October 31, 2019

 

BRF to establish first chicken processing plant in Saudi Arabia

 

 

BRF SA has announced on October 29 that it will invest around US$120 million to set up its first chicken processing facility in Saudi Arabia in order to bolster its position in an important growth market, Reuters reported.

 

The new plant is expected to start operations by end-2021, according to BRF's chief financial officer, Carlos Moura. It would likely generate 1,000 direct and indirect jobs and will be 100% owned by BRF, he said.

 

As of now, the Brazilian food processor has yet to decide the plant's location,  investment schedule and capital structure.

 

BRF, the biggest food exporter in the Gulf region, has four production facilities in the Middle East, where increasing populations will lift demand for food.

 

The company currently serves the Saudi market through eight plants in Brazil and a factory in Abu Dhabi.

 

Earlier this month, BRF said its Abu Dhabi plant was being audited and that Saudi Arabia had restricted buying of some of its products.

 

When asked whether agreeing on an investment in Saudi Arabia was an action made in anticipation of potential protectionism, Moura downplayed the notion.

 

"The BRF move is that of a protagonist. It is not purely and simply defensive. We have a long history in the region," he told Reuters in an interview. Moura explained that the investment reflects BRF's commitment to maintaining its leading position as a supplier to Gulf nations.

 

While a majority of new plant's output - estimated at around 50,000 tonnes per year - would go to the Saudi market, some of this will also be delivered  to neighboring countries.

 

BRF, which has operated in the Middle East since the 1970s, said the plant's product portfolio will include breaded and marinated products and burgers, among others.

 

The halal market, which requires an animal be slaughtered in accordance with Muslim rules for its meat to be allowed for consumption, represented about 27% of BRF global food volumes, generating net sales of R$2.4 billion (US$602 million) in the second quarter.

 

- Reuters