Saudi Arabia's plan to phase out production of water intensive crops including animal fodder has opened the doors for multi million dollar deals with firms in the United States and Canada, traders said.
Saudi based Al Khumasia Company, plans to launch its $40 million crushing and packaging feed mill in July, said Meshaal Al Wetaid, assistant general manager, on the sidelines of an industry event in Dubai to Reuters.
He said: "We will need to import 500,000 tonnes of animal feed and we are looking at getting this from Europe, US and Canada since we can no longer grow the fodder in Saudi because of water shortages."
He said that his firm is willing to spend up to $200 million to secure fodder supplies this year.
Saudi Arabia, a desert kingdom with scarce water resources, has stepped up conservation in agriculture. It is much cheaper for them to import all water intensive crops rather than growing them locally.
Green Prairie, a Canada based wholesale supplier of fodder is looking to finalise a 150,000 tonnes fodder deal with Saudi Arabia's Al Kholi Group over the coming few days.
The fodder is used to feed the huge and growing dairy herds of the Gulf including camels, horses, sheep and goats. The cost of shipping is in the range of $250-$320 per tonne from the US west coast.
The UAE is also importing large amounts of animal feed, and last year Abu Dhabi launched a tender for 800,000 tonnes of fodder.
Abu Dhabi is the biggest single customer with 26 distribution centres where the emirate's small livestock farmers receive heavily subsidised supplies.
Growing own abroad
Feeds from the US or Canada are currently cheaper and of better quality, but this could change in the future. Gulf investors look to acquiring stakes in farmland in developing nations and thus produce their own feed in another country.
The UAE and other Gulf countries are investing in agricultural land in countries such as Egypt, Sudan, Pakistan, Kazakhstan and Azerbaijan to grow fodder and they will begin to challenge the US companies, according to traders.