February 11, 2004

 

 

Expansion Plans of CP Chongqing in China Unaffected By Bird Flu Outbreak

 

An eFeedLink Exclusive Report
 

Despite the current bird flu outbreak in China, Chia Tai (CP) in Chongqing is going ahead with its plans to open another nine farms within the first quarter of the year. It currently has only one chicken farm in operation.

                                                             

At present, Chia Tai in Chongqing is reportedly at its wit's end over what to do with its more than 10,000 broilers, which has reached the stage ready for sales, as its poultry sales has been dropping significantly in recent weeks due to the bird flu outbreak. Despite of the immediate problem on its hand, the poultry production company is full confident of its expansion project. When the expansion is completed, Chia Tai Chongqing's broiler production capacity will be increased fivefold. According to a reliable source, the objective of the aggressive expansion is to capture the post-bird flu broiler market.                   

 

Seizing Business Opportunities

 

Reportedly, the chicken farms of Chia Tai Chongqing currently produces about 5,000 broilers every month. Based on its plans, nine more chicken farms, each producing 6,000 broilers, will be built in the first quarter of this year. Once all the chicken farms are completed, Chia Tai Chongqing will be supplying 1,000 broilers daily to Chongqing area, seizing 1/3 of its broiler market. Chia Tai's ultimate aim in Chongqing is to increase its daily supply of broilers to 3,000, exerting a dominant claim over the city's broiler market.

 

Despite the expansion risks at this point of time, Chia Tai Chongqing is confident that its plans will succeed. A spokesperson of the company optimistically replied that it is unlikely that the bird flu will prevail indefinitely. Once the crisis is over, the market is likely to see an excess demand, which will then present a good opportunity for Chia Tai Chongqing to conquer the broiler market it serves.

 

Finding a Way Out

 

Chia Tai Chongqing's "chicken plan" is an ambitious one and the difficulties it is currently facing is evidently clear. A company spokesperson claimed that given the prevailing conditions, broiler prices are likely to drop to about RMB2.00 for every 500g. Prior to January 30, price quotes for broiler in the market were reportedly above RMB3.30 for every 500g.                   

 

Said the spokesperson, "Of course, there are still buyers now, though the opening price quotes are around RMB1.80 for every 500g, against the broiler production costs of RMB3.00 for every 500g."

 

There is no choice but to sell, as the broilers are nearly 45 days old. Briefly, broiler's average cycle lasts 45 days from the purchase of the day-old-chick to the sale of the approximately 2500g broilers. In other words, after 45 days, broilers will tend to "eat more but grow at a slower rate", making broiler production unprofitable.

 

"Our 10,000 over broilers consume 45 bags of feed daily, which at over a ton, cost more than RMB4000. Add to that are utilities bills, labour wages, and thus the losses incurred are substantial," the spokesperson lamented on the company's broilers which are ready for sale but having difficulty finding buyers.

 

Chia Tai Chongqing is reportedly looking at ways to solve the problem of this large quantity of ready-for-sale broilers.