Saudi Arabia’s BinDawood Holding is exploring opportunities to invest in Lithuania’s dairy-processing sector, considering either the construction of a new processing plant or the acquisition of an existing dairy business.
The potential investment comes as Lithuania’s dairy sector faces declining cattle numbers, farm closures and persistently low milk prices. The Saudi group has reportedly been evaluating investment opportunities in the country for around six months.
Two Investment Options Under Consideration
BinDawood Holding is assessing two potential routes for entering Lithuania’s dairy-processing industry.
The first option involves building a new dairy-processing facility specifically designed around the group’s requirements. The second would involve acquiring all or part of an existing dairy-processing company, allowing BinDawood to make use of established infrastructure and production capabilities.
The investment could enable the Saudi group to source and process dairy products in Lithuania before supplying them to Saudi Arabia and other markets across the region.
Lithuania’s Agriculture Minister Kęstutis Mažeika said the government is supportive of the investment discussions. The country currently has four major dairy processors, meaning the entry of another significant player could potentially reshape competition within the sector.
Saudi Arabia Sees Potential in Lithuanian Dairy
BinDawood Holding CEO Ahmad BinDawood said the group was attracted by Lithuania’s investment environment and food quality standards.
Producing and packaging dairy products in Lithuania could also provide greater access to Saudi Arabia and neighbouring markets, according to Lithuanian officials.
For BinDawood, the investment could provide an opportunity to establish a European production base while developing a supply chain connecting Lithuanian dairy production with growing Middle Eastern markets.
Lithuania’s Dairy Sector Faces Declining Herds
The proposed investment comes at a challenging time for Lithuania’s dairy industry.
The country’s dairy cattle population declined by around 2,000 cows last year, while farmers have continued to shut down dairy operations following years of low milk prices.
Eimantas Bičius, director of the Lithuanian Milk Producers Association, said Lithuania has one of the lowest farmgate milk prices in the European Union.
He highlighted the scale difference between Lithuania and larger European dairy producers, noting that the Netherlands produces approximately as much milk in one month as Lithuania produces in an entire year.
Investment Could Increase Competition for Milk
Lithuanian officials believe the arrival of another major dairy company could improve competition within the domestic market.
Agriculture Minister Mažeika suggested that increased competition could benefit consumers while potentially allowing farmers to receive milk prices that better cover their production costs.
For dairy farmers, the possibility of increased demand from Saudi Arabia and other export destinations could provide an additional market for Lithuanian milk.
However, the sector faces a broader European challenge. EU milk production is increasing while demand is weakening, putting downward pressure on dairy prices.
Farmers Remain Cautious
Despite the potential benefits, Lithuanian dairy farmers remain cautious about the proposed investment.
Bičius pointed to previous discussions surrounding increased dairy exports to China and other international markets, which failed to deliver significant results.
Farmers therefore want to see concrete investment commitments and commercial agreements before expecting meaningful changes in the domestic dairy market.
Rebuilding Lithuania’s dairy herd would also take time. Farmers say several years of stable milk prices and predictable market conditions would be required before they could confidently expand production.
Regional Dairy Investment Continues
BinDawood’s potential investment comes alongside increasing activity by Lithuanian dairy companies outside the domestic market.
Vilvi Group, one of the Baltic region’s major dairy producers, recently expanded its international footprint by opening a new processing facility in Latvia.
The development highlights the increasing importance of cross-border investment and regional expansion within the Baltic dairy industry.
What Could the Investment Mean for Lithuania?
If BinDawood Holding proceeds with the investment, the project could provide Lithuania with additional dairy-processing capacity, access to new export markets and potentially stronger competition for locally produced milk.
For farmers, the most important question will be whether the investment translates into sustained demand and better farmgate prices.
For BinDawood, Lithuania could offer a European production base capable of connecting the country’s dairy sector with consumers in Saudi Arabia and other Middle Eastern markets.
The success of the plan will ultimately depend on whether the proposed investment moves from discussions to a concrete facility or acquisition and whether it can generate sufficient demand to support Lithuania’s struggling dairy-farming base.