Qatari food company Baladna has signed a $3.5 billion agreement with the Algerian Ministry of Agriculture and Rural Development to develop the world’s largest integrated dairy farming and production project, according to a Qatar Stock Exchange filing.

What happened: The pact is for the establishment of a vast cattle-breeding farm for powdered milk and meat in southern Algeria, the Algerian Agriculture Ministry said in the filing Wednesday.

The ministry stated in the filing that the deal was signed in the capital, Algiers, by Souad Assous, head of agricultural and land investments in the Algerian Agriculture Ministry, and Baladna chairman Mohamad Moutaz Al-Khayyat.

“Algeria aims to reduce its imports of powdered milk and create jobs for its youth, and Baladna’s output will come online in 2026,” the ministry said.

Baladna is Qatar’s largest milk and dairy production firm, which started trading on the Qatar Stock Exchange in 2019 and has a market cap of around $2.5 billion. It produces fresh and ultra-high temperature milk.

The project will cover a 170,000-hectare area in the Adrar province and be split into three hubs, each comprising an arable farming operation, a dairy and beef farming operation, and a powdered milk manufacturing facility. Baladna said the herd on the site will reach 270,000, producing around 1.7 billion liters of milk a year.

Baladna said it will hold a 51% share in the complex, with the remaining 49% held by the Algerian state through its National Investment Fund.

Why it matters: In the stock exchange filing, the Gulf company said the project will meet 50% of Algeria’s demand for powdered milk and create 5,000 direct local jobs. 

“It will also leverage modern technology and best management practices to enhance dairy farming efficiency, reduce production costs through economies of scale, and improve control over the entire value chain,” Baladna added.

Milk is an important industry in Algeria, and the country has seen shortages of the product in recent years. As a result, the North African country heavily relies on powdered milk imports — in 2022, Algeria imported $1.62 billion of concentrated milk, according to Observatory of Economic Complexity data. By those metrics, Algeria that year was the world’s second-largest concentrated milk importer. 

Local reports this month say that queues have become commonplace in Algerian cities to received rationed and subsidized powder-based milk. Many Algerians have protested on social media about having to wait hours to pick up milk.

In past years, huge numbers of cows and other livestock have been smuggled across borders into Algeria. For example, in October 2022, authorities announced the seizure of 20 cows that smugglers intended to cross into Algeria from Tunisia. Some of the reasons for this are the high costs associated with feedstock in countries where droughts are common.