September 5, 2017 at 3:32 p.m.

Farming in the desert

Garcia visits Saudi Arabia to promote U.S. distillers grains

By By Alvaro Garcia- | Comments: 0 | Leave a comment

RIYADH, Saudi Arabia - The fact that there were dairy farms in the middle of the Arabian Desert had always been a challenging thought for me. Not that it was something that couldn't be solved through technology, but the question was how it could be done profitably. So when this May I was offered the opportunity to visit Saudi Arabia to review nutrition programs and promote the use of U.S. distillers' grains, I accepted without hesitation. Two U.S. Grains representatives also came along and we made base in the capital, Riyadh, right in the middle of the Arabian Peninsula.
Saudi Arabian dairies have no reason to envy top U.S. dairy farms. The cow genetics are there, a fact that is easily corroborated by the production observed in leading operations. In addition, several of these dairies have U.S. dairy consultants. It was a glad surprise to find that one of SDSU's recent graduates was the nutritionist at one of them.
One aspect that immediately grabs the visitor's attention is the scale at which these dairies operate. When asked there about the size of some large dairies in South Dakota, I made reference to 2,000 and 4,000-cow farms. Their comment, half-serious and half-joking, was: " farms!" In the lines that follow you will understand the reason for their comment.
Al-Marai is their largest dairy operation with 60,000 milking cows and 120,000 head of cattle total. Housed in a handful of farms, the company markets a range of food and beverage products under the Almarai brand, principally through retail outlets. The product range includes fresh and long-life dairy products, which primarily consist of fresh milk, cheese, butter, fruit juices and some other non-dairy products. All the dairy products to which we are accustomed can be found in the Saudi market, although cheese is number one by volume with nearly 40 percent of the market. This is followed by fluid milk at roughly 25 percent, and drinkable yogurt (laban) at 11 percent.
The second large farm we visited was the National Agricultural Development Company (NADEC). It's constituted of four dairies with a total of 24,000 milking cows. This company is 20 percent owned by the local government with the balance in the hands of the local public. NADEC's goals are to reduce the dependence of the country on imports, increase the dependability of the national economy and increase the contribution of agriculture to the Gross Domestic Product of Saudi Arabia.
The world's single largest integrated dairy operation (proudly displayed in their offices with a certificate from the Guinness Book of World Records) is apparently Al Safi with 37,000 cows on just one farm. They are located in the Al Sahba Valley, approximately 60 miles south-east of Riyadh. At present, the company has approximately 8,650 acres and has 1,400 employees. It is a fully integrated farm from the growing of forage to the final distribution of milk and dairy products. In addition, the farm has established an integrated private factory that processes and packages fresh milk and long-life milk, as well as its various subsidiaries. In 2001, Al Safi formed a joint venture with the International Danone Group for the processing and distribution of their dairy products. Their products include UHT milk, flavored milk, juice and milk mixes, cream, Danino (flavored cream cheese meal for children), laban (drinkable yogurt) and yogurt.
There are two big challenges to the Saudi dairy production systems: the ambient temperatures and the limited water resources. Hot is not a strong enough word for what people and cows feel there. Cows need to be cooled off regularly with sprinklers and soaked in the holding pen. Water is needed not only to cool the cows but to irrigate (center pivots) the areas where alfalfa is grown. This water is labeled "fossil water" (Pleistocene period) and it comes from as low as 3,000 feet.
Milk prices for the producer were between $16 and $17 (USD) per hundredweight, similar to that received by U.S. dairies in May 2012. Similar to our situation, Saudi production costs have risen because the costs of feedstuffs have gone up by 40 to 60 percent compared to last year. In addition, the Saudi government is pressuring farmers to reduce the local production of forage because of the amount of water used. The forage base of dairy cow diets is mostly alfalfa (no silages are produced). Strangely enough, the word alfalfa originated as "al-fisfisa" which means "fresh fodder" in Arabic. This word was then modified in Spain to "alfalfez" during the early Christian conquer of large territories occupied by Muslims rulers in the 11th, 12th and 13th centuries AD.
Diets are very similar to what they would be in certain parts of the U.S. and usually are composed of 50:50 to 60:40 concentrate to forage ratio. The concentrate fraction is mostly made of corn or sorghum, soybean meal, cottonseeds, and other feeds in minor concentrations. So, if milk prices are similar to those in the U.S. and feed prices are also high, how do they remain competitive? The main reason is because of government subsidies (Table 1).
In fact, some dairies we visited with had a hard time telling us how much they were receiving for their milk but knew right away how much subsidies were. The lower the price paid for a feedstuff the more money there is to be made with the subsidies. There are other reasons though, why producers may remain profitable in a market with a great demand for milk. The following excerpt came from the "Saudi Gazette." Can you find any difference with our milk market?

One similarity with our larger dairies is their need to rely on migrant employees (mainly from the Philippines and Egypt) to fulfill their labor needs. There is little interest from Arab nationals to work in dairies.
This trip was very interesting and gave us very valuable insights. First of all, we made excellent progress in the incorporation of U.S. ethanol co-products in their cow diets. In addition, we were able to establish a potential working relationship between South Dakota State University and researchers at King Saud University, the largest public institution located in Riyadh, Saudi Arabia. There is funding available for joint research projects that will favor both countries. Finally, there was the realization that the SDSU Dairy Science Department has produced highly competitive professionals within the U.S. but that also contribute internationally to reduce global food shortages.
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