Anderson said it timed the announcement of the JV to coincide with attendance at the AgraME show in Dubai. The company produces hay and forage products for livestock and horses.
A company, Agrivita Marabe, is in the process of being set up - Anderson said the forage products will be distributed using that brand label.
The US feedstuffs exporter is expecting to have a solid presence in the Middle East arising out of the JV.
“This new initiative compliments the global presence of Anderson Hay and Grain as we expand our business through key strategic partnerships with regional industry leaders,” said Mike Trua, Anderson CMO. “We have strong results in Japan, Korea, and China, and through our [joint venture] with Agthia, will serve customers and lead the market in the GCC and Middle East.”
Both companies said they expect the JV to support the regional farming industry and to improve food security in the UAE and GCC areas by enabling access to "high quality" livestock feed.
Abu Dhabi headquartered Agthia, which has 50 types of animal feed products targeting the ruminant and poultry segments in its Agrivita portfolio, said the combined strength of both parties will provide a solid supply and distribution alternative in the UAE and the GCC markets that "would be difficult to achieve working independently.”
“At the roots of this company [Agthia] lies animal feed,” said Tariq Al Wahedi, acting CEO of Agthia. “This joint venture is another step in this direction, complementing our existing animal feed portfolio and providing a full-service solution to our livestock customers in the UAE.”
Ban on grasses
The company said imports of alfalfa and hay increased from 2006 as the government in Abu Dhabi introduced a gradual ban on local cultivation of animal feed grasses, including alfalfa, as a way to protect underground water reserves.
To augment the shortfall in local production, the government entered the global hay importers market, awarding 600 thousand metric tons of hay to importers to be sourced globally. Agthia reported that, over the years, the scheme has been extended to benefit farmers across the UAE, with imports of hay reaching 2.5 million metric tons per year in 2016.
Financial performance
Agthia reported net profit of AED 254m ($69.1m) in 2016, an increase of 10% on the previous year, with net revenues rising by 8% to over AED 2bn. The group’s animal feed business is the largest, representing 33% of total revenues in 2016. However, net revenues for the feed business at year end December 2016, were AED 669m - a decline of 2% versus the previous year.
The listed company said both its feed and flour businesses were subject to a change in the subsidy regime in 2016 that has been in place since 2007 in Abu Dhabi. The group said it responded to that development by deploying initiatives to protect volume, ranging from the introduction of more competitive product lines to expanding distribution in especially the northern emirates and export markets, which, it claimed, helped partially mitigate the adverse impact on volume and profits.