Baladna will bring experience from transforming desert dairy in double-quick time
Malaysia to set up its biggest dairy farm with help from Qatar
The Federal Land Consolidation and Rehabilitation Authority, better known as Felcra, has tied up with Baladna Food Industries, which has amassed 20,000-plus cows at breakneck speed on home sand.
Under the collaboration, the two companies aim to produce 50m liters of milk by 2021. Five locations have been identified for the purpose in the northern and central regions of peninsular Malaysia, as well as the Borneo states of Sabah and Sarawak. Felcra will provide the land while Baladna will provide the technology and the livestock.
The partnership will involve a development of an anchor farm, which is expected to be the biggest in the country, with a 10,000-head capacity and annual production of 50m liters of milk per year.
Satellite farms, run by Felcra workers, will also be developed to supply feedmeal for the dairy cattle. It is hoped dairy will serve as a new source of revenue for the agency as it looks to reduce its over-reliance on palm oil and rubber, two of Malaysia’s best-known agricultural commodities.
Within the next two years, the two companies aim to double Malaysia’s current fresh milk production, in line with government’s food security aims.
"We hope to be able to meet the domestic demand which is currently heavily reliant on imports,” said Felcra chairman Nageeb Wahab on signing the agreement earlier this month.
"This venture will benefit Felcra in the long run and we believe it will have a positive impact on our future earnings.”
Though it is no more than an agreement between both parties now, the deal is expected to be formally concluded and contracts signed in early 2020 during a proposed visit by the prime minister of Malaysia, Mahathir Mohamad, to Qatar.
Baladna has form in transforming a country’s dairy industry, which is what Malaysia desperately needs after decades of failed attempts at expansion.
Qatar self sufficiency
It was charged with making Qatar self-sufficient in dairy production when the country’s land neighbors, Saudi Arabia and the United Arab Emirates, erected a trade blockade in June 2017 in response to their claims that it supported Islamist terrorist groups, which Doha denies.
To address the country’s growing need for dairy supplies, 4,000 cows were airlifted by Baladna into Qatar soon after the blockade to create what was to become an enormous diary farm.
The initial 4,000-head herd has since expanded fivefold and is well on the way to the 24,000 it had targeted in the wake of Qatar’s isolation. The animals, most of which have been bought from breeders in the US, live in vast air-conditioned sheds at a farm located in Umm al Hawaya, about 55 kilometers from the capital city, where temperatures can surpass 50 degrees Celsius in summer.
“I am delighted that the Qatari dairy industry has come to the world and exported its expertise abroad, in line with the vision and guidance of our wise government. We will strive to be one of the most important dairy manufacturers in Malaysia and East Asia,” said Balanda’s executive vice-chairman, Ramez Al Khayyat, following the signing of the Felcra agreement.
“This will be the most important step after achieving self-sufficiency of milk in Qatar and exporting to several countries such as Oman, Yemen, Iraq, Pakistan and Afghanistan.”
It is not surprising that the legwork ahead of the agreement started at the top levels of government, due to the politically exposed nature of Balandna’s setup.
“The Malaysian government had sent a letter to the Qatari government requesting to conduct a market study aiming to establish joint project in Malaysia, which we have done,” said Khayyat.
“Malaysia today has only about 20% self-sufficiency in terms of dairy products. So we went there and did the initial study and found the numbers are promising. So we are expected to sign the contracts by the first quarter of next year.”
The Malaysia deal was soon followed by more good news for Baladna when it was announced last week that the dairy will launch an initial public offering that could raise QAR1.4bn (US$392m).
The subscription period for the IPO of 1.425bn new shares will begin on October 27 and run to November 7, with the first day of trading at the Qatar Sock Exchange expected on December 11.
In the IPO, the company plans to sell 75% of its share capital on the local stock exchange, while proceeds will be used to strengthen the company’s balance sheet, it said in a statement.
“[Baladna] already enjoys an unparalleled position in Qatar as a market leader with growing exports and increasing economies of scale,” chief executive Kamel Abdallah said.
“We look forward to continued growth as Baladna leads the way towards real sustainability for Qatar as part of the Qatar National Food Security Programme.”