- $40 million grain silo in Algeria set to open later this year
- Grain stockpiles enough to meet U.A.E. demand for 3 months
Al Ghurair Resources LLC, the agricultural commodities trader owned by the richest man in the United Arab Emirates, will add another grain silo in Algeria to its holdings by the end of this year as part of a strategy to secure food supplies for growing populations from the Middle East to Asia.
The $40 million storage unit will have capacity to hold 165,000 metric tons of grains, Essa Al Ghurair, chairman of Al Ghurair Resources, said in an interview in Dubai. It will add to the company’s existing grain-processing mill in Algeria and others in Sudan, Lebanon, Sri Lanka and the U.A.E., where sister company Al Ghurair Foods owns the nation’s largest flour mill with capacity of 2,400 tons a day.
Food-security threats due to lack of rain water and swelling populations are forcing investors to look farther afield as a warming climate plays havoc with global agriculture production. U.A.E. crop production has fallen since 2007 and the population will exceed 10 million people by 2017, according to an October report by the business advisory company MEED Insight.
“Wherever we have a silo we act as food security, providing grains,” Al Ghurair, 58, said.
Al Ghurair Resources is part of Dubai’s Al Ghurair Investment LLC, founded half a century ago by Essa’s father, Abdullah Al Ghurair whose net worth of $6.7 billion makes him the richest man in the U.A.E., according to the Bloomberg Billionaires Index. The list doesn’t include royalty or rulers where wealth is held by the state.
Al Ghurair Resources will trade about 5 million tons of grains this year valued at about $3 billion, with sales growing 10 to 15 percent a year, the younger Al Ghurair said. It holds 300,000 tons of grain in Dubai, enough to feed the U.A.E. for three months, and has 30,000 tons of wheat dedicated to the U.A.E. government. “Now is the right time for the government to hold stocks of material because the price is cheap,” he said. Chicago wheat futures have dropped 11 percent in the past year. Al Ghurair Resources gets wheat from Ukraine and parts of Europe, and is looking for more suppliers, he said.
Al Ghurair is probably the most active U.A.E. company trying to assure food security for the nation and meet the government’s goals of reducing reliance on imports, according to Sari Alabdulrazzak, advisory head of MEED Insight in Dubai. “That’s why Al Ghurair and state-owned companies are identifying investment opportunities in agriculture markets abroad. Africa is very attractive and I believe that Egypt will become attractive once again.”
U.A.E. crop production has declined since 2007, from almost 3 million metric tons of vegetables, fruits and field crops to 522,804 tons by 2013, according to a MEED Insight report on Oct. 28, citing latest government data. Agricultural land dropped to 3,823 square kilometers (1,476 square miles) from 5,376 kilometers over the same period, as the population is forecast to exceed 10 million people in 2017 from 8.3 million in 2010, according to the report.
“My focus is on the resources which have been growing,” Al Ghurair said. “We are not only a trader but also a processor in wheat milling and crushing, and this gives us the edge to meet our own requirements and our region’s requirements.”
Al Ghurair is seeking partnerships, rather than acquisitions, to keep growing, he said.
“We don’t have acquisitions but partnerships,” he said. “This is capitalizing on other people’s knowledge of the market to complement each other.”