Almarai buys US land for its hay harvest
Almarai has bought farmland worth US$31.8 million in California as the government halts the growing of green fodder in the kingdom.
The dairy company has bought 724 hectares in Blythe, California, through its Fondomonte unit. Of the land bought, 643 hectares are currently cultivated. Alfalfa hay grown on the land will be used to support Almarai’s dairy business.
“Almarai is committed to invest into the necessary infrastructure, including a bailing system and logistics and transportation equipment necessary for the efficient supply of alfalfa hay from its US-based facility into [Saudi Arabia],” the company said in an announcement on the Saudi stock exchange.
The transaction will be financed from the company’s own resources. In 2014, Almarai bought 3,979 hectares of farmland in Arizona through Fondomonte for US$47.5m.
The latest purchase comes as the Saudi government seeks to halt growing green fodder in the kingdom. The government is also aiming to implement reforms in energy subsidies.
California itself is battling water scarcity and desertification. Last year’s drought in the US state is expected to cost $2.74 billion in losses across economic sectors and 21,000 jobs, according to a report from University of California, Davis. The effects of continued drought in California through next year will worsen by 6 per cent compared to last year, it said.
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Updated: January 10, 2016 04:00 AM