Sheik’s new agro firm shells out $80m

Addis Fortune | 12 October 2009

Al Amoudi has a new company whose purpose is to grow food in Ethiopia for Saudi Arabia. This company has paid 80 million dollars for Caterpillar agricultural machinery and equipment. Its plans to increase its holdings to 500,000hct are preceded by the short term plans to acquire 200,000hct from various regional states in the country. WUDINEH ZENEBE, Special to Fortune reports that the company will add more crops as it increases its territory to include maize, teff, sugarcane and oil seeds.

By WUDINEH ZENEBE

Special to Fortune

Saudi Star Agricultural Development Plc, Sheik Mohamed Al Amoudi’s newest company formed to grow food in Ethiopia for Saudi Arabia, paid 80 million dollars for the delivery of Caterpillar agricultural machinery and equipment.

The receipt of the money was confirmed by a letter sent to Haile Assegdie, director general of Saudi Star, and Alemayehu Mengesha, managing director of Ries Engineering SC, by Philippe Bory, finance manager of Near East Financial Corporation.

Saudi Star and Ries signed the agreement on August 13, 2009. Paul Ries is the sole agent of Near East Financial Corporation, which is the dealer for Caterpillar products. These products are manufactured in the United States, Europe and Japan, from where they are expected to be delivered to Saudi Star.

Saudi Star’s was the largest order ever for Ries, which was established in 1974 Alemayehu said.

“We supply products to the Ministry of Defence and Salini; but this is the first time we are getting an 80 million dollar order at once,” he said.

Saudi Star was registered at the Ethiopian Investment Agency on August 20, 2009, with a capital of 500 million Br.

The company plans to increase its land holdings to 500,000hct over the next 10 to 15 years, which could cost the company three to five billion dollars, according to Haile. Its short term plan is to acquire 200,000hct from various regional states in the country.

So far it has only received 10,000hct in Alwero, in the Gambella Regional State, where it plans to grow rice. This farm will use the Alwero dam, which was constructed by the military regime to grow cotton in the area.

Saudi Star is the first company that is benefiting from a decision of the Council of Ministers allowing private investors to utilize irrigation dams and canals made by the government. The Alwero dam had been idle for 18 years.

While Saudi Star is waiting for the delivery of the machinery, it has commissioned the Agricultural Equipment & Technical Services SC (AETS), a state enterprise, to clear 1,000hct of land from the Alwero site for a payment of 9,000 Br per hectare.

“We are trying to get a contract to uproot the tree stumps in the area,” said Teferi Belay (PhD), acting general manager of AETS.

The land given to Saudi Star Plc is covered by a medium-dense forest of juniper and other indigenous trees and is land that will be used to grow rice.

The company will add more crops as it increases its territory including maize, teff, sugarcane and oil seeds.

Saudi Star presented a sample of rice to King Abdullah Bin Abdul Aziz of Saudi Arabia, who liked it enough to give him the order.

Saudi Star will also supply the local market as the company looks forward to harvesting one billion tonnes of various crops, Haile says.