MENA-OECD Award Application

ARABIAN SHRIMP COMPANY

PROJECT DESCRIPTION:

The project developed, and is implementing, a world scale shrimp farm in Jizan in the southwestern part of Saudi Arabia on the Red Sea coast. The Project site -- located near several small villages, accommodates a scale of operations that economically justifies the vertical integration of related facilities for primary seed supply (hatchery), shrimp production, processing, and marketing using low environmental impact technology. The total of 8,500 hectares of land available at the site will be developed into 5,000-hectares of producing water surface, with associated channels and pumping infrastructure in several phases. Upon completion, this farm will

(a) employ over 3,100 people in a remote area (30% of them women in the processing plant),

(b) result in indirect employment of approximately 5,000 people,

(d) promote best environmental practices for long term sustainability, and

(e) act as a catalyst for growth of the aquaculture industry in Saudi Arabia,

(f) be one of the largest single shrimp farms in the world producing approximately 25,000 tons of high quality shrimp/year,

(g) process and market shrimp for both local and international markets.

The project was established under the auspices of the Saudi Economic Offset Program with direct assistance from the Saudi Arabia General Investment Authority and the support of the Ministry of Agriculture, and with 50% foreign ownership and 50% Saudi/Pan Arab ownership.

CONTRIBUTION TOWARD THE KINGDOM’S INVESTMENT OBJECTIVES:

JIZAN AND TIHAMA PLAINS REGIONAL DEVELOPMENT:

The project is located in one of the less developed regions of Saudi Arabia, which has high population growth with a tendency toward migration of the local population toward the major population centers. This migration contributes to the high urbanization rates in these population centers, thus increasing burdens on infrastructure and employment.
Upon completion the project will employ a 3,100 person work force of which 30% will be women, will create approximately 5,000 opportunities for indirect employment, and will foster the development of SMEs.
As the project is located in a remote area next to small villages, it will provide training and employment for the local population of these small villages, will stabilize the local population, thus inhibiting migration to urban areas, and will contribute to their economic growth and well being.

HUMAN RESOURCE DEVELOPMENT, TRAINING, AND EMPLOYMENT:

Timing: The project recognized from the beginning the requirement to train and employ the local workforce. Its training department was established at the start of the project and the training plan and capability is integral to the commercial success of the farm operations.
National Training Initiative: Active cooperation with Saudi Government organizations such as the General Organization for Technical and Vocational Training (GOTEVOT) will develop a national aquaculture training center to provide training for both men and women in the emerging aquaculture industry of Saudi Arabia.
Coordination leading to job access: The project’s internally developed and implemented training programs will quickly incorporate the local population into its work force. The training plan is made even more effective by establishing a direct linkage from training to full time employment for qualified graduates of its training classes.
Program Progress: The training program for the women for the processing plant has already been completed in Arabic and English, the program for the hatchery has been completed in English and is being translated, and the program for grow-out operations is in-process.
New Job Development: The project will create new employment opportunities for over 3,100 people upon commencement of full operations. At full operation the shrimp processing plant will employ 800 to 1000 women; many will have never worked outside the home before. As shrimp farming is a new industry in Saudi Arabia, these are new jobs, not replacement jobs for people already in the work force.
Actual Job creation: Although the company was registered in May 2005, it started actual studies and planning in late 2002 and implementation in mid-2004 soon as it made the necessary agreements with the Ministry of Agriculture. During 2005 the company was able to recruit and employee over forty specialists to fill the critical functions and start the implementation. Out of this total the company was able to recruit twelve Saudis, two in management, one in R& D, one women in training planning & supervision, and the rest in the Farm as heavy equipment and other Farm specialists.

CREATING EMPLOYMENT OPPORTUNITIES FOR WOMEN:

Gender Requirements in Saudi Workplace: The Saudi Government currently targets employment of women in the work force, but requires strict adherence to labor law and cultural practices. One requirement is gender separation of men and women in the workplace. A processing plant that will employ 800 to 1000 women is being built for the project. The processing plant is designed to both separate the genders and meet specific bio-security certification and operating requirements to qualify its products for export for the international market.
Bio-security and Gender Fit: The bio-security requirements require workday segregation of the work force inside the plant from those outside the plant. The plant design matches the bio-security requirements with those of Saudi law to isolate women during the working day. The implementation of gender segregation, combined with the higher degree of fine motor skills of women, make the processing plant an ideal environment for the employment of Saudi women. A detailed training plan has been developed for the women, and work visas have been approved by the Saudi Government authorizing the company to employ foreign women to start up the plant and train the Saudi women.
Women’s Response to Work Opportunity: With no publicity, and only word of mouth communications, over 3,000 women have already contacted the company about future training and employment although the initial requirements is only 100 training slots. Recruiting for the processing plant will primarily be from the local villages characterized by high school or less educational levels. There are also many divorced women with children and single, unemployed women still living with the nuclear family. Employment in the processing plant is ideal for the level of education of the local workforce, and will have a major impact on providing needed wages for many local women currently dependent on the government, local charity organizations, or their extended families for support.
Range of Employment Opportunities: Initial employment of Saudi women will concentrate on relatively unskilled labor positions, but the processing plant will also require highly educated professional Saudi women with management, laboratory, and computer skills and university qualifications in life sciences, business, and accounting/finance. Plans are in place to internally promote local Saudi women and to attract university graduates to the processing plant as it becomes operational. Some out of Kingdom training will be necessary for specific positions such as HAACP Quality Control, thus bringing a new technical qualification to the Saudi female workforce and allowing transfer of skills to another industry – food processing.

