Engineer Abdullah Alrubaian, ARASCO’s Chairman of the Board, said: “This significant expansion comes in response to the recent decision by the Saudi Government to reform the subsidy system to encourage the animal feed industry and lessen dependence on barley. The government expects the private sector to support the reform by increasing production capacity and it is fitting that ARASCO is the first to respond given its deep expertise in this industry and status as the largest feed miller in the region.”
He continued: “Besides substituting barley, our government wants to achieve some key strategic objectives that are at the core of the Eighth Development Plan. First and foremost, enable the feed industry to create economic alternatives for locally grown forages which consume about 7 billion cubic meters of water per year or 30% of the total water consumption in the entire country. Second, relieve pressure on natural pastures by providing viable alternatives. Third, improve the productivity of the animal products sector, particularly the livestock segment, to support food security and reduce the cost of animal products to the consumer. Fourth, encourage rural development and slow down urbanization.”
He then pointed out the need to implement the new subsidy reform in full and as soon as possible, adding: “the reform requires subsidizing the raw materials for the feed industry based on their nutritional content of energy and protein. This is applied to all raw materials except barley whose large subsidy is not linked to its nutritional value. Our government is aware of this issue and we hope they will address it in the near future.”
Dr. Abdulmalik Alhusseini, ARASCO’s Executive President, elaborated on the expansion plans, stating: “The expansion will take place in two phases. The first phase is already under implementation and aims at increasing the production capacity from 1.6 to 3 million tons per year and should be completed by the end of the first quarter of 2009 without any hindrance to existing production. Our team has recently completed the plans for the second phase which will be implemented in 2009 to increase capacity to 4 million tons per year making ARASCO one of the top 10 feed millers worldwide.”
He added: “ARASCO will benefit from the many competitive advantages accumulated during the past 25 years which include operational excellence derived mainly from our superior supply chain and modern facilities, our ability to develop and innovate, our strong purchasing power, our excellent reputation and long-term relationships with suppliers and customers alike, and the expertise we gained in marketing and branding our products to the tricky B2C livestock segment.”
He continued: “Furthermore, an important advantage is that ARASCO will expand its existing facilities in Dammam and Al-Kharj rather than build new facilities. This will reduce the required investment and cut the project period to less than a year.”
Dr. Alhusseini concluded: “The expansion re-affirms ARASCO’s noble mission as the Kingdom’s key enabler of food and water security. We will produce 3 million tons per year of complete feed for the livestock segment which will substitute 2 million tons of forages and an equal quantity of barley. We will, therefore, help conserve 5 billion cubic meters per year that would have otherwise been used to irrigate the forages our complete feed will replace. In our view, this is the key benefit and we are proud to contribute something this significant to the country. As far as food security is concerned, our 4 million ton per year of high quality compound feed bundled with effective services will enable our valued customers to produce more than 40% of the Kingdom’s animal products and enhance the competitiveness of small producers who can not invest in feed milling on their own.”
It is noteworthy that ARASCO was founded in 1983 in Riyadh to provide services for the budding agricultural sector.
It has evolved and grown steadily over the past 25 years to become one of the most prominent national multi-business companies with a workforce of 1,800.
ARASCO operates along the food value chain with emphasis on feed milling, corn refining, broilers production and marketing, farm inputs and services, feed and food phosphates manufacturing, inspection and testing services, and logistical services.
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