November 7, 2003
Thailand's Betagro Group Enters Into Joint Venture with Ajinomoto Group of Japan in Pork Products
One pork exporter is hoping to finally crack the restrictive but lucrative Japanese market, through setting up a joint venture with a Japanese partner.
Betagro Group and Ajinomoto Group of Japan will invest Bahtt400 million to set up Ajinomoto-Betagro Specialty Foods next month.
The 50:50 joint venture will process pork products at a facility in Lop Buri and export them to Japan.
Betagro farms will supply the pigs.
'This will be the first time that Thailand will be able to export a large amount of processed-pork product to Japan,' Betagro CEO Vanus Taepaisitphongse said yesterday.
'Betagro will concentrate on manufacturing while Ajinomoto will be responsible for marketing.'
Japan is famous for its stringent safety restrictions on food imports and Thai exporters have been pushing for decades to gain greater access to the country's massive market.
Once the processing plant is up and running, Betagro pig farms will supply it with 200 pigs a day. The pigs will be raised to meet hygiene requirements set by the Japanese government.
Construction of the processing plant, which will be built on a 200-rai area of Betagro's main manufacturing complex in Lop Buri, will begin early next year.
Initially, all of its production will be exported to Japan. It will begin with ready-to-cook products such as tongkatsu and may also export top-end products to other markets.
The joint venture is one of five big projects Betagro has initiated since last year with a total investment of Bt1 billion. The other projects are a hi-tech slaughterhouse, pork and chicken-soup manufacturing, sauce plant and the establishment of a major production complex.
Except for the production complex, all the projects have been in the form of joint ventures with Japanese partners.
The slaughterhouse and soup and sauce plants will start operating early next year.
Betagro is seeking to form a joint venture with a large Japanese sauce manufacturer to facilitate exports to Japan.
Betagro's sales are expected to reach Bt22 billion-Bt24 billion this year, with a net profit of Bt300 million-Bt400 million. Earlier it had forecast Bt1 billion in profit for the year.
However, pork and chicken exporters have had a tough year due to contamination from chemical residues, rising export competition and higher prices for animal feed.
Betagro's executive vice president, Vasit Taepaisitphongse, said profits were lower than expected this year due to the sharp rise in the price of animal feed, particularly soybean, due to increased imports by China.
The price of imported soybean seed has doubled from US$170 (Bt6,780) per tonne early this year to $300 because China bought 20 million tons, said another Betagro executive.
Vasit said that the opening of the group's new integrated manufacturing facility would result in higher revenues and 15 - 20% business growth next year.
To expand pork exports, the group is planning to double its supply of hygienic pigs to 4 million per week by opening six new farms next year, he added.