The Big Interview: we talk to Adirek Sripratak, CEO of CP Foods, about the group's feed business

'China is evidently our largest overseas operations and will continue to be' - CEO of Thai feed giant reveals future expansion plans

Charoen Pokphand Foods gets a handle on shrimp disease

Thai food and feed giant, CPF, is upbeat about prospects for its feed business, following on from its posting last month of a near double Q1 net profit for group operations, driven by higher meat prices, lower raw material costs and a recovery in its shrimp operations.

May also saw the Asian meat and feed company on the acquisition trail – buying Kaifeng Chia Tai - an animal feed business in China.

We talked to Adirek Sripratak, CEO of CP Foods, to get a handle on the group’s strategy to mitigate the impact of livestock disease and strengthen its feed presence globally.

FeedNavigator: What annual growth rate is CPF targeting for its feed business?

Adirek Sripratak: We expect the overall organic growth rate for the CPF feed business to continue to be consistent with historical growth levels of 7 to 8% per annum on average over the next five years. 

FeedNavigator: The company recently said that 60% of a THB 50 billion fund (around $1.12bn) would be invested in foreign operations - how much of this will be invested in the feed business in South East Asia?

Adirek Sripratak: We will primarily use our fund to drive growth and enhance capabilities in our food business.

We expect the amount of the fund invested in our feed business to be in the region of 25% - targeted at feed mill upgrades and replacements. 

FeedNavigator: What is CPF's focus for China and India over the next 3 years?

Adirek Sripratak: China and India are undoubtedly markets with high potential considering their combined population total of 2.5 billion.

China is evidently our largest overseas operations and will continue to be. Regarding India, we intend to focus on our poultry and food business.   

FeedNavigator: It was recently reported that CPF plans to expand its feed and farm businesses in regional neighbors, Vietnam and the Philippines. How attractive are those markets for feed multinationals?  

Adirek Sripratak: We continue to see potential growth of the feed and farm businesses in the region, and we expect to grow in line with the market. Our large scale investment is in the compound feed business there.

FeedNavigator: Is Africa of interest to the company at all in terms of future expansion?

Adirek Sripratak: The African market is interesting given its population of over 1 billion. CPF has recently started an animal feed and poultry farming business in Tanzania and we will consider expansion into its neighbors in the future.

FeedNavigator: How damaging has the avian flu epidemic been in terms of lower consumption of poultry feed for CPF in China?

Adirek Sripratak: The China feed market declined slightly in 2013. The increase in swine feed consumption was more than offset by the decline in poultry feed, part of which was a reflection of the avian flu issue.

While our performance reflected the market situation, our feed revenues in China increased by 6% in 2013, and this was due to the fact that, over the past few years, regardless of avian flu, we have been growing swine feed sales and decreasing the poultry feed side. 

In 2013, swine feed accounted for half of our total feed revenues, and poultry feed constituted around 30%.

FeedNavigator: How has the company coped with the devastation wreaked on the shrimp sector in SE Asia and Thailand, in particular, by the outbreak of early mortality syndrome (EMS)?

Adirek Sripratak: The shrimp industry in Asia has faced huge challenges since the emergence of EMS.

We have been very effective at preventing deadly viral diseases. However, as we have learned over the past year, EMS is caused by bacteria, making the protocols that work against a virus ineffective.

But CPF has employed a very proactive research and development approach to learning about the basic causes of EMS.

We have taken a number of specific steps in response to what we have learned in order to minimize the bacterial density and maximize the fitness of the shrimp.

While we are not completely at the stage where we have solved all the EMS issues, we have certainly made progress towards improving and bringing efficient shrimp production back to CPF, Thailand and SE Asia. 

FeedNavigator: How has CPF been controlling volatility in feed raw material pricing?

Adirek Sripratak: CPF has its feed and farm operations strategically located in several major countries in Asia and Europe, which are exposed to different seasonality and feed raw material demand and supply fundamentals.  

This strategically geographical diversification provides CPF with natural hedges and also offers CPF the depth and breadth of local feed or farm or food demand and supply information, which strongly benefits our raw materials forecasting, planning and execution.

In addition, we have carried out physical handling activities of major raw materials in many countries where we are located to ensure stable and continuous flow of inputs, which results in more stable costs.

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Comments (3)

William - 12 Jun 2014 | 05:57

West needs to think ?

At some point the west needs to start thinking about self preservation ?

12-Jun-2014 at 05:57 GMT

Ashwin - 11 Jun 2014 | 08:01

Great article thank you

Great article thank you

11-Jun-2014 at 20:01 GMT
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