Going with the grain: Saudi flour mill transfer gets $540m boost

Going with the grain: Saudi flour mill transfer gets $540m boost
First Milling Company (MC-1) product on pallets at its manufacturing facility in Jeddah. (Courtesy MC-1)
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Updated 05 January 2021

Going with the grain: Saudi flour mill transfer gets $540m boost

Going with the grain: Saudi flour mill transfer gets $540m boost
  • Al-Raha Al-Safi Food Co has completed the acquisition of the First Milling Company (MC-1)
  • MC-1 is the largest of the four milling companies and is part of SAGO’s privatization plan of Saudi flour mills and grain silos

JEDDAH: Saudi Arabia took the latest step in the privatization of the Kingdom’s flour mills with the announcement on Monday of a $540 million deal.

Al-Raha Al-Safi Food Co, consisting of Al-Mutlaq Group, Al-Safi Holding Co., Abunayyan Trading Co. and Essa Al-Ghurair Investment LLC, announced it has completed the acquisition of the First Milling Company (MC-1) for $540 million.

The deal was facilitated by the National Center for Privatization (NCP) and the Saudi Grains Organization (SAGO).

MC-1 is the largest of the four milling companies and is part of SAGO’s privatization plan of Saudi flour mills and grain silos. The company was previously owned by the sovereign wealth fund the Public Investment Fund (PIF).

“The acquisition represents an attractive opportunity for the private sector to invest in one of the largest flour markets in the Middle East and North Africa with high and appealing growth rates, and to further boost private sector productivity and improve product quality,” said Tariq Al-Mutlaq, chairman of Al-Raha Al-Safi Food.

“The company plans to invest in human resources, technologies, and to develop innovative products that address the evolving needs and requirements of our business clients and discerning consumers in Saudi Arabia,” he added.

In September the NCP said that “the flour-milling sector is one of the targeted sectors for privatization under the Kingdom’s Vision 2030 realization programs.”

The sector “enjoys the support of the relevant regulatory and executive authorities led by the Ministry of Environment, Water and Agriculture, Ministry of Finance, and the NCP,” it added.

Privatization of flour mills was one of the first such projects in the Kingdom and is seen as a barometer for the government’s wider privatization goals.


Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
Updated 19 January 2021

Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
  • They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million

JAKARTA: Indonesia has launched a campaign to help small firms in the country compete for millions of dollars-worth of food trade in Saudi Arabia.

The government aims to help small and medium-sized enterprises (SMEs) improve the quality and competitiveness of their products to meet the Kingdom’s required standards, Indonesian trade and commerce officials have said.

Under normal circumstances, before the coronavirus disease (COVID-19) pandemic, around 1.5 million Indonesians a year make the pilgrimage to Saudi Arabia to perform Hajj and Umrah and hundreds of thousands work in the Kingdom.

They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million.

To meet the Saudi food regulator’s standards, the Indonesian Chamber of Commerce (Kadin), the Ministry of Trade, and the Ministry of Cooperatives and Small-Medium Enterprises have teamed up to assist SMEs in improving products such as bottled chili sauce, soya sauce, coffee, tea, and sugar that are in highest demand among Indonesians in Saudi Arabia.

Kadin chairman, Rosan Roeslani, told Arab News: “We have facilitated five small-medium enterprises that produce soya sauce to obtain Saudi Food and Drug Authority approval for distribution, while nine tea and coffee producers are in the pipeline to also obtain a license. We have also submitted the application for four bottled chili sauce producers.”

While travel and pilgrimage restrictions remain in place due to the COVID-19 outbreak, he said that the time before things get back to normal will be used to prepare the SMEs — which contribute 60 percent to the country’s gross domestic product and employ up to 90 percent of its workforce — for expansion into the Saudi market as soon as the pilgrimage sector resumes.

“We still have time to groom them as there are many aspects such as hygiene, and consistency in their product quality and quantity that they need to improve,” Roeslani added.

In 2014, the Ministry of Religious Affairs issued a regulation obliging catering companies that provided food and drink to Indonesian pilgrims in Saudi Arabia to source their products from Indonesian producers whenever possible.

Indonesia’s vice religious affairs minister, Zainut Tauhid Sa’adi, said that as each Indonesian pilgrim received food from caterers an average 75 times during his or her pilgrimage, demand was high but supply in Saudi Arabia remained limited and similar products from India and Thailand had been used instead.

Kasan Muhri, director general for export development at the Ministry of Trade, told Arab News that the program to prepare the SMEs had been in the making since 2017 and officials eventually decided to launch it this year despite the COVID-19 restrictions.

“Just because there are few Umrah pilgrims now and this year’s Hajj remains uncertain, it does not mean that the market is gone.

“People from around the world would still go to Saudi Arabia to perform the pilgrimage, not just Indonesians, so we are doing this to anticipate the market when the economy revives, and things are recovered. We don’t want to be left behind,” Muhri said.

Besides food and beverage products, officials say they are also looking into the possibility of exporting items such as goodie bags, prayer beads, and other pilgrimage accessories made by Indonesian SMEs.