RENEWABLE RESOURCES AND BEST PRACTICES:

Use of Renewable Resources: The project utilizes natural, renewable resources of Saudi Arabia including year-round warm and meteorologically stable weather; sun; nutritious, clean sea water; and uninhabited mud flats with little commercial or human value next to the coast line. This low elevation and hyper-saline land is located in an area with little or no heavy industries or industrial discharges into the sea.
Best Practices: The project will stock ponds at low intensity in order to inhibit viral disease and protect the quality of Red Sea water. An effluent treatment system was extensively designed and included to treat and filter the discharge from bonds before being discharged to the sea.
Sustainable Protein Food Source Product: The environmentally friendly technology used allows the project to produce indefinitely products for local and international sea food markets. Seafood products increasingly must be supplied from aquaculture sources as the world’s oceans and seas continue to be over-fished.

ENVIRONMENTAL SUSTAINABILITY:

The long term survival of the enterprise depends on maintaining the quality of the environment.
Risk: Diseases are the biggest risk in the aquaculture industry. Aquaculture operations that do not abide by the principles of environmental sustainability create the conditions for diseases to establish themselves and propagate with resultant catastrophic impacts on the entire industry in a country and entire regions.
Appropriate Environmental Plans:

Low-stocking density: The large land area for the project allows for establishing commercially viable operations using low stocking densities, less labor, and fewer external management inputs. This ensures both low cost operations and environmental sustainability.
Mangrove enhancement: The project is also undertaking a mangrove enhancement program to increase the density and breadth of the thin line of mangroves that border one part of the site. Synergies exist between shrimp farming and mangroves that result in advantages to both.
Local Fishery enrichment: Mangrove enhancement will enrich the fisheries of the adjacent bay area where local fishermen make their living as mangrove root structure operates as a shrimp and finfish protective environment in the early stages of sea creature development.

Project Philosophy: The full integration of environmental best practices in a successful shrimp culture project of this size will act as a catalyst for both the Saudi Government and the private sector aquaculture industry to adopt best environmental practices necessary for sustainability for the entire industry. Arabian Shrimp Company is already working with the Ministry of Agriculture and Jizan Governate to suggest policies and procedures that will promote long term environmental sustainability for the aquaculture industry as a whole.

DIVERSIFICATION OF THE ECONOMY:

Current Situation: The Saudi Economy primarily depends on oil revenues and the flow down/spill over of expenditures in the economy based on oil revenues.
Project Costs And Initial Shareholder “Risk” Investment Contributing to Diversification: This project, among other projects that are being encouraged by the Government and created with private sector investment, is increasing the diversification of the economy. The total cost of this project is estimated at SR One Billion Saudi Riyals over a period of five years. The partners have committed sixty (60) million Saudi Riyals of “risk funding” on all aspects of the project, up to the end of 2005 and have committed to develop and invest in 6 other aquaculture related projects due to the knowledge, experience, and international contacts gained in this initial shrimp culture project.
Project Benefit: This project uses sustainable natural resources to provide employment, export earnings, and decentralization of investments to a regional area, and acts as a catalyst for investment in other aquaculture projects, all of which are totally unrelated to oil. By developing the aquaculture sector, the project not only diversifies the economy but also supplies a protein food stream which is local and increasingly appreciated by the native population.

