BROILER CONTRACT GROWING Achieving Better Profitability Through Modernization
DR. VICENTE C. MANALO, JR, EMBA Bounty Fresh Food Inc Contract Growing- Controlled Environment Systems Department BFFI- CG CES
OUR COMPANY Ø Bounty Fresh Food Inc (BFFI), together with its sister company Bounty Agro ventures (BAVI), is the second biggest broiler integrator in the Philippines. Ø A fully integrated broiler operations, will produce 140M in 2010. Ø The two companies operate in 19 branches nationwide. Ø 80% of company’s income come from broilers. Ø Only company in the Philippines that continue to invest on company owned facilities (broiler farms, GP and PS breeder farms, hatcheries, feedmills). Ø Company is in Hog breeders, slaughter hogs, colored broilers, day-old chick sales, commercial layers, layer DOPs and RTL pullets.
OUR COMPANY
Ø Recipient of “ASIAN LIVESTOCK INDUSTRY AWARD 2009, given last October 2009 in Malaysia. Ø First and only Philippine Agricultural company to receive the award. Ø Previous awardees include: Ø Ø Ø Ø
Charoen Phokpand (CP) – (Thailand 2001) Leong Hup Berhad (Malaysia, 2003) PT Japfa Comfeeds (Indonesia, 2005) Suguna Poultry (India, 2007)
Kuala Lumpur
Malacanan Palace
Bounty Agro Ventures Inc North Luzon (Ilocos ( Ilocos))
Western Luzon (Pangasinan Pangasinan))
North Eastern Luzon (Isabela Isabela)) Talisay Bicol region (Naga)
Southern Tagalog
Calbayog Tacloban
Roxas
Ormoc Cebu
Ilo Ilo Bacolod
Butuan Cagayan De Oro
Pagadian
Zamboanga
Davao General Santos
PER CAPITA CONSUMPTION OF MEAT IN SELECTED COUNTRIES, in kilos, 2008 BROILER
Source: USDA – FAS, Livestock and Poultry Outlook, Oct 2008
PORK
BEEF
UAE
66.2
US
45.1
Kuwait
59.7
Malaysia
38.7
Brazil
38.5
Saudi
37.1
Hong Kong
36.8
Argentina
32.5
Canada
30.5
23.7
32.2
Mexico
29.0
14.5
24.1
Taiwan
28.8
40.5
4.6
EU - 27
15.9
39.3
16.0
8.1
13.9
4.0
Philippines
28.3
41.2
12.1
37.2
69.8
16.2 69.3
INTEGRATED POULTRY OPERATIONS GRAND PARENT FARMS
FEEDMILLS
PARENT STOCK FARMS
HATCHERIES
BROILER FARMS
ANIMAL HEALTH GROUP
QUALITY ASSURANCE PROCESSING PLANTS
PRODUCT DEVELOPMENT
SALES & MARKETING
Challenges § High cost of production § High cost of feed inputs § High cost of importation
§ Poor productivity of broiler farmers § § §
Housing Mycotoxins Diseases
§ Effect of environment § Third quarter syndrome § Heat Stress, El Nino, La Nina
§ Imports and High farm gate prices § AFTA
MODERNIZATION § Continuous investment on new technologies all through-out the production chain.
Grand Parent/ Parent Farms
Broiler Hatcheries
(Controlled Environment)
(Additional 20 machines in 2010
MODERNIZATION
Bulacan Feed Mill
Inoza Feed Mill, Tarlac
Subic Grain Terminal 100k MT grain capacity
Premium quality compliant facilities • BFFI - Pulilan :
products
from
NMIS
•National Winner- Search for best meat Establishment 2005, 2006, 2007, 2008 PDP AAA category. •ISO 9001:2000 (Quality Management System) •ISO 22000:2005 (Food Safety MS) •ISO 14001:2004 (Environmental MS & OHSAS) •ISO 18001:2007 (Occupational Health &Safety MS) •Halal Certified / HACCP-GMP •Accredited to serve the export market
–
MODERNIZATION IN BROILER GROWING § To produce better quality broilers throughout the year § To have consistent efficiency in broiler performance § To cope up with the new technology in growing high quality broiler § To have a better income and offset high production cost § Improve environment of broilers through use of modern equipments. § Ensure good return on investments for business partners.
