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Animal feed stocks surge on subsidy speculations.

MUSCAT: Shares of animal feed producers surged ahead on the Muscat Securities Market (MSM) on speculation that the government may give subsidy to these companies.

Among the three firms, Dhofar Cattle Feed was the top gainer, while Oman Flour Mills and A'saffa Foods were among the top ten gainers on MSM yesterday.

This follows a Times of Oman report on a move by the government to provide subsidy for animal feed makers, including poultry feed firms, in view of an administered pricing system for their products.

Dhofar Cattle Feed shares shot up 8.62 per cent to close at 126 baisas amid 234,219 shares changing hand, while Oman Flour Mills and A'saffa Foods gained 5.24 per cent and 3.18 per cent at 442 basias and 470 basias, respectively.

Trading suspended

In fact, MSM authorities on Wednesday suspended share trading in four animal feed producers - Sohar Poultry, Oman Flour Mills, A'saffa Foods and Dhofar Cattle Feed. Several animal feed producers have already presented their case to the Ministry of Commerce and Industry, seeking financial assistance, similar to cement and wheat flour.

Local animal feed companies have recently complained that their profit margins are under severe pressure, following rising cost of imported grains.

This follows an ever growing demand for grains across the world, sometimes due to crop failures.

No animal feed producer can freely increase the prices of their products. Companies have to produce valid reasons to convince the government to get permission for increasing prices.

This stringent measure, according to sources, is an effective tool to control inflation.

The government will decide on the subsidy on a case-to-case basis, after taking into consideration the cost structure of each company. This could include scale of operation and import cost of the grain for making animal feed.

Muscat Press and Publishing House SAOC 2011

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Publication:Times of Oman (Muscat, Oman)
Date:Dec 12, 2011
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