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Largest dairy farm in world? In KSA, of course 23, April 2010

Posted by thegulfblog.com in Saudi Arabia.
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The Centre for Strategic and International Studies’ monthly newsletter informs slightly incredulous readers that the largest dairy farm in the world is in Saudi Arabia. Indeed, it is over twice as large as the largest American equivalent. Stuck in the middle of the desert with 37,000 cows, the farm uses cooling water AC to keep the cows at a pleasant temperature.

In the height of last summer I went to a dairy farm in Kuwait that also used a similar system. Imagining the farm that I saw scaled up thousands of times beggars belief. The sheer amount of water needed to keep the farm working is staggering. The newsletter reports that it takes a whopping 2300 gallons of water to produce one gallon of milk, three times the US’ average.

In Saudi of all countries, who are in the midst of abandoning old water-hungry agricultural projects, it is near impossible to see this venture continuing. Though, ironically enough, perhaps its best hope for its future lies in the glacial pace that Saudi does – well – pretty  much everything.

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1. AbuArqala - 23, April 2010

This sounds a lot like SAADCo (an aptly named project) started by Amir Muhammad Bin Abdullah AlFaysal in the late 70′s. Original partners were a Lebanese fellow and a Scandanavian dairy company.

Perhaps the successor company?

SAADCO had problems from Day #1. First, a bit of a misunderstanding (some would say fraud but I am not the sort of fellow to use that term). The financing of the transaction included a letter of credit mechanism for the importation of cows. Drawings under the LC then were refinanced by the loan. The project company was to build its own facilities – including an innovative water mist system to keep the cows cool. After its first year, the project declared a huge profit. Picky folks who read the financials noted that this was the profit the project company declared on the building of the project’s infrastructure. According to the company and its agreeable auditor, since the company was building its own facilities (in effect contracting with itself) it should recognize a profit. Some of the small minded foreign lenders thought this wasn’t particularly proper. A bit of investigation and they discovered that the number of cows at the project was well below plan. That’s when they discovered that the LC agent – at the time a prestigious US bank now successively swallowed in serial mergers – had allowed the company to use the LCs for other than the importation of cows without bothering to ask the other lending banks for their concurrence.

It also seemed that the project had its calving season off – so that it was producing most milk during the “frigid” winters of Saudi when demand was low. Hence, it was literally dumping milk in the desert.

Then there was a small problem with making sure the collections for the milk sold actually got into the company’s coffers.

A rather famous case study from when I was a newbie in a credit training program. One grey beard said the Lebanese (who was the purported marketing whiz hired to promote the company) showed up to the loan signing wearing gym clothes. And when he sat down to sign, at least one of the lenders claimed to be able to see all the way to Baalbek.

The workout proved to be equally interesting when the Governor of Riyad failed to serve a summons on Amir Muhammad. But space is limited here.

davidbroberts - 23, April 2010

That’s quite some heifer-related knowledge there…mabrouk. I think you have clearly missed your calling in life.

On a more general note, if you’ll excuse a mildly absurd generalisation, but are there any real success stories in…err…the whole Middle East? Of indigenously started and led companies with a bit of foreign expertise, that don’t spectacularly mess up? I suppose it could be that such companies are just not much of a story, so to speak. Or is the rentier malignancy just that profound? Does any company (outwith hydrocarbons…one would have to really work not to sell those) leap to mind as a great example of successful and dynamic entrepreneurship?

As always, thanks for taking the time to comment.

2. AbuArqala - 23, April 2010

Some off the top of the head comments on private firms.

Abdul Latif Jameel – took what was considered a second rate product (a Japanese car the Toyota) into Saudi (dominated by US brands) and made a success even though the Saudi Govt imposed a modest profit margin

Zahid Tractor – Caterpillar distributor that successfully navigated the collapse in the construction industry (1983). Unlike many of its peers did not go through a restructuring,

AlGosaibi Bottling was a long time success (Pepsi). Certainly much better than Kaaki with Coke.

These firms largely escaped the great recession in Saudi in the 80′s with their reputations for business sense and integrity intact.

Saudi Oger (though one may argue that Harriri Pere had some unique advantages in getting those government contracts). Construction work well done and one time.

CCC – Lebanese origin but built itself a pan Arab franchise in construction and if I’m not mistaken has done some work in one or more of the Stans. Pipelines and other construction.

Arab Bank Limited – which had the handicap of having its home country occupied away from it. And then building a world class operation from a country “on the margins”.

National Bank of Kuwait – has by and large avoided the typical Kuwaiti problems. Built a solid franchise outside of the country.

Alba – Ignoring the pollution (but that’s a common industrial story) and the allegations of corruption. Profitable business. Also one of the few GCC countries where nationals actually work in the factory!!

Jashanmal (retailing).

AlFuttaim to some extent (though they might be overextending with all the expansion)

And finally by way of context, some of our illustrious home grown companies have royally messed up. Financial sector firms who are serial bankrupts (though prevented from becoming so by compassionate governments).

3. AbuArqala - 23, April 2010

A visit to the farm along with a bit of hoe down music at the end. There’s quite a lot to be said for the comparison of Saudi to Texas. In more ways than one.

The scene of the cows in the covered area – the pipes deliver a fine mist spray to cool the cows. In the low humidity the mist evaporates quickly.

DeLaval seems to be the successor of the original partner Alfa Laval.

davidbroberts - 23, April 2010

Again, that’s quite some knowledge that you’ve got at your fingertips. You should work professionally on this stuff or something…

That’s a fascinating list. It is interesting to have an expert point out examples of best practice for once, as opposed to the usual highlighting of mistakes by the press (and me…). I’m particularly intrigued by NBK’s success. Kuwait always seems to suffer acutely from severe rentirism to me, so for a savvy businessman to eschew its grip and forge on ahead in Kuwait where so many are so co-opted and ‘useless-ified’ by it is a real credit.

