The Charoen Pokphand Group has added a new business group, the feed ingredients trading business, to its stable of 10 business groups as a way to cope with the skyrocketing prices of raw materials for animal feeds.

The new unit of the country's largest agribusiness conglomerate was formed in May to act as hub that links information both on supply and demand of the group's worldwide animal-feed raw materials and sources raw materials for animal feeds for the group from suppliers worldwide.

''The main objective of the new business group is to enable the group to cope with the world's energy crisis, which has begun to affect the farm and food production sector. It will help enable us to better manage the risks both for the animal feeds and human foods,'' said Somchai Kungsamutr, president and CEO of the new unit.

CP Group has to date invested in integrated agricultural businesses in 13 countries worldwide _ Bangladesh, China, India, Indonesia, Malaysia, Russia, Taiwan, Thailand, Vietnam, Laos, Cambodia, Burma, and Turkey. In those countries, some of the group's operations manage both the production and the imports and exports of animal-feed raw materials, such as maize, soybean meal and fishmeal.

Raw materials generally account for up to 60-70% of the total cost of animal feeds.

CP Group currently demands about 20 million tonnes a year of raw materials for animal feeds, with China operators the biggest users.

According to Mr Somchai, the new unit will also invest in agricultural futures, not only to secure raw-material supplies both for the group and other operators but also to hedge against future price fluctuations.

''In the future, we have set a target to invest in warehousing or logistic development, particularly in countries such as Laos, Cambodia, India and probably China, where post-harvesting processes are not very well-prepared.

Bangkok Post, July 24, 2008