US agri firm Bunge, ARASCO said to be eyeing SAGO stake

US-based agricultural trader Bunge Ltd. is looking to bid for the Saudi state grain company's milling operations, Reuters reported, citing unnamed sources.

A memorandum of understanding was signed by Bunge and Arabian Agricultural Services Company (ARASCO), a privately-owned Saudi firm, sources said.

Bunge is the second international commodities company to express interest in the privatization of Saudi Grains Organization (SAGO).

Earlier, US agribusiness firm Archer Daniels Midland Co and Saudi foods group Almarai had also shown interest in bidding for SAGO’s milling operation, Reuters had reported in March.

Details on the possible price for SAGO’s milling operations were not available, the report said.

SAGO’s privatization is part of Saudi Arabia’s larger plan under its "Vision 2030" reform program, which aims to diversify the country’s economy away from oil revenue.

SAGO is expected to be among the first to sell assets, making it a model for other companies, the report said.

The state grain agency is preparing to sell off its milling operations by placing them in four specially formed corporate entities, while retaining other functions.

The organization currently imports the Kingdom's entire wheat supply of around 3.5 million metric tonnes a year. It has said that demand for wheat is expected to grow at an annual rate of 3.2 percent to reach 4.5 million tonnes a year by 2025, largely due to population growth, the news agency said.