KSA to sell flour mills, UAE’s Al Ghurair may buy

By Eliot Beer

- Last updated on GMT

KSA to sell flour mills, UAE’s Al Ghurair may buy

Related tags: United arab emirates, Saudi arabia

As Saudi Arabia prepares to privatise its public flour mills, the UAE’s Al Ghurair may become a purchaser, while Agthia plans to enter the kingdom’s wheat flour market.

The Saudi government announced its plans to break up and sell the nine flour mills under the Grain Silos and Flour Mills Organisation – now known as the General Organisation for Grains (GOG) – last month. The organisation’s assets will be split into four companies, and offered for sale to private investors – including foreign buyers.

GOG stays in charge

According to a US Department of Agriculture report, Saudi Arabia has been considering the privatisation of its flour mills for several years – although the GOG will retain control of the country’s grain silos. USDA figures show the kingdom’s mills process around 3.3m tonnes of wheat a year.

The new milling companies will serve as clients of the GOG to process and distribute wheat flour for fees to government approved customers at agreed subsidised prices. The new mills would be allowed, if so chose, to import their own wheat shipments for the processing of non-subsidised flour and the production of upscale quality bakeries and pasta. Most of the revenue of the private mills is expected to come from the milling fees charged to the GOG​,” said the USDA report.

The GOG will remain the exclusive government agency to import subsidised milling wheat, and will maintain ownership and operation of most of the wheat silos across the country. The GOG will manage the strategic wheat reserves and ensure the Kingdom’s food security objectives​,” it added.

UAE producers eye KSA market

One possible buyer of some of Saudi Arabia’s flour mills may be Essa Al Ghurair, chairman of the Al Ghurair Group, which owns a number of food processing businesses in the UAE. In an interview with Bloomberg late last month, Al Ghurair said he was considering the purchase of Saudi flour mills within the next 18 to 24 months, adding it was “not so difficult​” to adapt to the Saudi environment.

Al Ghurair Group recently invested in the flour mill and food processing operations at Sohar Port in Oman. Earlier this year Essa Al Ghurair said he wanted to improve food security​ in the GCC, and was investing in silos and new processing facilities.

Agthia, another major UAE food producer, is also planning to get involved in Saudi Arabia’s flour market, in a bid to improve the utilisation rates of its flour mills. Currently the firm has a milling capacity of 310,000 tonnes a year, but is only using 85% of this capacity, Agthia’s chief executive, Iqbal Hamza, told UAE daily Khaleej Times.

He said the company would aim to use the remaining 46,000 tonnes to market wheat flour in Saudi Arabia, with a view to increasing utilisation to 100%. Once it comes close to this, by 2018, the company will expand its production facilities, said Hamza. 

KSA to sell flour mills, UAE’s Al Ghurair may buy

 

As Saudi Arabia prepares to privatise its public flour mills, the UAE’s Al Ghurair may become a purchaser, while Agthia plans to enter the kingdom’s wheat flour market.

The Saudi government announced its plans to break up and sell the nine flour mills under the Grain Silos and Flour Mills Organisation – now known as the General Organisation for Grains (GOG) – last month. The organisation’s assets will be split into four companies, and offered for sale to private investors – including foreign buyers.

GOG stays in charge

According to a US Department of Agriculture report, Saudi Arabia has been considering the privatisation of its flour mills for several years – although the GOG will retain control of the country’s grain silos. USDA figures show the kingdom’s mills process around 3.3m tonnes of wheat a year.

The new milling companies will serve as clients of the GOG to process and distribute wheat flour for fees to government approved customers at agreed subsidised prices. The new mills would be allowed, if so chose, to import their own wheat shipments for the processing of non-subsidised flour and the production of upscale quality bakeries and pasta. Most of the revenue of the private mills is expected to come from the milling fees charged to the GOG​,” said the USDA report.

The GOG will remain the exclusive government agency to import subsidised milling wheat, and will maintain ownership and operation of most of the wheat silos across the country. The GOG will manage the strategic wheat reserves and ensure the Kingdom’s food security objectives​,” it added.

UAE producers eye KSA market

One possible buyer of some of Saudi Arabia’s flour mills may be Essa Al Ghurair, chairman of the Al Ghurair Group, which owns a number of food processing businesses in the UAE. In an interview with Bloomberg late last month, Al Ghurair said he was considering the purchase of Saudi flour mills within the next 18 to 24 months, adding it was “not so difficult​” to adapt to the Saudi environment.

Al Ghurair Group recently invested in the flour mill and food processing operations at Sohar Port in Oman. Earlier this year Essa Al Ghurair said he wanted to improve food security​ in the GCC, and was investing in silos and new processing facilities.

Agthia, another major UAE food producer, is also planning to get involved in Saudi Arabia’s flour market, in a bid to improve the utilisation rates of its flour mills. Currently the firm has a milling capacity of 310,000 tonnes a year, but is only using 85% of this capacity, Agthia’s chief executive, Iqbal Hamza, told UAE daily Khaleej Times.

He said the company would aim to use the remaining 46,000 tonnes to market wheat flour in Saudi Arabia, with a view to increasing utilisation to 100%. Once it comes close to this, by 2018, the company will expand its production facilities, said Hamza. 

Related topics: Middle East

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