Following the devastating May 12 earthquake in China's Sichuan province, the Bangkok-based Charoen Pokphand (CP) Group has drawn up a three-year business plan establishing an integrated livestock- and poultry-manufacturing industry covering that country's Southwest.
The expansion will be handled by CP's business arm, the Chia Tai Group, which specialises in agribusiness in China.
The investment required has not yet been estimated, because several "unstable" factors must still be considered. These include higher basic-infrastructure costs to meet China's new requirement that buildings be constructed to withstand earthquakes of magnitude 8-9 on the Richter scale. The May 12 quake measured 7.9, and the company's present structures are designed to withstand earthquakes of magnitude 7.
The expansion will be aimed at enabling the company to penetrate China's domestic market further. Plans include the manufacture and distribution of feed meal, construction of slaughterhouses and meat-processing lines through to finished products.
Unlike the company's businesses in China's coastal provinces, the Sichuan strategy is not focused on exports.
Chia Tai vice chairman Damrongdej Chalongphuntarat, who is based in Sichuan and responsible for China's southwestern region, said the investment plan would encourage the company to focus more on producing value-added goods.
The expansion will cover Hunan, Hubei, Chongqing and Sichuan provinces, the main agricultural areas of the Southwest.
At present, Chia Tai's business in the area covers pig and chicken farming, seed production, feed meal, tea, concentrated animal feed and vineyards. The company operates seven feed mills in the area and is China's largest feed-meal producer, with a capacity of 1.48 million tonnes a year.
The expansion plan will not only provide higher-quality materials for the company, but also upgrade local farming systems.
"We try to encourage locals to undertake more standard farming than their present focus on backyard feeding," Damrongdej said.
At present, Chia Tai is studying the establishment of a chicken slaughterhouse in the region and plans to establish two new feed-meal plants costing 70 million yuan (Bt341 million) each. They will be located south of the Sichuan capital of Chengdu.
At present, livestock generates 80 per cent of company revenue. The rest comes from tea and other businesses. Chia Tai's revenue is expected to grow 15 per cent this year, the same as last year.
Although located near the centre of the devastating May 12 earthquake, Chia Tai suffered only relatively minor problems, including the death of 67,000 chickens worth about 500,000 yuan. The company's total chicken production reaches 12 million a year.
Damrongdej said the quake had affected the company's transportation and that consumption had fallen, because the region's main tourist destinations were temporarily closed.
Immediately after the quake, the company donated 18 million yuan worth of cash and products to the relief effort.
The Nation, July 2, 2008