Tuesday, November 17, 2009

Chia Tai to cut back poultry business

According to a posting on the China veterinary association site, the Chia Tai Company, known as Zhengda in China, is planning to de-emphasize its poultry business to emphasize its food processing and feed operations. The company plans to reduce the share of its revenue derived from chickens and ducks from 47% to 33%. The company plans to increase the food processing share of sales from 18% to 30-33%. The feed share of sales will be maintained at the current 35% share.

The measure is motivated by fears of market risks due to avian flu. Zhengda is one of the biggest players in the meat and livestock businesses in China. The 2004 outbreak of avian influenza had a major effect on Zhengda. It plans to keep its poultry farm in Thailand and purchase additional poultry from outside the company.

Zhengda has been operating in China for about 30 years and has over 20 poultry-raising enterprises that have capacity to raise about 100 million chicks annually. The company typically raises chicks on its own breeding farms that it supplies to small-scale contract farmers for grow-out. Zhengda also sells the farmers feed, and buys back the chickens for processing.

It is not clear whether operations in China will follow the reorganization plan for operations in Thailand.

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