May 27, 2013
Cobb-Vantress, a poultry genetics company and Tyson Foods subsidiary, plans to invest US$6 million in Brazil during the fiscal year 2013/14 that begins in October, in an effort to expand production of breeding birds for export.
The investment will help increase the capacity by 30% for the company's two farms located in Itapagipe, Minas Gerais state, and Paulo de Faria, Sao Paulo. The two farms' current joint capacity is 1.2 million "great grandparent" breeding birds, which will increase to 1.5 million following the expansion.
Cobb-Vantress is pushing its Brazil operations forward as a platform for genetic poultry exports to all of Latin America. The company invested BRL35 million (US$17.08 million) in 2012 to build a new "grandparent" bird farm in Itapagipe, which began operation earlier this year. In this type of farm, birds are raised to lay eggs, which will be slaughtered an average of 45 days after hatching.
The farm expansion plan is scheduled for completion by late 2014, after which Cobb-Vantress plans to raise the share of grandparent birds in its exports from 20% to 40% by mid-2015.
The company's focus on exports of genetic material vindicates the belief that Brazil's domestic consumption of poultry will not increase significantly in the future. On a per-capita basis, Brazilians currently consume 45 kilogrammes of poultry per year, a top-five market for per-capita consumption in the world, according to data from the Brazilian Poultry Union (Ubabef).
Brazil currently accounts for 27% of Cobb-Vantress's global revenue.
Cobb-Vantress' shift in export strategy is also a reflection of logistical difficulties the company faced, particularly with the cost of air freight. A total of 21.9 million offspring was produced in 2012, with each export flight only able to send 30,000-40,000.
South American countries, the main export market for Cobb-Vantress, tend to buy more grandparent birds than their offspring, so a focus on farming these grown birds will help save shipping costs over time. Export operating margins would also rise because the average cost of a grandparent bird is roughly five times that of offspring.
