CP Cambodia aims for growth

Sakol Cheewakoset, senior vice president in charge of overseeing the agribusiness giant’s Cambodia and Laos operations, said that despite the numerous obstacles facing investments in feed and animal production in Cambodia, now is the time to have a strong presence there.

 

Success in the Cambodian feed business requires technical support and follow-up, he added, because the cost of product failure is too high for the country’s struggling producers to bear. Furthermore, re-establishing trust and credibility in such a case would be virtually impossible. In its decade of operations in the country, CP Cambodia has helped to modernise the local livestock industry. It has also established a positive image and reputation, differentiating CP Cambodia’s feed from imports. The company’s production accounts for 60% of the feed sold in Cambodia. Feed is distributed through more than 40 distributors in major animal production areas, namely Kandal, Kampong Spue, Kampong Cham, Siem Reap and Battambang.

 

Although labour is cheaper, overall, Cambodia has up to 15% higher production costs due to more costly transportation and import taxes. Electricity alone is 20-30% more expensive than in Thailand. In recent years, infrastructure has been improving. Cultivation areas for corn and cassava are growing as well, which will one day lead to enough production for domestic use and limited exports. Local producers face fierce competition in the form of imports from Thailand and Vietnam.

 

Vietnamese products have been enjoying cost advantages over their Thai competitors because the Thai baht has risen faster against the US dollar than the Vietnamese dong. Also, Vietnamese feed is packed in 25 kg bags, making it seem cheaper at first glance than the standard 30 kg bags coming from Thailand. On the production front, the feed industry sees competition from the cassava processing industry in Cambodia and traders from Korea, Thailand and China, all of whom are vying for corn and cassava. This has driven prices up by more than 50% compared to early 2007, resulting in a big windfall for Cambodian farmers. It is estimated that some 60% of raw materials produced are destined for Thailand. Tight supplies of raw materials have driven feed prices up by more than 20% compared with 2007.

 

Additionally, bird flu in 2004 swept away many small hatcheries supplying broiler and day-old layer chicks. Furthermore, more stringent animal trade controls along the Cambodia border have deterred animal trade, enabling better control of this serious disease.

 

Today, the poultry breeding operation of CP Cambodia is doing well and will be expanded further to accommodate heavy demand. The company plans to raise its annual output of broiler chicks to 3 million birds per year, up from 2.2 million in 2007. In Cambodia, the company supplies only pullets.

 

Raw materials such as corn, soybean, cassava, and fish meal are available locally. December is the busiest time for procuring raw materials and checking the quality of feedstuffs. Coarse grains are tested for adulterants, contaminants, appearance, physical quality, moisture content and more. Some 30% of raw materials are subject to primary testing before acceptance. Once accepted, the quality control team takes 100% samples of all intake materials. For protein sources, it is using dried freshwater fish from Tonle Sap lake, fishmeal from Kampong Som, and oil from the fish processing industry. It uses a urea phenol red solution to screen if soybean meal has been overcooked. Raw materials and cooked products are physically separated.

 

Producers can choose concentrate, mash or pellet feed. Pellets are slightly more expensive than mash, but the market is shifting more towards pelleted feed due to better growth performance. CP Cambodia’s sales strategy is based on the premise that providing top breeds, proven technology and management, as well as good feed performance, will improve the competitive position of the producers who buy its products. With modern technology, genetics and top quality feed, a producer can reduce finishing time for their pigs by two weeks or more, Cheewakoset said.

 

Quality assurance and feed quality is on par with CP’s feed in Thailand. Formulas are prepared on site under the direction of the parent company in Thailand. Its phase feeding programme consists of pre-starter, starter, grower and finisher feed. Retained samples are kept for one month to aid trace back. CP Feed is marketed under the Hi-Gro, CP, and Hog brands.