June 25, 2004

 

 

Charoen Pokphand Foods To Profit From New Chicken Production Plant
 

Charoen Pokphand Foods' largest integrated chicken production plant, in Thailand's Nakhon Ratchasima, will start operations in August. The firm said the plant would steer the company into profitability for its second financial quarter.

 

The Bt8-billion project includes feed production and slaughterhouse, as well as processing lines with a production capacity of one million birds a week. The company's current capacity is around five million birds per week.

 

CPF said the facility would raise its output to 1.5 million to 2 million birds by the end of 2005 and 2006, respectively. However this is dependent on market conditions.

 

Bt5 billion of the Bt8 billion will be spent this year, and the rest in the next two years.

 

In the new facility, chicken breeders will be able to keep track of temperature, feed supply and weight of the birds.

 

Productivity will also increase to 100,000 birds per breeder, more than double the current 40,000 in existing facilities and 5,000 on traditional farms.

 

CPF aims to reduce the cost of production by roughly 5 per cent, which will be positive for the company's overall gross margin.

 

Chicken-meat sales yield around 5 to 20 per cent margin, depending on chicken prices.

 

With a recovery in local demand for broilers and higher exports of cooked chicken, CPF expects to return to profitability in the second quarter after its Bt471-million loss in the first quarter.

 

Meanwhile, the company yesterday reported receiving an order for 1,000 tonnes of heat-treated chicken from a Singaporean customer.

 

Adirek Sripratak, president and chief executive officer, said Singapore had shifted to placing orders with CPF after discovering nitrofuran residues in chicken imported from Malaysia.

 

CPF's heat-treated poultry products are being exported once again to the European Union, Japan, Hong Kong, Singapore and South Korea following several months of suspension due to the bird-flu outbreak.

 

However, the company's aquaculture business has faced export difficulties due to possible anti-dumping charges on shrimp exports to the United States. This has caused the country's shrimp production to drop by 20 to 25 per cent.

 

"If the US Commerce Department announces the final extra import duty in August, it will convince Thai shrimp farmers to farm again," Adirek said.