substantial surplus of treated wastewater into the Gulf, it can be put to productive use for many industrial uses.

Expo 2020 The Netherlands was one of the first countries to support the UAE’s bid to host Expo 2020. Dutch companies can benefit from the opportunities that will arise from Dubai hosting Expo 2020. In Dubai the Netherlands Business Council already set up the “NBC Dubai Expo 2020 Committee”, in order to discuss the opportunities for the Dutch business community. Dubai Expo 2020 will mark the first time the Expo has been held in the Middle East, North Africa and South Asia (MEASA) region.