What is Tunnel Ventilation ? Tunnel ventilation is a system where exhaust fans are located at one end of the house and two large openings are installed at the opposite end. Air is drawn through these openings, down the house, and out the fans, like a wind tunnel. A ventilation system alone can never reduce inside temperatures to levels below temperatures outside the building. If lower temperatures are desired, then a Cooling System must be utilized
Evaporative Cooling System
Evaporative cooling refers to the cooling effect produced when water evaporates. The energy used to evaporate water is taken from the air, cooling the air as energy is removed.
Evaporative cooling is the most inexpensive way to cool air. The pumps and fans needed for evaporative cooling are less expensive to buy and much less expensive to operate than conventional air conditioning that uses refrigerants and compressors.
Advantages vs. Open Side Systems § Can grow more birds per square foot / can load up to 45% more broilers § No problem with environmental stresses especially heat stress – can grow big birds even during summer § Birds grow faster and more uniform § Better broiler efficiency § More cycle per year § Better income
Disadvantages • •
Higher capital outlay Needs highly trained personnel.
Advantages with BFFI § We have 4 company owned broiler complexes. § We recommend based on our experience to reduce / minimize learning curve. § We have competent technical serviceman knowledgeable about the system.
INTERNAL BROILER COMPLEX ORANGE FARM, 2002 Bgy.. Kawili Bgy Kawili-- wili wili,, Capas Capas,, Tarlac
PAPAYA FARM, 2003 Bgy.. Sapang Tagalog Bgy Tagalog.,., Tarlac City
MANGA FARM, 2004 Bgy Sto Nino, Concepcion, Tarlac
AVOCADO FARM, 2005 Bamban,, Tarlac Bamban
BLUEBERRY FARM, 2010 Bamban,, Tarlac Bamban
Contract Growers- Cool Cell
•the first contract grower in the Philippines with pre-fabricated buildings, •the first double deck building designed with a wind load of 200 km/hour in Asia
A
§ Pre-fabricated house.
• Double deck, solid wall panels, insulated ceiling and walls. Date Harvest 3/31/2010 2/14/2010 12/31/2009 11/16/2009 9/30/2009 8/18/2009 7/6/2009 5/19/2009 3/31/2009
DOC 117,679 116,824 121,145 115,743 113,062 119,480 113,601 105,578 103,709
Age 29.51 29.23 29.11 29.05 30.16 26.70 29.77 26.80 27.85
HR 95.93 95.97 95.05 95.24 94.00 95.06 96.41 95.53 96.24
ALW 1.61 1.51 1.60 1.49 1.27 1.39 1.61 1.45 1.40
FCR 1.52 1.57 1.55 1.54 1.79 1.47 1.54 1.43 1.48
BPI net P/bird Amount Net Sq ft/b Per Hse 345 19.00 2,144,622 0.54 29,420 315 17.57 1,969,499 0.55 29,206 339 17.81 2,051,272 0.53 30,286 317 17.91 1,973,766 0.55 28,936 221 13.12 1,393,890 0.57 28,266 335 19.13 2,172,512 0.54 29,870 340 20.34 2,227,707 0.56 28,400 362 19.21 1,937,487 0.61 26,395 327 18.35 1,831,846 0.62 25,927
• First 2 cycles, BFFI put a technician to supervise.
Single Deck Pre Fab House ft/deck Floor Area ft2 Density (ft/bird) House L xw (m) Floor Area m2 Birds/m2 Population/cycle
40 x 400 16,000 0.55 1,487 19.56 29,091
Grower’s OPEX per Cycle (Prefab) Timing from Chick-in Light, water and power monthly LPG -7 Labor / Food monthly Litter Material -4 Med/Vac 52 Repair & Maintenance 52 Others 52 Income from Manure Income from Sacks
Cool Cell 1.00 0.60 1.75 0.50 0.50 0.15 0.25 -0.50 -0.25 4.00
Amount 30,189 18,113 52,830 15,094 15,094 4,528 7,547 (15,094) (7,547) 120,755
• Income from manure is for cool cell farms with slats. •Cost of LWP and LPG is lower with prefab as compared to regular cool cell since prefab is well insulated & without leaks.
