Feed Business Worldwide - April, 2012

 

 

 

Netherlands-based Royal Friesland Campina N.V. bought a controlling interest in Alaska Milk Corporation (AMC), one of the largest Philippine dairy companies.

 

The company is increasing its stake from about 8.1% to 68.9% via a purchase of 535.7 million shares held by the Uytengsu Family, Alaska Milk's founders and controlling shareholders.

 

With Alaska Milk found in numerous Phillipinne supermarkets and 7-11s, this acquisition transaction strengthens FrieslandCampina's position in Southeast Asia, adding approximately 100 million consumers to its ASEAN consumer base. FrieslandCampina is already present in Thailand, Indonesia, Malaysia, China, Vietnam, India, Hong Kong and Singapore.

 

The company, which also produces and sells dairy products in the Middle East and Africa, will see annual global revenues increase from approximately EUR2.5 billion (US$3.31 billion) to nearly EUR2.7 billion (US$3.57 billion).

 

With annual revenues of over EUR200 million (US$265 million), Alaska Milk specialises in canned dairy milk based products but also enjoys a strong and growing position in powdered milk. It has also recently expanded into higher value-added milk products, particularly in the ready-to-drink milk category.

 

Wilfred Steven Uytengsu will continue to be Alaska Milk's president and CEO and remains on its board of directors.

 

"We expect this historical agreement to propel AMC to its next stage of growth and that the products developed by FrieslandCampina will strengthen our positions in all dairy categories. The intended integration will provide AMC with access to an international dairy company that has production plants in 25 countries and with products that are sold in over 100 countries worldwide. 

 

 

 

 

Brazil's Marfrig Alimentos SA expects to generate synergies of up to BRL330 million (US$193 million) from the integration of its pork and poultry divisions.

 

The company will organise its three big poultry and pork brands - Moy Park, Seara and Keystone - under Seara Foods, which will make overall strategic decisions for all three brands.

 

The meat packer sees cost savings in the next two to three years of BRL130-230 million (US$76-135 million) and additional revenue generation of BRL100 million (US$59 million) within the next five years.

 

The decision follows a move last year to integrate Marfrig's beef-exporting divisions in Brazil, Argentina and Uruguay.

 

The company aims to run its beef divisions under Marfrig Beef and its poultry, pork and processed foods under Seara Foods. The umbrella company, dubbed Marfrig Group, will determine allocation of capital, the investment budget and appointment of officers.

 

Over the past decade, Marfrig swelled in size through a wave of acquisitions, including the purchases of European poultry producer Moy Park, Brazilian pork giant Seara and US meat packer Keystone Foods.

 

Marfrig Group Chief Executive Marcos Molina will serve as the interim CEO for Seara Foods. James Cruden will remain CEO of Marfrig Beef.  

 

 

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Mitsui & Co. plans to acquire 40% ownership in China's Beidahuang Grain Logistics Co Ltd, a grain collection, storage, logistics and trading business owned by China Ministry of Agriculture.

 

Upon approval by the Chinese government, Mitsui will be allocated new shares in Beidahuang Grain Logistics, sometime between spring and summer of this year.

 

Mitsui intends to leverage the know-how of its North and South American grain transport operations to increase the efficiency of its feed grain collection and distribution in China.

 

Based in Heilongjiang province, one of China's largest grain-producing regions, Beidahuang Grain Logistics handled 1.61 million tonnes of grain in 2011, with revenue totalling around RMB3.6 billion (US$572 million).

 

Mitsui's extensive financial resources will be used by Beidahuang Grain Logistics to expand its grain collection infrastructure and boost its operational efficiency. By 2015, it hopes to handle five million tonnes of grain, with estimated sales of RMB10 billion (US$1.6 billion). 

 

 

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Mitsui & Co. and Sumitomo Corporation will integrate their Japan fertiliser businesses and raw material importing operations. After the 50-50 joint venture is formed this autumn, the combined entity will become Japan's second largest fertiliser company, with an estimated annual revenue of JPY75 billion (US$898.8 million).

 

The joint venture hopes to gain overseas sales to counter declining Japanese fertiliser demand. Global demand for fertiliser has been rising 3% annually, as the growing world population drives demand for food. At the same time, Japan's fertiliser use has fallen from three million tonnes to 2.5 million tonnes over the past decade.

