French agricultural group InVivo plans to join Saudi Arabia's Fruitful Seed to set up plants to produce up to 2 million tonnes of animal feed annually by 2014, the chief executive of the Saudi company said on Tuesday.
"There will be four plants, each one 500,000 tonnes. The capital to build these plants will be in excess of $100 million," Abdulaziz al-Muzaini told Reuters in a telephone interview.
Negotiations on the shareholding and investment level are still taking place but the majority stake is to be held by the Saudi partners, he said.
"Conclusion of all agreements will be within the next six weeks. Construction is expected to start this year and within three years we expect to reach the capacity of 2 million tonnes," Muzaini said.
Saudi Arabia mainly relies on importing barley for animal feed, making it the world's largest importer of the grain.
It is trying to build its strategic food reserves as a buffer against rising global prices for basic commodities and has also encouraged the private sector to invest in farmland abroad.
Since 2009, Saudi Arabia has said it is in talks with countries including Sudan, Egypt, Ukraine, Pakistan and Turkey to allow Saudi companies to establish projects to help supply it with wheat, barley, soya bean and rice.
The first of the four 500,000 tonne animal feed plants is expected to be completed, along with an animal pharmaceutical plant, before the end of 2012 while the completion of the whole project will take three years, Muzaini said.
The joint venture, managed by a Saudi company based in Britain called Camel Capital, aims to supply farmers with processed animal feed to substitute the use of barley in feeding livestock.
"This improves the quality and quantity of meat and health of animals in the kingdom, so you are going to get an animal that grows meat faster, is healthier and at a lower cost of production," Muzaini said.
Fruitful Seed is chaired by Saudi businessmen Bader al-Dawood who is also chairman of Dar Al-Mustored Group, a large distributer of foodstuffs in Saudi Arabia.
