February 16, 2004

 

 

Leading Korean Poultry Company Cherrybro On Brink of Bankruptcy

 

Leading Korean poultry processing company, Cherrybro Food Co., has filed for bankruptcy protection as the bird flu outbreak severely curtailed the company's poultry sales. 

 

Last Tuesday, Cherrybro filed for bankruptcy protection at the Cheongju District Court, according to reports released by the Ministry of Agriculture and Forestry and related industries yesterday.

 

Average daily sales have declined to 50 million won from pre-flu sales of between 200 million and 250 million won, according to Kim In-sik, chief executive officer.

 

"Sales have plummeted with the bird flu epidemic, and as we suffer from lack of funds to keep the businesses going, our banking agency has refused to extend our loan payments," he said. "We are thus on the brink of bankruptcy."

 

The company says it is Korea's second-largest company processor of chicken-based products, after Halim.

 

Since its establishment in 1999, Cherrybro has experienced phenomenal growth, playing a major role in expanding the chicken nugget market, as well as various other processed poultry products, while building its brand name, "Deliqueen."

 

Between 2000 and 2003, Cherrybro's growth exploded from 44 million won to 1.1 billion won.

 

Kim said the crisis has eased since he petitioned the court for bankruptcy protection from creditors. The company's work force remains intact, he said.

 

"Our plants are still operating under normal conditions, and the financial trouble has not yet threatened our employees," Kim said. He added, however, that the farmers affiliated with the business are facing a tough time.

 

Cherrybro has processing plants in Jincheon, North Chungcheong Province, Gumi and Cheonan and about 300 employees. It is affiliated with about 250 breeding farms.

 

Kim says the only way to save the company from bankruptcy and to preserve jobs is for consumers to resume poultry consumption.

 

To this end, poultry farmers and related industries last week launched campaigns to salvage the poultry industry.

 

The government has joined the effort, declaring every Wednesday as chicken-serving day at government cafeterias and eateries. The ministry says it will also organize chicken dish events with doctors and pharmacists in support of the movement.

 

As another means to gain public confidence, the Korean Medical Association requested its local chapters to serve up poultry at their weekly meeting tomorrow.

 

Experts say it is safe to consume poultry products, stressing that the meat cannot transmit the virus to humans if they are thoroughly cooked.

 

According to the Duck Association, of the approximate 800 poultry farms specializing in ducks across the nation, about 5 percent are estimated to be in state of bankruptcy.

 

Consumption of chicken and duck products have dropped to less than half since December, when bird flu first appeared in Korea, according to the Ministry of Agriculture and Forestry. Since then, the disease has decimated the poultry industry elsewhere in Asia, especially Vietnam and Thailand.

 

As of Saturday, 20 people have died in Asia from the H5N1 strain of the bird flu, none of them in Korea.