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Thailand - Poultry giant expands further into Europe

Published on 24 November, 2009, Last updated at 22:53 GMT
Thailand - Poultry giant expands further into Europe

When Charoen Pokphand Foods Plc decided to expand its investments into Europe in the mid-1980s, its main objective was to cash in on the regional integration of the various members of the European Union (EU) and a decision was made by the group to invest in three countrA worker puts finishing touches on CPF’s pig feed manufacturing plant in Russia. Pork sells for the equivalent of 300 baht per kg there due to insufficient supply, prompting CPF to come up with a plan to replace some of the 750,000 tonnes of annual imports.

Years later, the company in Turkey is the only one of the three firms set up to tap the market to have survived. Those in Spain and Portugal ceased operations after operating for just a few years.

The Turkey operation was aimed at catering for the EU market even though Turkey has yet to become a member of the bloc.

The investment in the Muslim country, which is a candidate for future EU membership, performed surprisingly well and became a profitable part of CPF's overseas operations.

This year, sales and profit from the Istanbul-based C.P. Standart Gida Sanayi Ve Ticaret A.S. (CPS) are estimated at 15 billion baht and one billion respectively, thanks to strong prices for chicken, eggs and livestock feed, said Sompop Mongkolpitaksuk, CPS vice chairman.

Mr Sompop, who has supervised the Turkey operation since 1991, expects 10% sales growth next year. Such confidence will see the Thai firm invest US$14 million of new capital to build new egg hatcheries and a chicken processing plant with a capacity of 1,000 tonnes per month.

The investment in cooked meat follows the direction laid out by CPF president and CEO Adirek Sripratak, who wants to balance the feed, farm and food businesses to better manage risk.

CPS annually produces about 730,000 tonnes of livestock feed, 550 million eggs and 116,000 tonnes of chicken meat.

The expansion would raise accrued investment in the local subsidiary with 2,650 employees, of whom 12 are Thai, to $180 million.

"We are now the country's biggest animal feed producer and in chicken meat, we have controlled a 10% share in the chicken meat industry, and 3% in the local egg market," said Mr Sompop.

The new processing plant to be opened next year will increase the volume of chicken produced to 130,000 tonnes a year. This will support local demand which is expected to rise to 15.2 kilogrammes of meat per capita in 2010, up from an estimated 14.8 kg this year. Demand for eggs will rise to 2 million per day, or an average of 140 eggs eaten per person per year.

With Turkey a potential future member of the EU, CPS hopes to supply chicken from its local operations to the union.

Mr Sompop said while Turkey gaining EU membership would boost revenue and profit, the company is currently focusing on servicing the massive increase in local demand.


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