How Almarai produces 1 billion litres of milk from 75,000 dairy cows in the Saudi Arabian desert

A desert land in Saudi Arabia with temperatures frequently over 45 degrees Celsius is where you will find one of the largest and most impressive dairy operations in the world.

Last week as part of the Irish trade mission I visited Almarai’s stunning Al Badiah farm, home to 47,000 head of dairy cattle. The farm is 6km long by 3km wide, with one third of the 2,200 hectares under buildings.

The parent company, Almarai, is a diversified food business with annual sales of over €2 billion across the Gulf region. Almarai’s dairy division will this year produce in excess of 1 billion litres of fresh milk from 75,000 milking cows on seven farms. It is the world’s largest intergrated dairy business.

A total of 698 men of 14 nationalities live and work on Al Badiah. As is the cultural norm in Saudi Arabia, no women live or work there.

It is difficult to get your head around the scale; 930,000 litres of milk is produced on the farm each day. In other words, the annual milk output of four average sized Irish dairy farms leaves this property each day. A milk tanker leaves the farm every 45 minutes.

The US Holstein cows average 13,400 litres of milk per year – over twice the Irish average. According to Anthony King from Newtownshandrum, Co Cork, the secret to producing these tremendous volumes of milk in such a harsh environment is “attention to detail”. He is a dairy manager at Al Badiah farm – one of seven Irish staff there.

Bernard Nolan, a native of Ballyporeen, south Tipperary, is manager of the overall dairy operation. He said that Almarai’s aim “is to maximize the production of quality milk from each farm at the lowest cost possible. This is achieved by investing in high quality facilities, a high genetic herd, a well-trained workforce and the use of high quality feed”.

Their top farm is averaging 14,200 litres at present. “Our next target is to get the whole herd over the 14,000 litre barrier and at the same time continue to expand the herd,” he told the Irish Farmers Journal.

Almarai farm management, who kindly hosted our visit to Al Badiah, were not willing to disclose costs of production, although they did state that feed accounted for 70%-75% of total costs. All feed must be imported, some from the other side of the world. Energy and labour costs are exceptionally low, with diesel just 8 cent per litre. Water is pumped from an aquifer, said to be 350 metres beneath the farm.

Al Badiah farm facts

Feed

Breeding at Al Badiah

Who are Almarai?

Almarai was founded in 1977 as a joint venture between Prince Sultan bin Mohammed bin Saud Al Kabeer and Masstock Group Holdings, an Irish farming systems company owned by Paddy and Alistair McGuckian. Masstock sold the last of its stake in Almarai to Saudi shareholders in 2004, a year before the company listed its shares on the Saudi stock exchange. The Prince, who chairs the company, retains a 29% shareholding.

Now a diversified food business with annual sales of over €2 billion across the Gulf region, Almarai’s dairy division will this year produce in excess of 1 billion litres of fresh milk from 75,000 milking cows on seven farms. It’s an amazing feat, given its desert location.

Dubliner Tom Trimble, who heads Almarai’s strategic business unit, said that fresh milk accounts for around 35% of the local milk market and sales volumes are growing. “Milk is sold at 70 cent per litre in the shops,” he said.

The company has an excellent refrigerated distribution network across the Gulf region. Dairy sales were up 14% for the first nine months of 2013.

One of Almarai’s most significant investments was a recently commissioned infant nutrition plant. Built in a joint venture with US giant Mead Johnston, it is reputed to be one of the world’s finest.

According to Trimble, Almarai has had a compound annual growth rate of over 20% per annum for the past 10 years. The revenue of Almarai has almost tripled in the past five years as demand for its products – milk, cheese, processed chicken, baked goods and juices – has surged with the nation’s population.

While cheap oil is freely available, other resources – particularly water – are challenging. The Government has already signalled a ban on the export of wheat from 2016. Almarai is investing in land assets overseas in order to secure access to raw materials.

This has included the $83m purchase in December 2011 of a large Argentinean tillage operation assembled by Jim McCarthy and other Irish investors.

Almarai is also a member of the consortium that earlier this year acquired Continental Farmers Group (CFG), a tillage operation with land in the Ukraine and Poland. Ireland’s Origin Enterprises was a 24% shareholder in CFG at the time of its sale.