November 14, 2013

Unite Arab Emirate's Al Ain Dairy invests in new farm, factory

In order to boost production, United Arab Emirate's (UAE) Al Ain Dairy is set to invest AED400 million (US$109 million) in a new farm and factory in Al Ain.

With milk prices across the Emirates controlled by the Government, dairy producers are eager to focus on improving manufacturing efficiency to boost margins.

"The market is growing organically at about 8%," said Shashi Kumar Menon, the chief operating officer at Al Ain Dairy. "Therefore our profits can only grow at between 6% and 8%. About 98% of what we feed a cow in the UAE is imported and the prices for agri-feed increase every year."

The new farm and factory will be operational by 2016, but the dairy producer does not expect to reap profits from the new facility until 2017 at the earliest.

Milk yields from the UAE's industrial farming methods are almost double that of Europe's pasture-fed animals despite the absence of rolling fields and lush pastures.

Al Ain Dairy, Saudi Arabia's Almarai and Dubai's Al Rawabi Dairy control 85% of the local market.

While the UAE can meet most its milk demand from local production, it is not 100% self-sufficient - with the summer months and Ramadan seeing the biggest shortages.

Al Ain Dairy's new farm and factory intends to meet local demand before it turns its attention further afield to export markets.