Feed buyers could reap gains

Al Dahra is halfway through a Dh1 billion investment plan involving more than 60,700 hectaresof farmland in Europe, the US, Asia and Africa to boost the UAE's food security, a senior official said.

Farmers thresh wheat in Pakistan, where Al Dahra holds 4,050 hectares.

Abu Dhabi's Al Dahra Agricultural Company is halfway through a Dh1 billion (US$272.2 million) investment plan involving more than 60,700 hectaresof farmland in Europe, the US, south Asia and north Africa to boost the UAE's food security, a senior official said. The privately held company is one of the prime suppliers of animal feed to the Government, which has encouraged local firms to invest in foreign agricultural businesses to secure food stocks. The moves come as the Government is expected to wean local farmers off groundwater supplies used in the production of animal feed.

The company became a major UAE agricultural player in 2007 when commodity prices were at record highs and many Gulf governments embarked on foreign land purchases to protect against food inflation. At that time, Al Dahra won contracts from the Government amounting to more than 50 per cent of the total import of forage for the nation's dairies and small farms, including alfalfa and feed grasses. It has spent Dh500m since then in the US, Spain, Egypt and Pakistan and plans to spend another Dh500m in the next two years, according to Mamoon Othman, the chief executive of Al Dahra.

The holdings include 4,050ha in Pakistan, which will rise to 10,100ha in the next two years. In Egypt, Al Dahra owns 10,300ha, which ultimately will encompass 48,500ha. It has long-term leases in Spain, the EU's largest exporter of feed, on 5,050ha and is finalising its strategy for the US, the world's largest producer of alfalfa and feed grasses, with facilities already acquired in central California and Washington state. Transporting such food stock from the US to the UAE can take up to 45 days by sea.

The company also operates fruit and vegetable farms in the UAE and abroad, including 32,000 date palms locally, and mango and citrus farms in Egypt. It exports some of its produce from Egypt and Pakistan to markets in the Middle East and Asia, including Saudi Arabia, Jordan, China and Korea and plans to expand into rice cultivation. It controls its entire supply chain. With 800 employees worldwide, Al Dahra has focused on investing in sophisticated farming equipment that is not labour-intensive.

"From the farm to the fork, we control the whole value chain," Mr Othman said. It is a major force in the UAE's transportation industry and is the largest customer at Mina Zayed port in Abu Dhabi. Last year it imported between 500,000 and 600,000 tonnes of animal feed into the UAE, or about 62,000 container TEUs (20-foot equivalent units).This amounted to almost one quarter of all imported container shipments at the port. It is also a major shareholder in Agility Abu Dhabi, an integrated logistics company, along with Agility of Kuwait and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.

The company's rise has come as domestic production of the feed stock Rhodes grass has halved in recent years, as the Government has sought more efficient uses of its water supplies. Where the country once produced 1 million tonnes of the grass, it now produces between 480,000 and 580,000 tonnes, Mr Othman said. @Email:[e-mail]