Baladna, Philippines partner for $500mn dairy project

*Qatar’s largest dairy producer to further expand into Southeast Asia *Philippines deal follows MoU with Indonesian entity and Malaysia

Baladna has said it looks to further expand into Southeast Asia following the signing of a deal with the Philippine government for the establishment of a $500mn integrated dairy facility in the Philippines.The Philippines has partnered with Baladna for the project through the Department of Agriculture (DA) and Department of Trade and Industry (DTI)."This week, the Philippines government has announced the signing of a deal with Baladna with the goal of improving the Philippines' self-sufficiency in dairy, which currently stands at less than 2%," the company said in a statement Wednesday. Last month, Baladna had signed a memorandum of understanding (MoU) with the Indonesian government-owned entity Berdikari Group, and last year with Malaysia."Baladna is continuing to see traction in Southeast Asia and, in March, Baladna teams will be present in all three countries," the company said.Baladna stressed that it has a proven track record of producing high-quality milk in similar high heat and high-humidity environments and achieved world-class yields for such environments. Baladna cows produce, on an average, 40 litres of milk per day.Baladna Chairman Moutaz al-Khayyat said, “We are proud to partner with the governments of the Philippines, Malaysia and Indonesia to transfer Baladna’s know-how and business model. This will ensure that the countries' fundamental nutritional needs are no longer majority dependent on imported milk powder. With the support of our shareholders, we are increasingly transitioning to a truly international company. We look forward to sharing Baladna's experience and growing our footprint in Southeast Asia as part of our international expansion plans.”DA secretary William Dar, who was present during the signing event with DTI secretary Ramon Lopez and Baladna independent board member Aidan Tynan on February 11 in Dubai, the UAE, said: “The DA, through the National Dairy Authority (NDA), fully supports and welcomes this new initiative as this will help jumpstart catalytic investments in the Philippine dairy industry to contribute to food security, local milk production and processing leading to agri-industrial development."In his presentation, the DA chief reported that the majority of the country’s annual dairy requirement is supplied by importers and processors, as the Philippines is a big importer of dairy products, particularly milk powder.He added that, in 2020, the Philippine dairy industry was characterised by increasing local milk production and decreasing imports and exports of milk and dairy products. The local milk production reached 26.71mn litres, an increase of 9.5% from 24.38mn litres in 2019. Baladna is into raising livestock and the production of dairy products, including milk, yogurt, cheese, labneh, cream, dessert, juices as well as animal fertilisers.The company is Qatar’s largest locally-owned food and dairy producer, supplying more than 95% of the country’s fresh dairy products. The firm now owns more than 24,000 Holstein cows on its 2.6mn sqm facility with 40 state-of-the-art barns, according to a statement by the Philippines' Department of Agriculture."Baladna has expressed its interest in setting up a large-scale and fully integrated dairy facility in the Philippines designed to be climate-independent using world-class management systems," the DA said. The project will significantly increase local milk production by 120mn litres from the current milk production of 26.71mn litres. This will be bringing the Philippines’ total milk production to 146.71mn litres, thus contributing to addressing the local demand of 2,927.04mn litres, of which the bulk is imported.“The investments will be able to generate 2,000 new jobs during the initial phase of its first full year of operations, providing significant opportunities for domestic employment,” Dar said.According to the DA statement, Baladna underscored that their main consideration for supporting the Philippine government is to level the playing field and foster domestic dairy production.Meanwhile, the support of DTI, through the Board of Investment, is through the facilitation of incentives under the Corporate Recovery and Tax Incentives for Enterprises law, which may also be extended to manufacturers who will be sourcing locally their inputs.The DTI and DA have also agreed to work together in looking at measures that will level the playing field such as implementing proper labelling of fresh milk.“The DA has already identified five possible locations for the Baladna project and welcomes the Baladna team in the next few weeks for the site visit in the Philippines. The DA will continuously provide the needed support to fast track the implementation of this project in co-ordination with the DTI and other partner agencies,” Dar added.Also present during the presentation of the signed MoU were Acting Public Works and Highways Secretary Roger Mercado, and Labour Secretary Silvestro H Bello III.Meanwhile, Baladna noted that dairy farming globally is facing increasing challenges as a result of an ageing farming demographic, low milk yields in developing countries where farmers typically keep only two or three cows, declining milk self-sufficiency ratios globally and climate change related methane restrictions on the future expansion of dairy herds.Dairy commodity prices are all at five-years highs with skimmed milk powder prices having doubled over the past two years."With a growing global population and increasing demand for dairy products, vertically integrated large scale dairy companies such as Baladna are well positioned to meet this growing demand," the company said. "Baladna’s goal in international markets is simple - to produce the highest quality milk at the lowest cost per litre by being fully vertically integrated and by maximising economies of scale."