BinDawood Considers Investing in Lithuania’s Dairy Sector

BinDawood Holding, one of Saudi Arabia’s largest food and retail groups, is considering investment in Lithuania’s food-processing industry. Its chief executive, Ahmad BinDawood, said the group was reviewing both a direct investment in a new factory and the use of existing infrastructure to supply Saudi Arabia and other countries in the region.

Agriculture minister Kęstutis Mažeika said the company was focused on two options: constructing a dairy plant designed for its requirements or buying all or part of an existing processing business. Lithuania has four major dairy processors. The government has pledged support for the investment plans, according to Prime Minister Mindaugas Sinkevičius.

BinDawood said Lithuania’s investment environment and food quality had attracted its interest. Mažeika said production and packaging in Lithuania could give local dairy products greater access to Saudi Arabia and neighbouring regional markets.

The possible investment comes as Lithuania’s dairy industry contracts. The number of dairy cows fell by about 2,000 last year, and farmers have continued to shut farms after years of low milk prices. Eimantas Bičius, director of the Lithuanian Milk Producers Association, said Lithuania had one of the lowest milk purchase prices in the European Union. He said the Netherlands produces approximately as much milk in one month as Lithuania produces in a year.

Mažeika said the arrival of another major company could alter competitive conditions in the sector. He said greater competition could benefit consumers and allow the price paid for raw milk to reach a level covering production costs. Bičius said stronger demand from Saudi Arabia or other export destinations could also support milk prices. He noted that EU milk output was rising while demand was declining, a combination he said was putting downward pressure on prices.

Farmers remain sceptical that the proposed investment will lead to immediate change. Bičius referred to earlier discussions about expanding dairy exports to China and other countries that did not produce major results. He said farmers would find the plan difficult to trust without concrete actions or agreements. Mažeika said expansion of Lithuanian dairy herds could eventually become possible, while farmers said rebuilding them would require several years of stable milk prices and predictable market conditions.

The investment discussions coincide with expansion by a Lithuanian processor abroad. Vilvi Group, one of the Baltic states’ largest dairy producers, opened a new plant in Latvia in the spring.