Saudi companies turn to US, Canada for animal feed

Saudi Arabia's plan to phase out production of water intensive crops including animal fodder has opened the doors for multi-million dollar deals with firms in the US and Canada, traders said on Monday (March 29).

Saudi-based Al-Khumasia Company plans to launch its US$40 million crushing and packaging feedmill in July, said the company's assistant general manager Meshaal Al-Wetaid.

"We will need to import 500,000 tonnes of animal feed and we are looking at getting this from Europe, US and Canada since we can no longer grow the fodder in Saudi due to water shortages," he said, adding that the firm is willing to spend up to US$200 million to secure fodder supplies this year.

Meanwhile, Green Prairie, a Canada-based wholesale supplier of fodder is looking to finalise a 150,000 tonnes fodder deal with Saudi Arabia's Al Kholi Group over the coming few days, said Peter Ball, vice president of marketing at Green Prairie.

"The demand for fodder is growing at a very fast pace in the Gulf and this is where most of our big contacts are," he said. The fodder is used to feed the huge and growing dairy herds of the Gulf including camels, horses, sheep and goats.

Shipment takes between 30 and 45 days to arrive by container ship from the US West Coast but remains usable as animal feed for about a year, traders said, adding that the cost of shipping is in the range of US$250-320 per tonne.

The United Arab Emirates is also importing large amounts of animal feed, and last year Abu Dhabi launched a tender for 800,000 tonnes of fodder, traders said.

"We expect that a second tender will be launched with an even larger amount in June," said Gregory Braun, president of US-based Border Valley Trading. Abu Dhabi is the biggest single customer with 26 distribution centres where the emirate's small livestock farmers receive heavily subsidised supplies, he added.

"The UAE and other Gulf countries are investing in agricultural land in countries such as Egypt, Sudan, Pakistan, Kazakhstan and Azerbaijan to grow fodder and they will begin to challenge the U.S. companies," said Marwan Barakat, general manager of UAE's Middle East Group of Companies.