Ukraine poultry giant signs deal to boost Saudi food security

Reuters/Mohamed Abd El Ghany

• Kyiv-based MHP is planning a joint venture with Tanmiah Food Company
• The partners aim to open a hatchery that will produce 108m eggs a year
• Project supports the food production goals of Vision 2030

A Ukrainian poultry business and a Saudi food group have signed an agreement that aims to improve the kingdom’s food security.

MHP, one of Europe’s largest exporters of chicken, has entered into a memorandum of understanding with Tanmiah Food Company. 

The agreement is the first step in establishing a joint venture between Tanmiah’s subsidiary, Desert Hills for Veterinary Services Company, and the Kyiv-based business.

The partners plan to open a greenfield hatchery in Saudi Arabia. The facility will hatch up to 108 million eggs a year and include milling facilities with the target of producing 137,000 tonnes of feed annually.

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The joint venture is part of plans to close the production gap in Saudi’s domestic poultry sector, in line with the food security goals of the Vision 2030 strategy.

The initiative will be primarily funded by the Agricultural Development Fund of Saudi Arabia while MHP will provide expertise across the value chain, the companies said in a statement.

The joint venture remains subject to regulatory approvals, including clearance by the kingdom’s General Authority for Competition.

Tanmiah has also signed agreements with the Agriculture Development Fund, Saudi Investment Recycling Company and the National Centre for Vegetation Development and Combating Desertification as part of its plan to invest SR4.5 billion ($1.2 billion) by 2030.

Zulfiqar Hamadani, the food group’s CEO, said: “The new partnership with MHP is yet another important step, demonstrating our resolve to contribute towards Saudi Arabia’s poultry self-sufficiency whilst reinforcing our pioneering role in supporting the kingdom’s food security and self-sufficiency objectives.” 

John Rich, executive chairman of MHP, which is listed on the London Stock Exchange, said: “The steady deepening of the relationship between MHP and Saudi Arabia is an important part of our long-term commitment to the region, and we continue to seek opportunities to make the best use of our expertise to improve food security around the globe.”

According to Kyiv’s embassy in Saudi Arabia, trade in goods between the two countries totalled $957 million in 2021 – the year before Russia’s invasion of Ukraine, which was launched on February 24, 2022. 

Ukrainian exports totalled $768.6 million, mainly consisting of cereals and meat, while imports from Saudi Arabia reached $188.5 million and were dominated by plastics and polymeric materials.

Unsplash/Artem Beliaikin

Ahmed Bin Sharaf Osilan, managing director of Tanmiah, said: “Our feed and animal health segment has been delivering solid results over the past few quarters and we have ambitious plans to expand this business further, and generate sustainable long-term value to all our stakeholders.”

He added: “The material investments into this joint venture will result in an expansion of our overall capacity, whilst supporting local job creation and delivering on the kingdom’s strategic vision for our sector.”

Tanmiah, established in 1962, is one of the Middle East’s biggest providers of fresh and processed poultry and is listed on the Saudi Stock Exchange. Its products are sold in Saudi Arabia, the UAE, Bahrain, Oman, Jordan and Kuwait. 

At the end of 2022, the company operated 108 farms as well as six hatcheries, two feed mills, four slaughterhouses, and 13 dry and cold storage facilities located in Saudi Arabia, Bahrain, and the UAE. 

Food security is a pressing issue in the GCC and Saudi Arabia is investing heavily in new ways of producing food for its expanding population. The kingdom is reliant on imports to meet up to 75 percent of its food consumption needs.

Earlier this month, the Public Investment Fund signed a joint venture agreement with AeroFarms, a US sustainable agriculture company, to build and operate indoor vertical farms across the Middle East and North Africa through a newly established company in Riyadh.

The partnership aims to enable sustainable, local sourcing of high-quality crops all year round, and the first farm in Saudi Arabia will have an annual production capacity of up to 1.1 million kilograms of agricultural crops.

Wes Schwalje, COO at Tahseen Consulting, told AGBI: “Vertical farming has the potential to supply large amounts of produce to the region while requiring significantly less land and water than traditional farming methods.

“In the GCC, major grocery chains are also in a prime position to adopt vertical farming technology by growing produce in facilities close to stores or installing miniature facilities on store premises.”

In December, Mowreq Specialised Agriculture Co and biotech firm YesHealth Group founded Vertical Farms Company, which will begin by building Saudi’s largest indoor vertical farm in Riyadh. 

The farm is due to be fully operational by the fourth quarter of this year. The expected daily yield is 2,000 kilograms, including a variety of lettuces, cruciferous vegetables, herbs and edible flowers.

In Saudi Arabia, which has lagged behind some of its neighbours in global food security rankings, the Ministry of Environment, Water and Agriculture has allocated $27 million to develop and localise vertical farming technologies.