Cargill, Arasco to set up starches and sweeteners joint venture in Saudi Arabia

American agribusiness firm Cargill and Saudi Arabia-based food company Arasco are planning to set up a new starches and sweeteners joint venture in Saudi Arabia.

The new joint venture company will acquire Arasco’s existing corn milling facility in Al Kharj and produce starch-based products.

It will cater primarily to the Gulf Cooperation Council (GCC) countries of Saudi Arabia, UAE, Kuwait, Oman, Qatar, Bahrain, as well as Yemen, Iraq and Jordan.

The joint venture, which marks Cargill’s first foray into Saudi Arabia, will combine Arasco’s local knowledge and supply chain infrastructure and Cargill’s global capabilities in food ingredients.

Following the agreement, which is subject to regulatory approvals, Cargill will hold a 20% stake in the joint venture, while Arasco will take an 80% stake and management control.

Cargill executive vice president Frank van Lierde said the rapidly changing demographics in the Middle East region, and the growth of consumer choice, means that the joint venture will be well placed to help customers meet this rapidly developing market.

"By partnering with Arasco and combining the strengths of both our companies, this joint venture will not only help us create enhanced solutions for our customers but, most importantly, local solutions," van Lierde added.

Arasco chief executive officer Dr. Abdulmalik Alhusseini said that through the joint venture, the company will be able to expand its facilities more quickly and launch new products, such as high fructose corn syrup (HFCS), in Saudi Arabia.

Cargill and Arasco plan to triple production at the Al Kharj facility in order to address the increasing demand across the confectionery, juice, bakery and catering markets in the region.

Following the capacity expansion, glucose and starch production capacities will more than double and HFCS will be added to the product portfolio.

The joint venture will also seek to expand its food ingredient solutions based on customer demand.