Cheers

4. AbuArqala - 23, April 2010

My take on NBK is it’s largely due to one man – Ibrahim Dabdoub.

Time and time again when all around him are enraptured by irrational exuberance (a sort of national characteristic of our friends up North), he calmly says “No”.

It’s a real problem when you’re in a small market (Kuwait) with a dysfunctional political system, a highly refined rentier mentality at play, and what might charitably (and I always try to be charitable) described as a “cowboy” business mentality.

What’s sad is that MAK seems to have donned chaps and spurs of late.

5. AbuArqala - 23, April 2010

BTW the real water wastage in the Kingdom was the center pivot irrigated wheat farms which I believe are now just an unhappy memory.
Another food independence project.

The absolute worst way to irrigate crops in sunny Saudi.

It used to be when you flew over certain regions in the Kingdom you’d see the green circles in the midst of the desert.

6. David lepeska - 26, April 2010

Hey Abu –

I just checked out your blog, pretty interesting stuff there. I’m the Doha correspondent for The National and might like to chat with you for an upcoming story. Could you pass on your email? Not finding it on your blog page.

Thanks

davidbroberts - 26, April 2010

Anything financial or economicy (or I dare say a host of other topics) and he’s your man. Do I get some kind of finder’s fee?

7. AbuArqala - 27, April 2010

David

Here’s a bit more on water in Saudi, including some of those “crop circles” I referred to.

http://www.english.globalarabnetwork.com/201004265656/Economics/great-transition-saudi-arabia-planting-new-seeds.html

8. hamdi abd elmaguid elbaz sheir - 26, July 2010

i hope chance for jop in any dairy farm in gulf

9. CB - 21, December 2010

http://www.technologyreview.com/energy/26759/page1/

“Huishan, one of the biggest dairies in the country, imports 3,000 cows from Australia every month to sustain its massive stock of 250,000 cows”

China’s got them beat hands down.

10. Ibrahim - 23, July 2011

I like to work in your farm if possible.

thegulfblog.com - 24, July 2011

Again, I think you have misunderstood…

11. amarendraec2@gmail.com - 27, July 2011

if you will give me a chance to work in your farm , i will highly thankful to you……………..

thegulfblog.com - 27, July 2011

Gents……I DON’T OWN ANY FARMS!

12. Anonymous - 2, April 2012

it is nice to know that ksa having worlds largest dairy farm i want to work with the gulfblog for straw plz if any body get me with the MD of farm

13. Bruce Pat McLaughlin - 17, June 2012

I heard a dairy farm in Tasmania has 45000 cows .

14. Anonymous - 31, July 2012

Ammmmazing, unbeliveable it is good to hear that our brother country is # 1 in dairy farm in the world.I could only wish to work in it,but some how it will be accomplished if i export my product to this farm.
(KSA-Pakistan)

15. Balakrishna - 5, August 2012

To All Animal lovers.

With great pleasure I am requesting you all from a poor village namely D. Gonapaputtuga, Srikakulam Dist., Andhra Pradesh State, India that my this is my dream to develop a dairy form with Good quality Cows, Buffallos but I don’t have enough money to do so. That’s the reason I request you all if anybody sponsor definetly I will get success in my mission.

Thanks & Regards,
Balakrishna
9912007518
e_mail. budida.balakrishna8@gmail.com

thegulfblog.com - 12, August 2012

Good luck and all, but I fear you’ve got the wrong kind of forum.

16. jehangir khan - 20, September 2012

i am very happy to see your website it is surly the best company if i have any chance to work in this company i am very lucky i am lawgraduate having veternary asistent diploma ,artifical insemenation diploma and other cource and having a wast experience of dairy.poultry farming treatment as first aid vaccination i am working as a artifical insemenation tecnician i am a efficient . hardworker and sincire person GOOD BY

17. World's Larest Dairy Farm in Saudi Arabia - 13, October 2012

[...] cows, the farm uses cooling water AC to keep the cows at a pleasant temperature. continued. http://thegulfblog.com/2010/04/23/la…ksa-of-course/ Reply With Quote Quick Navigation Middle East [...]

18. World's Largest Dairy Farm... in Saudi Arabia of course. - 13, October 2012

[...] with 37,000 cows, the farm uses cooling water AC to keep the cows at a pleasant temperature. http://thegulfblog.com/2010/04/23/la…ksa-of-course/ Reply With Quote Quick Navigation Economics & Trade [...]

19. Tom Coleman - 11, August 2014

If this in fact is SADDCO i worked as a manager of this facility for a long time my unit was calves and heifers up until freshing and we never milked more than twelve thousand cows with about 8,000 head of young-stock unless they expanded a lot since i was there it would have been difficult for them to produce enough feed for that many cattle. The problems that where experienced at SADDCO where almost all due to corruption on the part of the saudis and a few of the vendors as for the actual difficulties on the ground level they where handled very well by highly skilled and i might ad very dedicated staff of americans english and a few swedish dairyman, crop producers, and veterinarians. As a matter of fact the former governor of Montana was the crop manager. I never remember dumping any milk we fed it to the calves! Our biggest problem for the first 2-3 years was foot and mouth disease which the cattle from the US and Holland had no vaccination history or immunity to at all once we pounded them with vaccine we took care of the problem. If any other Employees see this post let me know how you are.Tom Coleman tinkerpug02@yahoo.com


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