ROI § § §
Assume P 14 grower’s fee less P 4.00 OPEX, 7 cycles per year Assume 0.55 ft2/bird Assume P 10M total house cost (pre-fabricated building and equipment), 70% loan, 10% pa (loan payable in 5 years). § ROI of 20% Five-Year Loan Gross Income Less OPEX Net Income
Year 1 2,840,151 (811,472) 2,028,679
Year 2 2,840,151 (811,472) 2,028,679
Year 3 2,840,151 (811,472) 2,028,679
Year 4 2,840,151 (811,472) 2,028,679
Year 5 2,840,151 (811,472) 2,028,679
Less Loan Amortization Net Income Net Income Per Bird
1,569,595 459,084 2.26
1,569,595 459,084 2.26
1,569,595 459,084 2.26
1,569,595 459,084 2.26
1,569,595 459,084 2.26
Contract Growers- Cool Cell Own Construction
B § Own construction, double deck Date 3/23/2010 2/5/2010 12/23/2009 11/5/2009 9/12/2009 8/3/2009 6/17/2009 5/4/2009 3/15/2009 1/29/2009 12/18/2008 10/29/2008 9/4/2008 7/11/2008 5/15/2008 3/28/2008 2/6/2008 12/15/2007
DOC 240,438 239,251 244,141 245,541 225,838 243,836 246,418 245,479 208,209 250,593 241,673 239,399 234,279 206,223 201,549 217,055 228,690 219,071
Tonnage 348126.55 314156.41 371000.96 365741.97 291677.36 347863.05 333604.81 325111.56 276202.69 359785.73 408833.8 388611.01 361137.1 309772.77 328706.22 328143.54 337359.06 321788.1
Age 30.84 28.85 31.49 31.07 28.94 32.29 30.61 28.77 30.89 29.82 33.43 35.24 33.90 36.08 35.48 33.07 30.58 29.79
HR ALW FCR 95.01 1.52 1.53 95.11 1.38 1.51 94.65 1.61 1.57 95.06 1.57 1.54 95.00 1.36 1.61 96.51 1.48 1.72 95.98 1.41 1.61 95.00 1.39 1.46 95.02 1.40 1.72 96.04 1.49 1.60 96.09 1.76 1.61 96.20 1.69 1.72 95.11 1.62 1.67 96.17 1.56 1.83 96.98 1.68 1.75 96.88 1.56 1.62 97.02 1.52 1.54 96.40 1.52 1.51
BPI net P/bird Amount Net 307 17.82 4,070,741 301 18.04 4,104,167 307 18.04 4,168,210 311 18.12 4,228,971 277 16.02 3,437,864 257 16.42 3,864,410 274 17.00 4,020,592 315 19.11 4,457,492 250 15.29 3,025,764 301 17.30 4,164,290 315 20.01 4,646,057 267 18.50 4,260,993 272 19.13 4,262,606 228 16.01 3,175,212 263 17.05 3,332,913 283 18.02 3,790,280 314 19.02 4,219,748 327 19.00 4,012,496
Financing § Company has made similar presentations to different banks (Landbank, Security Bank, Planter’s Bank, etc.). § Funding from ACEF (interest free, 30-40% equity).
Design / Specification Three important points for effective ventilation § East – West orientation § Insulation § Tightness
REQUIREMENTS FOR NEW FARMS Site for Inspection • minimum area of one (1) hectare • within the agricultural zone of the community • one (1) km away from residential area • one (1) km away from nearest poultry or piggery farms • with reliable source of electricity and adequate potable water • All-weather road leading to and within the farm, passable to 10-wheeler truck
