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
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
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