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Logo of Phnom Penh Post newspaper Phnom Penh Post - Chicken empire enters Cambodia

Chicken empire enters Cambodia

THAILAND'S largest conglomerate, Charoen Pokphand (CP Group), has ventured into Cambodia

with a modest but creative strategy which has paid off for it in other countries.

"We plan to do just what we did in Thailand, Taiwan, Indonesia, Malaysia, China,

and Vietnam," said Suwit Cheewesat, assistant vice president of CP Group and

president of CP Cambodia.

In addition to its share in Camtel, a joint venture in the Kingdom that sells Motorola

cellular phones, CP has entered the chicken market. If successful, CP will expand

into other sectors.

The company plans to commit $12 million in poultry, pig, and other agricultural projects

by the end of 1997.

Much of the challenge lies in creating a market that barely exists. Cambodia's agricultural

industry is small-scale, scattered, and inefficient. Individual farmers raise 80

percent of the 4.5 million chickens that are sold in the Phnom Penh area each year,

according to CP's estimates.

CP stepped into the chicken market by giving baby chicks to interested farmers in

the Phnom Penh area. After the chickens have grown, the farmer will sell the birds

back to CP at an agreed-upon price.

Success depends on changing consumer tastes. Compared to other Southeast Asian countries,

the biggest challenge in Cambodia is persuading farmers and consumers about the value

of CP's white-feathered chickens.

"Cambodians only know about native chickens which don't provide as much meat,"

Suwit said. With brown and black feathers, the native chickens also look very different

from CP's.

Suwit is optimistic that this challenge can be overcome, however, and expects that

the Kingdom's chicken consumption will grow 10 percent annually, compared to 12-15

percent growth in Thailand.

Others agree that CP is likely to be successful in Cambodia. "CP's strength

is in its sheer size and expertise in the agro-industrial sector of Southeast Asia

and China," said Craig Martin, of the consulting firm IMIC. "There's money

to be made in chickens."

Supplying feed is where CP begins to carve out a foothold in Cambodia. The company

sets the stage by requiring that participating farmers buy CP-made feed. While the

company argues that its feed ensures a high quality bird, it has also constructed

a captive market.

By July CP plans to operate a feed mill with an eventual capacity of 60,000-tons

per month. The mill will have a steady demand from the company's other projects.

By the end of the year CP expects to produce layers in addition to broiler-breeders

at two large chicken farms currently under construction. Not only will these birds

consume CP-produced feed, but they will produce eggs and baby chicks for its other

chicken ventures.

The company also plans to step into the pig market - expecting to sell 6,000 piglets

to farmers this year - and from there, it will move into large-scale rice and maize

cultivation for export as well as fast food restaurants. Following the pattern established

in China, CP's Chester's Grill may link up with Kentucky Fried Chicken to build a

fast-food chicken restaurant.

It is also likely, according to Suwit, that CP will enter a host of related fields:

supplying plastic feeding troughs, buckets and other equipment, as well as veterinary

products for pigs and chicks.

"You'd be amazed at the number of products you can get from a chicken,"

explained IMIC's Martin. "[CP] may build chicken processing factories to prepare

and sell chicken parts. It could also sell eggs and feathers and the by-products

of chickens and eggs. Egg yolks can be used for dried protein ingredients in a range

of foods and shells can be used for fertilizer and other products."

CP's entrance into Cambodia will likely hurt small-scale farmers who do not participate

in CP's contract farming because the demand for native chickens will fall.

The demand for chickens imported from Thailand, which account for 15-20 percent of

the total market, will also decline. Some importers have already signed up to buy

chickens from CP's farmers.

One segment that CP will likely not affect is high-quality chickens, according to

John Harper, Director of United Distributors Cambodia, which imports food, wine,

and spirits for hotels, supermarkets and hotels. Imported from Denmark and the United

States, these chickens are corn-fed.

Harper believed that many expatriates and restaurants prefer the taste of UDC's chickens

- corn-fed and imported from the United States and Denmark - over CP chickens, which

are fed a mixture of corn, rice bran, soy bean meal, and fish meal.

"It's like beer," Harper said. "No matter the price or the similarity

in taste, some expats and Khmers will continue to prefer imported chickens over domestically

grown chickens."



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