July 28, 2008

CPF centralises feed raw material sourcing with new business group

The Charoen Pokphand Group has added a new business group, the feed ingredients trading business, to centralise its feed raw material sourcing in the face of high grain prices.

The new unit formed in May will be the group's focal point for information on supply and demand of the group's worldwide animal-feed raw material. It would also be charged with sourcing the raw materials from suppliers worldwide.

Somchai Kungsamutr, president and CEO of the new unit, said the group will help CPF to better manage the risks both for animal feeds and human foods.

Raw materials generally account for up to 70 percent of the total cost of animal feeds.

The sprawling group, which operates in 13 countries, needs 20 million tonnes a year of raw materials. Some of its operations engage in both production and grain and feed raw material trading.

According to Mr Somchai, the new unit will also invest in agricultural futures, not only to secure raw-material supplies but also to hedge against price fluctuations.

The Group also intends to invest in warehousing and logistic development in countries such as Laos, Cambodia, India and probably China.