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Betagro Raises Capacity to Meet Export Demand

by 5m Editor
13 January 2011, at 9:11am

THAILAND - Betagro has announced a three billion-baht upgrade to its chicken processing plant in Lop Buri, with a focus on cooked products for export.

Betagro Group, the integrated agribusiness enterprise, will spend three billion baht (THB) this year to upgrade its supply chain and increase production capacity to cash in on rising demand, according to Bangkok Post.

The improvements will also help it to achieve its ambitious goal of becoming a major supplier for premium-grade chicken and pork products.

Vasit Taepaisitphongse, the chief operating officer, said Betagro will raise chicken production to 410,000 birds a day, up from 370,000 last year.

The increased volume will help to serve growing demand, especially in exports, which are expected to expand 10 per cent from last year's 40,000 tonnes.

"Export prices were high in last year's fourth quarter thanks to the strong yen and larger orders placed ahead of the festive season," said Mr Vasit.

He said chicken products shipped to Japan such as yakitori, or bite-sized grilled pieces on a skewer, earned Betagro US$7,000 to $8,000 a tonne. That is far above the average export price for all processed chicken shipped from Thailand, which is $4,500 a tonne.

The bullish prices in the fourth quarter helped offset weak first- and second-quarter prices due to slow domestic consumption that affected the company's 2010 sales projection.

Betagro reported sales of THB53 billion last year, up by 12 per cent from 2009 but below the target of 15 per cent.

The group is targeting more modest growth of 10 per cent this year, expecting that high food prices driven by costly fuel prices and strong consumption worldwide will promote meat exports.

Thailand expects to export a total of 438,000 tonnes of chicken meat this year, up from an estimated 417,500 tonnes last year.

Europe and Japan are major importers of the product, accounting for 46.35 per cent and 43.7 per cent, respectively, of Thai export volume last year.

The country is the world's fourth-largest exporter of chicken meat, representing 4.7 per cent of the global trade of 8.66 million tonnes last year and dominated by Brazil at 3.35 million tonnes.

The Thai Broiler Processing Exporters Association expects export prices will increase by $300 to $500 a tonne this year due to higher feed costs driven by more expensive maize and soybean meal, reports Bangkok Post. Traders foresee exchange rate volatility and rising wages will remain negative factors in this labour-intensive industry.

Mr Vasit said exports of fresh meat have yet to recover fully from their collapse in 2004 caused by the bird flu outbreak.

Despite good prospects for raw meat, many processors including Betagro put more effort into making and selling cooked products instead.

Many processing facilities at Betagro's Lop Buri production hub will be upgraded this year for higher-quality meat production that could raise its profile as a premium food producer.

The goal come in the wake of years of success in using research-based operations to offer a wide range of food products including hygienic eggs and concentrated soup base.

Its sausage products won awards at the International Sausage Quality Competition hosted in Frankfurt last May by the German Butchers' Association.

"We don't want to be too big in the industry, but would prefer instead to become known for food innovations," said Mr Vasit.

Betagro's recent launch of hygienic eggs received a good response despite the product being priced three times more than normal eggs.

The company spends THB200 million a year on research and development. In 2006, it opened the Betagro Science Centre in Pathum Thani province, offering biological, chemical and testing services to ensure food safety.

High-grade products are sold under the S-Pure brand produced by joint ventures established over the past three decades with giant Japanese food corporations looking to out-source operations for shipment back to that country.

The Bangkok Post report concludes that the latest joint venture, with the Japanese food leader Itoham Inc and Ajinomoto (Thailand) Ltd, began operations last year and will double the company's sales of processed meat products, mainly sausages to Japan, to 6,000 tonnes by next year.