The Saudi announcement presents a major opportunity to expand the range of distribution channels for our livestock and meat products.
The South African agricultural sector has been buoyed by the recent news that Saudi Arabia is to resume imports of lamb and beef from our country, after an interval of more than 20 years. The opportunity is a massive one, and reports are that shipments are due to start in a matter of weeks. The effects of this policy announcement will be felt well beyond the agricultural sector, as beef production has numerous stakeholders in adjacent industries as well as the financial sector.
From our perspective at Al Mabroor Select Meats, a vertically integrated business in the meat sector and supplier of halal-certified meat products in South Africa and abroad, the announcement was anticipated, but extremely welcome.
We have long been involved in business development within the Gulf region, and we have been pursuing several exciting prospects. Sample loads have already been sent to areas like Qatar and Kuwait, and we have already begun talks with Saudi Arabian importers.
As cattle farmers, we breed livestock, which we provide to abattoirs. However, our vertical integration strategy means we can process our production into a range of meat products tailored to particular domestic and international markets.
Although the Saudi policy announcement was made recently, South African meat producers have had relationships with Saudi Arabian buyers for many years. It was not altogether unexpected that this lucrative market would open up again, after imports were suspended in 2002. Thanks are due to industry players such as Karan Beef and the Department of Trade and Industry for helping to resolve the last outstanding issues.
For South African beef producers in general, our product has not changed at all. All that has been required has been some adjustments from a traceability and provenance standpoint and some updates to the halaal compliance protocols.
With Saudi Arabia having recently joined the BRICS group of developing nations, the regulations and customs requirements for exporting to the country are also likely to become even more streamlined. Certain tariffs will fall away, and there will be less paperwork and fewer delays. Saudi Arabia and South Africa will become like virtual neighbours. At present, we are planning to export carcasses, but as more trade agreements are concluded, we expect great potential for exporting livestock and other agricultural products.
This is a significant development for the agriculture sector at large, and it is an exciting time to be in the industry. Saudi Arabia is a well-developed market economy, with multiple import businesses, offering vast opportunities for South African beef producers. It will also benefit financial investors in that their investments in the beef sector will become more predictable and secure, with export markets now easier to find. Exporters have more options, and a wider range of potential business partners, which will make for less volatility.
From an international investor perspective, the Saudi announcement will have a major psychological impact, boosting confidence in South African exports across the economy. As a Sharia-compliant fund, Al Mabroor and its sister companies are now well positioned to grow exports to Saudi Arabia. With the country being a leader in the Arab community and amongst Islamic nations, a Saudi vote of confidence will also enhance our opportunities within these trading blocs. As agricultural economist Wandile Sihlobo recently noted, the upside of this opportunity is enormous. Saudi beef imports are worth around $647 million (approximately R12 billion) annually, while South Africa currently exports a total of $132 million (approximately R2bn) worth of beef a year.
This allows meat producers the ability to scale, secure in the knowledge that there is demand for their product. In fact, there are large opportunities at every level, and it will require real levels of collaboration across the system to meet this potential demand. Synergies are vital, and all players in our sector are working overtime to ensure we leverage and supplement what we're currently doing to convert this massive growth opportunity.
ADNAAN PATEL CEO of Al Mabroor Select Meats.
Saturday Star