INVESTMENT DECENTRALIZATION:

Current Situation: Urbanization is occurring in the three major population concentrations in Saudi Arabia at an alarming rate. According to the most recent census, 60+% of the total population is concentrated in these three areas. The population in these highly urbanized areas is increasing at rates well exceeding the overall population growth due to migration from the outlying areas.
Project Benefit: The project will provide employment and stabilize the populations in a rural area, thus contributing to the national economy and relieving pressure on the existing urban areas’ infrastructures. The project will provide over 3,100 new employment opportunities and result in over 5,000 indirect opportunities after completion, thus diversifying investment to a less developed region and in an emerging sector. In addition it acts as a catalyst to accelerate the development of the overall aquaculture industry in the Jizan region, which will further increase investment diversification to the Southern Red Sea area.
Research and Development: One important aspect of the project is research and development in improvement of shrimp culture specifically and aquaculture in general. It extends to the social impact as well as environmental impact of shrimp culture. For that the company has started organizing its Research and Development Activity under Dr. Feisal Buckari who spent several years in research in the Fish Center of the Ministry of Agriculture, and Dr. Leo Galli, a recognized expert in the field of hatchery operations, high health and genetic breeding, and bio-security. The company also built a high health research center to start the activity of research in polyculture and closing the cycle to include genetic selection to improve future generations of shrimp for the Farm. The shareholders have already approved the establishment of a separate Specific Pathogen Free shrimp hatchery for development of high health brood-stock and post larvae that will be required for the healthy development of the regional shrimp culture industry. It is estimated that eight (8) million Saudi Riyals have already been spent on research and development and preparation of training materials. Over the next five years it estimated that the company will spend more than one hundred and fifty (150) million Saudi Riyals on various Research and Development Activities to include culture of additional shrimp species and other aquaculture projects.

SUPPORT TO SMALL/MEDIUM ENTERPRISES (SMES):

SME Catalyst: Income distribution (probably better in Saudi Arabia than most countries) is still skewed with significant income differences between the top 20% and the remaining 80%. Multiple SMEs will be established based on this project and on the expansion of the aquaculture industry in Saudi Arabia that it fosters.
SME Examples Associated with Project: Transportation of women to and from the processing plant, maintenance shops, small restaurants and food stores, road side stands, furniture/carpentry shops, light metal fabrication, child care services, and ice production plants are just a few examples of SMEs that can be established around new aquaculture projects.

CATALYST FOR FURTHER EXPANSION IN SAME INDUSTRY, SUPPORT INDUSTRIES, AND ADOPTION OF BEST PRACTICES:

A major project such as Arabian Shrimp Company invariably acts as a magnet for other investments in the same industry and supporting industries. Other shrimp culture projects are already in advance planning; projects in other aquaculture areas such as fin fish cage culture, microalgae, etc. are under development; and supporting industries such as feed mills and processing plants are being planned. This flagship project, due to its ability to hire professional management, its international reach and exposure, and the advantages that best practices can demonstrate, act examples to promote the adoption of best practices for the national industry as it develops.

EXPORT ORIENTATION AND IMPORT SUBSTITUTION:

Import Substitution: The Project will produce 25,000 tons of shrimp/year. The local market for shrimp, approximately 14,000 tons/year according to estimates of the Ministry of Agriculture, is met by a combination of wild caught shrimp, product from other local aquaculture companies, and imported shrimp from international producers. The wild catch is declining every year, thus requiring increasing product from local aquaculture production and/or imports. The project will market shrimp locally, reducing imports.
Export Orientation: The 25,000 tons/yr of production from this project will also create a substantial export base to the GCC, Europe, Japan, and the US, thus increasing export hard currency earnings from non-oil related products.

PRODUCTION OF HIGH-END, VALUE ADDED PRODUCTS:

Both scientific and on the ground market results prove that shrimp grown in high salinity conditions, such as in the Red Sea, taste better, are healthier, and command a price premium in several markets (especially Japan). The sophisticated processing plant, designed to international certification requirements, will be able to provide value added products for high-end international markets.

PRODUCTIVE USE OF OTHERWISE NON-PRODUCTIVE LAND:

Non-Productive Land: Substantial amounts of land bordering the Red Sea consist of “Subkha” soils. Subkha is a low lying mix of silt, sand, and clay (washed down from the mountains over hundreds of years). The soils are highly unstable with hyper-salinity. No land vegetation can grow there; nothing can be built on it without expensive piling or other forms of foundations/soil improvement. Subkha is dangerous to drive on as even slight moisture immediately acts to further destabilize the soil.
Benefit to Shrimp Project and Nation: Due to its clay content and its low elevation next to the sea, this land is ideal for the construction of impermeable dikes and ponds for shrimp culture and its low elevation allows the pumping of seawater for direct exchange, allowing low intensity operation of shrimp farms and other types of land based aquaculture, thus inhibiting viral disease. Thus, unproductive land is transformed into valuable land for sustainable aquaculture that can produce valuable food products over many years.

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Send mail to lgreenberg@devcorpint.com with questions or comments about this web site. Last modified: November 08, 2006

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Last modified: November 08, 2006