Philippines: Integrated producer beefing up feed volumes
It has allocated PHP80m (USD$1.6m) in capital expenditure to finance its growth initiatives this year.
“Vitarich is geared up for expansion nationwide to supply the increasing demand for food and animal feed in the country," company CEO, Ricardo Manuel Sarmiento, told local reporters during a media briefing this week.
The firm, which is listed on the Philippines Stock Exchange, said it is in the process of expanding and automating its Iloilo feed mill to hike its output to 187,200 50kg bags a year from the current 93,600 50kg bags on average.
It will open a new feed mill in Davao in July and aims to double the capacity of its chicken dressing plant in the same region to 942,000 heads per month from the existing 471,000.
The company is also looking for partners to expand the company’s sales and distribution network.
Sarmiento noted a shortfall in locally produced livestock, with a significant portion imported. He said the challenge for the industry was to scale up operations and produce everything locally.
A recent Vitarich SEC filing shows it sources feed raw materials locally from traders, but also, when required, from Australia, North and South America, India and Pakistan. It said it is continually undertaking programs to try and replace traditional grain inputs with materials such as food byproducts in a bid to shave costs.
The company generates some 60% of its revenue from its poultry and food business and 40% from its commercial feeds division, which serves the broiler, layer, swine and aquaculture segments. It is also involved in day old chick production.
Last year, Cargill noted that livestock husbandry in the Philippines, a key growth market for it, was undergoing a transition as farms consolidate and grow larger and, thus, require more sophisticated feed ingredients.
In October 2016, the US agribusiness group announced the start of construction of a new facility in the country.
That plant, scheduled to be online by the Q3 2017, is located in Bulacan. Cargill said the site would have capacity of 20,000 metric tons of premix products per year when operational.
When completed, the facility will bring to five the number of animal nutrition production facilities Cargill has in the Philippines. However, it will be the first plant in that country dedicated to manufacturing Cargill’s Provimi range of premix products.
The facility is targeting medium to large livestock farms that may be shifting from compound feeds to developing their own formulations and feed millers who may want a broader portfolio.
Cargill is also investing in a new poultry-processing factory in Batangas through a joint venture with Jollibee Foods Corporation (JFC), one of the largest buyers of chicken in the Philippines.
Fast growing market
Other feed manufacturers have been showing interest in the Philippines. In May 2016, French animal nutrition group, Neovia acquired a Philippines based pig, poultry and aqua feed manufacturer, Popular Feedmill Corporation (PFC).
Neovia has had a presence in that Asian country since 2014 in the form of a commercial subsidiary but it said the purchase of PFC allowed it to strengthen its standing in a fast growing market; it gained feed manufacturing facilities in Cebu and Bulacan.
The Filipino company produces around 150,000 tons of pig, poultry, aquaculture, and pet feed annually.
The Philippines has a population of over 100 million people, which is expected to grow by 57% by 2050, making it then the 10th most populated country in the world, noted Neovia then.
The biggest user of feed, in terms of livestock segments in that Asian country, are broilers, followed by layers and then swine, said the French company.