Domestic wheat production in Saudi Arabia will come to an end by 2016 as government subsidies are being slowly phased out according to the quarterly Saudi Arabia Agribusiness Report. While commodity prices rose in 2007 and 2008, Saudi Arabia's subsidies were revealed as being inefficient, thus resulting in the government to end domestic what production.

Although Saudi Arabia has one of the highest GDP per capita in the world, they are experiencing food security concerns. Water has become a major concern in the Middle East. The water used to irrigate farm fields has now been allocated to supply households instead. It is not possible to supply irrigation and households with water anymore. With lower or no irrigation use, wheat production has declined while demand has increased.

Saudi Arabia's solution lies in foreign investment. Saudi Savola Group plans on investing at least US$100mm to secure minority shares in agribusinesses in high potential emerging markets, including Egypt, Sudan and Ukraine.

Investing in foreign farmland is a very controversial issue. Many land deals are done behind closed doors and often people, or countries are taken advantage of. There has been no word how the upcoming transactions will occur for Saudi Arabia, besides Saudi Savola Group will be making the purchases to help solve Saudi Arabia's food security problems.

While the Middle East is the epicenter for oil, farmland is a different story. Places like Canada, Brazil, Ukraine and the U.S. are known for fertile land. Just like oil, farmland does not have an endless supply, but the demand continues to grow. Saudi Arabia has realized that food security needs are changing and they are wisely making arrangements to solve their food security problems before they get out of control.

Farmland has the potential to be one of the best investments of this generation. With each story about food security and land grabbing, farmland's values are going to strengthen, especially in areas with fertile land that can produce for many decades.

- Colvin