Charoen Pokphand Foods - Operations in Brief

Operations in Brief

Livestock business
Operations of the livestock business are fully integrated. The livestock business covers broiler, layer, swineand duck. The products can be divided into 3 main categories, namely 1) animal feed, 2) animal breeder and 3) meat and food products, with detail as follows:

Animal Feed
The Company is the leader and pioneer in the manufacture and distribution of livestock feed. The Company produces livestock feed in the forms of concentrate, powder and pellets for broilers, layers, swine and duck. The livestock feed is distributed by more than 600 sales representatives throughout the country.

In addition, a portion of the livestock feed is sold directly to large animal farms in Thailand. Agriculture products such as corn, soybean meal and broken rice are use in the production of livestock feed under fully computerized formulation and production processes to ensure consistent quality as required.

Animal Breeder
The Company is the leader in the research and development of natural animal breeds. The goal is to obtain quality breeds that are disease-free, suitable to the breeding environment in Thailand. The Company produces parent stock broiler chicks, parent stock layer chicks, parent stock swine, broiler chicks, layer chicks, layers and piglets for distribution to animal farms and domestic sales representatives.

As the Company’s operations are fully integrated, livestock breeding is part of a continuous production process. Grandparent stock used in livestock breeding are imported from abroad to breed parent stock which are then raised on the Company’s farms. The Company’s breeding farms, located in numerous provinces across the country, practice good farm management and use the evaporative cooling system.

The evaporative cooling system applies advanced technology to raise livestock and has proven to be an effective method to prevent and control disease, yielding quality products that are sought after in the market. The prices of livestock breeds depend on domestic demand and supply as well as the quality of the breeds.

Meat and Food Products
Products in this category can be further divided according to 2 types of production process, namely animal farming for commercial purposes and processing and manufacture of cooked food products. Details are as follows:

(1) Animal Farming for Commercial Purposes
Products from animal farming for commercial purposes include live chicken, eggs, live ducks and live swine which are distributed to sales representatives throughout the country. The products are also distributed in surrounding local areas, to wholesalers and retailers, or to the Company’s processing plants or other processing plants in Thailand. The selling prices fluctuate according to domestic demand and supply.

Research and Development is applied to continuously improve the farming process, making it suitable to the conditions in Thailand. The Company’s farm management system also has an effective system to control and prevent diseases. This results in faster growth in animals, higher yields and minimizing costs.

In addition, the Company has an office across the country, which acts as centers providing technical information to farmers on how to properly raise animals to obtain fast growth as well as assistance with marketing and distribution.

The Company has a support program for the farming of swine and broiler. The Company selects farmers who have their own farm and farming equipment. Selected farmers receive support in the areas of animal breeds, animal feed, medication and farming knowledge from the Company.

The Company thenundertakes to purchase all yield which meets the CPF standards. Most of the farmers participating in this program also use the evaporative cooling system.

(2) Processing and Manufacture of Cooked Food Products
In meat processing, broilers, ducks and swine from the Company’s farms are brought to processing plants to be cut into meat parts according to customer specifications. The meat parts are then packaged, frozen and distributed as chilled and frozen meat products to wholesalers, domestic retailers and importers in various countries. The selling prices fluctuate according to demand and supply in the country and the world market. The selling prices are also determined by agreement if the products have been manufactured according to customer specifications. Furthermore, the Company adds more value to processed meat products to create cooked food products by flavoring and cooking through the process of boiling, steaming, frying, baking and grilling according to customer specifications. These products are then packaged, frozen and refrigerated, ready for distribution to wholesalers and retailers, fast food restaurants and modern trade outlets such as discount stores and supermarkets. Export products are distributed through importers in various countries, mainly countries in the European Union, Japan and Asian countries.

The selling prices of cooked food products distributed in Thailand and exported, for example frozen karage chicken, frozen steamed chicken breast, chicken green curry with rice, egg tofu, meatballs and sausages, are determined by agreement with customers during the sell process. For ready meal products, the company insists on using CP brand to sell both in domestic market and export.

Aquaculture business
Operations of the aquaculture business are fully integrated. The aquaculture business includes mainly shrimp and some fish. The products can be classified into 3 main categories, namely 1) animal feed, 2) animal breeder and 3) meat and food products, with detail as follows:

Animal feed
The Company is the leader and pioneer in the production in Thailand and distribution of aquatic feed with the main product being shrimp feed. Aquatic feed is produced in the forms of concentrate, powder and pellets and distributed through sales representatives that are located in shrimp farming areas throughout the country. A portion of the feed is distributed directly to shrimp farms in Thailand. Agriculture products such as soybean meal, fishmeal and wheat flour are used in the production of aquatic feed under fully computerized formulation and production processes to ensure consistent quality as required.

Aquatic Breeder
Aquatic breeds come from culture farms and hatcheries, with details as follow:

(1) Shrimp Culture Farms and Hatcheries
Following the Company’s policy of supporting sustained growth and development in the shrimp industry, the Company has developed quality shrimp fry to distribute to farmers, which will increase their opportunity to successfully farm shrimp. In 2004, the Company entered into a joint venture with an American company with shrimp breeding expertise to develop shrimp fry that are suitable to the farming conditions in Thailand. The Company’s culture farms and hatcheries are located in the shrimp farming areas in the eastern and southern regions of Thailand. The culture farms and hatcheries practice good farm management, apply advance technology to raise shrimp and fish and has an effective system to prevent and control disease, yielding quality products that are sought after in the market. The prices of shrimp fry depend on domestic demand and supply as well as the quality of the breeds.

(2) Fish Culture Farm and Hatcheries
The Company has developed fish breed to distribute fish fry to farmers, including the Tabtim fish fry, which was developed from Tilapia fish. In 2006, the Company also succeed in develop Morakot fish breed type, which was developed from Bassar fish.

Meat and Food Products
Products in this category can be further divided according to 2 types of production process, namely animal shrimp and fish farming for commercial purposes and processing and manufacture of cooked foodproducts. Details are as follows:

(1) Farming for Commercial Purposes
The Company realizes the importance of traceability which has prompted the Company to expand its shrimp farming business, resulting in fully integrated operations that produce high quality for the Company’s processing plants as well as other processing plants in Thailand. In the management of the Company’s shrimp farms, research and development and technology are applied to find ways to prevent the outbreak of disease in shrimp and farming methods, which are friendly to the environment and do not cause residue build-up. The Company promotes “Probiotic Farming” which avoids the use of drugs and chemicals.

(2) Processing and Manufacture of Cooked Food Products
Products derived from processing are one of the important products in the meat and food products category of the aquaculture business. The main products are processed fresh shrimp and value-added processed shrimp, most of which are produced for export as chilled and frozen products and distributed through importers in various countries. The selling prices fluctuate according to demand and supply in the country and the world market. The selling prices are also determined by agreement if the products have been manufactured according to customer specifications. Furthermore, The Company has added value to processed shrimp, producing ready to eat cooked food products.

Research and development in this area focuses on processing fresh shrimp into semi-cooked and cooked food products by flavoring and cooking through the process of boiling, streaming, frying baking, and grilling according to the specifications of customers. These products are then frozen and refrigerated, ready for distribution to wholesalers and retailers, and through modern retail outlets such as hypermarkets and supermarkets. Export products are distributed through importers in various countries, mainly the USA, Japan and countries in the European Union.