Thai firm steps up 2008 investments

04-01-2008 | |

The planned listing of its shares and a brighter industry outlook have encouraged Betagro Group to invest more in various farm projects this year.

Betagro, one of Thailand’s leading agricultural groups, announced that it
planned to use around four billion baht (€ 91.2 million) of its capital to
finance the new investment, about 30% more than the three billion baht (€ 68.4m)
spent last year.

”Farm prices, which nosedived in the first half [of
last year], have improved significantly since the latter half,” said Vasit
Taepaisitphongse, executive vice-president and group chief operating officer in
an interview with the Bangkok Post.

Chicken meat and pork prices started
picking up in the second half last year, in line with the world market. Export
prices of processed chicken shot up strongly by 30% to US$4,000 per tonne after
a substantial decline in the first half last year due to the re-emergence of
bird flu in late 2006 and the strong baht.

Limited shipments from China
have also pushed up world prices and brightened the industry’s
outlook.

According to Vasit, the expansion plans have been outlined in
accordance with the group’s plans to list
on the Stock Exchange
 of Thailand, probably in the second half of
this year, after it had filed the application to the Securities and Exchange
Commission in late 2007.

New processing plants
Part of the
funds raised will be used to finance new projects including a number of
small-scaled processing plants to supply food products to community stores such
as convenience outlets.

Two new plants will also be added, one each for
cooked chicken for exports and tailored pork products for retail
channels.

He said it was no longer necessary for the group to build huge
production plants as it already had two large complexes in Lop Buri, which house
operations for feed meal, a slaughterhouse and processing plants for cooked
chicken products.

Improve distribution officiency
”The
investments from now would aim to improve distribution efficiency, make better
and new food products and strengthen the brand,” he said.

A logistics
centre in Wang Noi, Ayutthaya, will also be set up to strengthen the
distribution of these stores.

Offshore investments would be made to beef
up the efficiency of its operations in the region after Thai Luxe Enterprise,
its joint venture in Vietnam with local partners, has performed remarkably well
in recent years. More processing plants will also be added and distribution
networks expanded in Cambodia, Laos and Burma.

Increase market
share
According to Vasit, the new projects will raise Betagro’s sales
revenue to 45 billion baht (€ 1.03 billion) this year. Of its revenue of around
34 billion baht (€ 776m) in 2007, chicken and swine products accounted for 80%,
with animal health products, commercial feeds and regional operations making up
the balance.

The expansion would also help turn Betagro into the
second-largest agro-industrial company in the country after the CP Group. ”We
aim to raise our market share in the farm business to 20% in the next five years
from 15% today,” he said.

At present, Betagro controls about 10% of the
12 million tonnes of animal feed sold annually, and supplies 2.5 million
broilers per week, or 13% of the country’s weekly broiler production of 18
million head.

Betagro is now counted among the top five in the chicken
industry, exporting 40,000 of the country’s total of 310,000 to 320,000 tonnes
last year. In the swine industry, it processes about 1,600 pigs or 13.33% of
Bangkok’s daily total of 12,000.

Related article: Thai Betagro company on expansion trail

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