News last update:6 Aug 2012

CP upgrades feed mills to top standard

Thai food manufacturer and farm operator Charoen Pokphand Foods (CPF) plans significant investment to upgrade the manufacturing technology of 10 animal feed mills nationwide to equal the high technology of its Nakhon Ratchasima plant.

Viroj Kampeera, senior vice president of CPF subsidiary Bangkok Feedmill, said the company planned to upgrade all 10 plants this year. The company did not reveal an exact investment figure.

The Nakhon Ratchasima plant - manufacturing feed for chickens, pigs, ducks and cattle - was built in 2002 with a production capacity of 1.2 million tonnes a year. However, it is currently using only half of its capacity.

Modern technology
Technology used in the plant features an automatic operating system, combining technology from Japan, Europe and the US that ensures hygiene and requires only 50 workers. Operating costs are 20% cheaper than in other feed mills. The mill required a Bt500-million (€11.3m) investment.

The company has already spent almost Bt1 billion (€23m) on the gradual improvement of the manufacturing technology in 10 plants in other countries over the past few years. CPF has accumulated 120 feed mills in 11 countries with a combined production capacity of 24 million tonnes. The company plans to upgrade the technology gradually in all of them.

Global expansion
CPF has plans to set up its fourth and fifth animal feed mill in Vietnam and expand production capacity in Cambodia. It will open a new plant in Laos in two months and another in Russia. In Laos, it expects to establish a wholly owned plant rather than a joint venture with a local partner. Each plant will cost about Bt500 million.

The company does not plan to expand production capacity in Thailand, because its current 11 plants already manufacture 6.5 million tonnes annually, while total domestic demand is 10.5 million tonnes.

CPF's major competitors are the Betagro Group and the Saha Farm Group, while smaller competition comes from 100 small feed mills.

Generous marketing budget
In term of CP products for human consumption, CPF senior vice president for marketing Suphat Sritanatorn said the company had allocated a Bt100-million (€2.26m) marketing budget to build awareness of all products under the CP brand this year. The company expects to launch 30 new products.

CPF has adjusted its website for a more modern look and is setting up a call-centre system, said Suphat. The call centre is expected to commence operations this year.

Product samples
Also this year, the company plans to focus on giving out product samples in office buildings, apart from advertising through major media channels.

CPF exports to eight markets, including Singapore, Hong Kong, Taiwan, South Korea, the US and France.

Tough year expected
In terms of the CP Group as a whole, the company expects another tough year, said Teerasak Urunanon, CPF executive vice president for food processing and integration. He said CPF's performance in the first quarter experienced difficulties, due to a decline in prices of eggs, pork and chicken. He is also worried about bird-flu developments, consumer spending and an increase in raw-material costs this year. Teerasak said feed-mill revenues last year was Bt120 billion (€2.71b), with Bt140 billion (€3.17b) expected this year.
The company will wait to see its second-quarter performance, and then consider whether it must revise expected revenues downwards.

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