SAUDI ARABIA – UAE-based agro-technology company Veggitech is exploring the potential for expansion into Saudi Arabia, according to a senior executive.
According to the executive, the company is planning to establish a farm on land owned by its parent company, SNASCO Investments.
“The Kingdom of Saudi Arabia is booming, and we see big opportunities to set up a farm in Jeddah, where SNASCO is headquartered. The project will be built on our land, which spans approximately 50,000 square meters (sqm),” says Rami Nairat, Group CFO of SNASCO Investment.
“We are currently in the study phase and considering investments ranging from 15 to 20 million UAE dirhams (USD 4.08m to USD 5.45m). We are exploring various possibilities, including equity, banks, and other options.”
Veggitech’s plan to expand in Saudi Arabia is backed by the increasing demand for its products in the Gulf Cooperation Council (GCC).
“Our sales growth is 200% year-over-year, and we have so many projects in the pipeline. In the future, we plan to expand our portfolio of 25 products under the well-loved Veggitech brand. The demand for our products exceeds our current supply capacity,” adds Nairat.
The projected population growth in the GCC to 58.3 million by 2030 and 72.3 million by 2050 has led to a search for food production methods to address the region’s climate challenge, as highlighted by Valentina Olabi, a Research Specialist at the Gulf Petrochemicals and Chemicals Association (GPCA), in her article titled “Farming for the Future: Hydroponics’ Role in GCC’s Path to Food Security.”
According to Nairat, using under-utilized farmland could be a crucial component of the food security program in the region.
In another development, Veggitech has revealed that it is in discussions with the Ministry of Climate Change and Environment (MOCCAE) and a leading local bank to secure funding for a pilot project. This project would be implemented under a new BOT (Build-Operate-Transfer) model.
Nairat said that the company will first conduct a study of the farm and then introduce the local owners to the bank for loan approval.
“The loans will start at 1 million UAE dirhams (USD 272,257) and can increase depending on the size of the project,” explains Nairat.
“We will then take over the farm, upgrade it, start production, market, and sell the produce under our name for the duration of the BOT. Afterward, we will return the farm to the owner for them to run it themselves.”
He noted that the model aligns with the vision of the SNASCO Chairman regarding the group’s social responsibility towards the region and its efforts to enhance post-pandemic food security ambitions.
“This will eventually lead our company to better business sustainability. In terms of the bigger picture, we are confident about the BOT model because the UAE government is seeking new opportunities to create jobs for Emiratis and ways to assist them in generating revenue,” he concluded.