BRF-SA and Saudi Arabia’s HPDC Form Halal Joint Venture

Brazilian food processing giant BRF SA (BRFS3.SA) has established a landmark joint venture with Saudi Arabia’s Halal Products Development Company (HPDC), a subsidiary of the nation’s Public Investment Fund (PIF), according to a recent press statement.

Initially announced in October 2022, the joint venture has now come to fruition, with BRF holding a majority stake of 70%, leaving HPDC with a 30% share. This strategic partnership reflects BRF’s intent to shift from solely being an exporter to becoming a local meat product supplier within the Saudi market.

Over the decade concluding in 2022, Saudi Arabia had been importing an average of 564,476 metric tons of Brazilian chicken products annually, data from the Arab-Brazil Chamber of Commerce reveals. However, imports dwindled to 340,000 metric tons in the previous year, pushing Saudi Arabia to fourth place behind the United Arab Emirates, Japan, and China in Brazil’s list of top chicken importers.

The joint venture’s primary objective will be the development of the regional halal meat industry, about meat products prepared by Islamic dietary laws. This move follows closely on the heels of SALIC, a subsidiary wholly owned by PIF, acquiring a 10.7% stake in BRF through a follow-on share offering. The acquisition is a testament to Saudi Arabia’s sustained efforts to fortify its food security.

As part of this venture, BRF announced the establishment of a Halal Business Headquarters, a Halal Food Innovation Center, and a Center of Excellence, further underscoring its commitment to the Halal industry. The exact location of these new entities is yet to be disclosed. However, specific details regarding the investment amount to be allocated for these initiatives remain undisclosed.

Having a long-standing presence in the Middle Eastern market for over five decades, BRF has been incrementally strengthening its ties with Saudi Arabia. In 2009, BRF began its distribution network in the country, and just three years prior, it purchased a local food processing unit, thereby cementing its footing in the region.

With this latest joint venture, BRF is poised to leverage its substantial market experience and expertise in the Halal industry, aligning its operations closely with Saudi Arabia’s food security objectives and religious dietary requirements.