As the Saudi population steadily grows against a backdrop of required reduction in water footprint of food production, Arasco Feed – the largest provider of animal nutrition in the Middle East and North Africa (MENA) region – has for all intent and purposes, plays a very crucial role in the society. Hence the company can't help but be continuously proactive and innovative in tackling the agriculture challenges. Johan Van der Ven, president of Arasco Feed, said in an interview that "agriculture is complicated in the Kingdom, but (is) also a way to differentiate the economy, to provide jobs and, most importantly, for food security." He said "being complicated brings an opportunity to be more innovative in the sector than in countries with less challenges than we face. That may make the Kingdom a frontrunner in advanced farming design, different from anywhere else. In Arasco we live that dream and this has for example resulted in our new poultry farms which in a half year already have proven that we can compete on price, quality and efficiency with leading countries in chicken meat production like the USA and Brazil." He added that though the Saudi agriculture outlook is good, there are still many hurdles need to be taken. Excerpts of the interview follow: What is your evaluation of the Saudi agriculture sector? At the moment, we are at several crossroads at the same time and that can be a confusing situation for the players in the sector. It is obvious that a ban on alfalfa production must be implemented given the fact that 33% of the total water consumption in Saudi Arabia is consumed by alfalfa crop farming alone. Any future plant farming requires precision farming and principles like drip feeding. The progress in these areas is amazing and for us the need to farm using the newest available technologies is obvious: We cannot stay spilling water. For animal nutrition, an alfalfa ban implies that the traditional markets and the technical dairy & beef markets need to reorient themselves on their nutritional business models. Arasco Feed has been preparing for this since 2005 and built a vast expertise on how this reorientation can be achieved. Our over 10 years' experience feeding many millions of livestock (camels, sheep and goats) has helped us understand that also dairy and beef can be fed differently nowadays and we believe this will contribute to further cost savings and further development of profitable animal farming in the Kingdom. The company has ambitious plans to become the backbone of food security for the country and to play a leading role in filling the large food gap in the Middle East. Tell us about the company's plans in this regard. Our stepping stones have already been laid on our path long ago in the early days of Arasco. Everything since it was a logical consequence of what happened in the early beginning. And by now Arasco plays a humble role, mostly in the background, in daily life of everybody who lives in the Kingdom through the diversity of our portfolio of businesses. We will further strengthen this by investments in those businesses while growing them slightly ahead of the curve. A good strategy is simple and consistent and can be executed with passion and perseverance — that is exactly what Arasco does. What is the company's production capacity and what is the company strategy for the next 3-5 years? We are getting close to 4 million tons. In this stage, we aim to modernize our first feed mill which was established in 1987. We are in the design phase for our new premix facility to bring our capacity in line with the expected future demand while we also intend to enlarge our feed phosphate production capacity. We invest in aquaculture feed, as well in product innovation and manufacturing capabilities since this is identified also by the Agricultural Development Fund as an important growth market and possibility to lower the water footprint of animal protein production. What are the external challenges you are facing while managing the company? The major challenge is lacking infrastructure. While we grow, other businesses grow too. So it gets busier and busier in the port in Dammam, SRO gets more business on the same rail track and the roads get more congested as a consequence. This of course puts heavy pressure on the growth ambition. On top of this we have truck bans. These bring a special negative dimension to our daily operations and planning. All of this increases cost tremendously and reduce demand fulfillment. What are the target markets for your company? Arasco Feed provides with success two distinctively different markets in animal nutrition in the Kingdom. At one hand, a traditional market where trust plays a key role and at the other hand a very advanced market in which best of the world's nutrition experts take responsibility for the feeding schemes, hence a technical market. The more traditional market comprises camels, sheep, goats and pigeons, while the technical market is about chickens, dairy & beef cattle and aquaculture. As a consequence we have built competences in distribution management for the more traditional markets and specific nutrition expertise for the technical markets. Our role in horse feeds is relatively small, albeit that we have a very good understanding of what it takes to feed thoroughbreds and breeding mares. Tell us the story of Arasco Feed. Arasco Feed is a fascinating business that originates from the inception of Arasco in 1983 and became the backbone of the company in 1987 when the feed mill in Al Kharj was established. Nowadays Arasco Feed has the most modern and largest feed mills in the world which reflects a tremendous growth in a period of only 33 years. And we are not there yet, our strategy puts us at the heart of food security in the Kingdom. With a growing population and the requirement to reduce the water footprint of food production that is not an easy mission. But we know how to do it and execute our strategy with conviction, and success. How does the company operate? We operate feed mills in Dammam and Al Kharj and a feed phosphate operation in Al-Khobar. We are in process to focus more and more on the activities that are essential for animal nutrition and leave important but not core activities to our sister companies like IDAC Merieux and Arasco Logistics. Product innovation, quality assurance, biosecurity and a best in class business process drive our core activities procurement/manufacturing/sales next to a constant dialogue with our customers. We produce affordable and nutritious feeds from natural raw materials. We do not use antibiotics or hormones. All of this enables us to take a leading position in our markets.