 

"We decided that we need to look beyond company lines in order to keep competing… this will result in good synergy," says Akira Umeoka, general manager of Sumitomo's fertiliser division.

 

Sumitomo Corporation produces and sells fertilisers, mainly in Hokkaido and Kyushu, Japan's northern and western islands. Mitsui & Co. mainly sells feed stock raw materials and fertilisers to producers and wholesalers.

 

In March 2010, Mitsui and Sumitomo entered a business alliance for overseas fertiliser raw material importing. The cooperation started against the backdrop of rising costs for fertiliser feedstocks such as nitrogen, phosphate and potassium, amid growing non-Japanese demand.

 

When the integration is completed, the companies will explore the possibility of expanding the scope of their cooperation to their respective overseas making and selling operations.  

 

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Argentina-based Biotech firms Bioceres and US-based Arcadia Biosciences have established a joint venture to create new transgenic soy seeds.

 

Known as "Verdeca", this new joint venture could will market GM soy seeds by 2015 or 2016. By taking advantage of expiring patents, Verdeca is attempting to break Monsanto's dominance of the GM seed market.

 

The two companies are investing US$120 million to develop seeds which combine transgenic traits for resistance to the herbicide glyphosate, drought tolerance, increased nitrogen efficiency and less water use.

 

"Another US$20 million to US$40 million will be spent over the next four or five years to gain regulatory approval for the seeds in key markets, including other South American nations, the US, China and India," says Eric Rey, Arcadia's president and CEO.

 

Federico Trucco, CEO of Bioceres explained that, "Verdeca's strategy involves building on a platform of established genetic traits and to take advantage of the expiration of Monsanto's US patent for glyphosate-resistant soy in 2014."

 

Verdeca plans to sell its products through conventional seed channels under licensing agreements with major distributors. As many of its potential customers are also its shareholders, Verdeca will benefit from a "built-in customer base," says Rey.  

 

 

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March saw Brasil Foods' officially open a new BRL30-million (US$17 million) dairy processing plant. Situated in Itumbiara, Goiás, where Brasil Food already operates a dairy unit, the new factory is expected to boost the company's monthly cheese output by 1,000 tonnes.
 
Designed to serve domestic consumers in Brazil's north and northeaser states, the plant will mainly produce Sadia and Santa Rosa brands of mozzarella cheese. Other cheese brands marketed by Brasil Foods include Batavo, Elegê and Cotochés.
 
The company already sells 700,000 tonnes of cheese valued at BRL7 billion (US$3.97 billion) annually, most of it accounted for by the mozzarella and prato varieties.
 
The Itumbiara factory will also produce fresh milk, flavoured milk beverages, milk powder and UHT cream to meet the needs of the southeast, northeast, north and midwest regions. Approximately 14 million litres of raw milk feed stock per month is being supplied by approximately 800 producers.  
 

 

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Bayer's seeds unit, BioScience, reported a 24% increase in revenue to EUR157 million (US$211.46 million) during the October-December quarter. This outpaced corporate profits in Bayer's larger agrichemicals business and crop protection, which rose a marginal 1.8% to EUR1.37 billion (US$1.85 billion).
 
The weaker sprays performance is partially due to the phasing out of some pesticide lines, along with competition from generic manufacturers, who take advantage of expired patents.
 
Going forward, CEO Marijn Dekkers  reports that, "We have stepped up our BioScience activities." Towards this end,  Bayer plans to invest €400 million (US$538.76 million) on seed research and development through to 2015.
 
This is in line with industry trends, where crossovers between seed and agrichemical operations are becoming more common. Even within Bayer's sprays unit, seed treatments were the strongest line, showing 21% growth in annual revenues.
 
Some of the new seeds Bayer is preparing to introduce include cotton seed genetically modified for both insect and herbicide resistance. In 2015, it intends to release soy seeds that are resistant to both isoxaflutole-based weedkillers and the glyphosate-based herbicides covered by current biotech products.
 
Weeds in some parts of the US have become invulnerable to glyphosate, earning them the tag "superweeds".
 
Bayer's total agriculture revenues rose by an underlying 2.8% to US$1.65 billion in the latest quarter, with earnings before interest, tax, depreciation and amortisation (ebitda) rising 1.1% to EUR273 million (US$367.7 million).