CPF to build a third feed mill in India

AGRIBUSINESS / NEW INVESTMENT, COMMODITIES AND EXPORT MARKETS

CPF to build a third feed mill in India

Projects planned in Russia and Malaysia

WALAILAK KEERATIPIPATPONG

Charoen Pokphand Foods, the CP Group's listed flagship, has decided to build its third feed mill in India at a cost of US$10 million to tap continued strong growth in marine products.

''The well-planned development in the aquaculture business by Indian authorities in recent years has given us confidence to invest there,'' said Pinij Kungvankij, senior vice-president for foreign aquaculture business development with CPF.

For example, farmers are not allowed to farm more than 20 shrimp per square metre in order to avoid too small output. The measure has worked and black tiger prawns from Indian farms weigh as much as 30 grammes each or approximately 30 heads per kilogramme, compared to 40-50 heads per kilogramme from Thai farms.

CPF's third mill will be built on the west coast of India this year and start operating in early 2009, with a capacity to produce 80,000 tonnes of shrimp feed a year.

Substantial expansion of shrimp farms across the country in addition to high local consumption are also positive factors, said Mr Pinij.

The Marine Products Export Development Authority, India's government agency that oversees the development of aquaculture, reports that India produced about 185,820 tonnes of shrimp and prawns in 2005, with a total of 183,433 hectares of ponds.

The agency expects that there would be an additional 10,000 hectares to raise both freshwater prawns and marine shrimp in 2008-09.

The third mill will be built on the west coast of India this year and start operating in early 2009, with a capacity to produce 80,000 tonnes of shrimp feed a year and putting total annual feed output from CP in India at 250,000 tonnes.

Mr Pinij said that CP Group started surveying India's shrimp industry in 1992 after the country opened its doors for foreign investment. It first tested the market by bringing in shrimp feed from Thailand to sell in India and continued the business for three years before establishing the first subsidiary, CP Aquaculture India (Private) Limited, in Chennai in 1995.

The company, 72% held by CPF and the rest by CP Group, has produced 90,000 tonnes of shrimp feed a year.

The second company, Charoen Pokphand (India) Private Limited, was founded in 2004 in Vishakapatanam, Andhra Pradesh, in southern India. It added another 80,000 tonnes of feed to the group and brought the total of CP's investment in the country to $17 million by then.

Pong Visedpaitoon, chief operating officer of CPF, said that the investment expansion was part of the group's five-billion-baht overseas investment budget for this year, which also includes new projects in Russia, Malaysia, and the Philippines for both the livestock and marine sectors.

He said CPF was also upbeat about the aquaculture business in the Philippines, the last Asian country that CPF invested in in 2003. It sells about 5,000 tonnes of shrimp feed a year in the country and the volume is expected to rise to 10,000 tonnes this year.According to Mr Pong, a boom in shrimp farming in the Philippines has led the company to build a shrimp-feed manufacturing plant sometime this year in Cebu at a cost of $10 million.

Fish farming on the islands is also booming, with high consumption of 30 kilogrammes per year per head on average. The statistics have caused the company to consider a new investment to produce fish feed, expected in Luzon this year at the same budget.

The Thai Shrimp Association forecasts that the shrimp industry this year will remain strong, with production of 530,000 tonnes, up from 500,000 tonnes harvested in 2007.

Exports will expand slightly to 370,000 tonnes from 360,000 last year.

CPF shares closed yesterday on the Stock Exchange of Thailand at 4.40 baht, down 0.9%, in trade worth 79 million baht.