OPERATIONS
The
Holding and Investment Company (HIC) has a policy of investing
in two lines of agro-industries :
1.
Fully-integrated sweet corn production: seed development; promoting
corn crop production; sweet-corn processing; packaging; domestic
and export sales; and processed sweet corn products trading. The
HIC group has three subsidiaries in the sweet corn business:
| |
a.
Sweet Corn Products Co., Ltd.:
River Kwai International Food Industry Co., Ltd. (RKIFI) holds
75% of equity, while 25% of equity is held by 28 individual
investors. This company develops sweet corn seed varieties
used by RKIFI in its business and markets to the industry.
b. River Kwai International Food Industry Co., Ltd. (RKIFI):
HIC holds 99% of registered capital and paid up capital is
350 million baht. RKIFI promotes corn crop production; processes
sweet corn, and sells in both domestic and export markets.
c. Agri Food Processing Co., Ltd. (AFP):
RKIFI holds 49% of registered capital with paid-up capital
of 30 million baht in a joint venture with Chiang Mai Frozen
Foods PCL, signed on 30 April 2003. AFP markets fresh-frozen
and canned sweet corn products. |
2.
Exports via air of culled, cleaned, and packed fresh vegetables
and fruits. Two companies in the group handle this line of business:
| |
a.
RKIFI:
HIC holds 99.9% of registered capital with 350 million baht
in paid up capital.
b. Agrifresh Ltd.:
RKIFI holds 100% of the registered capital of 1 million baht.
This company exports to selected offshore markets. |
|
REVENUES
BY SOURCE & YEAR
(millions of baht)
|
|
Year
|
2001
|
2002
|
2003
|
|
Source
|
Value
|
Value
|
%Change |
Value
|
%Change |
|
Processed
sweet corn
|
375.57 |
499.33 |
33.0% |
621.86 |
24.5% |
|
Exported
fresh vegetables
|
240.47 |
283.77 |
18.0% |
304.45 |
7.3% |
|
Domestic
sales
|
57.62 |
54.29 |
-5.8% |
78.05 |
43.8% |
|
Seed
sales
|
76.37 |
84.38 |
10.5% |
77.82 |
-7.8% |
|
Total
|
750.03 |
921.77 |
22.9% |
1,082.18 |
17.4% |
Key developments in 2003
HIC formed a joint venture with Chiang Mai Frozen Foods PCL (CMFF),
a fresh-frozen vegetable producer in the North, to manufacture
fresh-frozen sweet corn with production and sales starting in
mid-2003. This project not only increases revenues, but also diversifies
the product line from exclusively canned sweet corn.
HIC subsidiaries formed another joint venture with CMFF to handle
marketing and sales called Agri Food Processing Co., Ltd.
RKIFI
embarked upon three major Business Development initiatives in
2003. They were new key accounts, new areas of geographic focus
and innovation in product and packaging. To this end, the company
began developing close relations with several international food
brand owners and started building infrastructure for marketing
and sales to territory previously untapped. Additionally, new
and innovative packaging technology was researched and studies
have begun for more alternatives to conventional canned packaging
in various sizes.
Outlook for 2004
With
regard to agri business, HIC will adjust the rate of production
of sweet corn to levels appropriate to prevailing economic circumstances
and adjust operating costs accordingly, while taking into account
that the potential demand in the world market is huge. Thai producers
need to accelerate quality enhancement, which HIC is doing by
developing new strains with characteristics similar to those in
the US that will help promote market acceptance.
In
addition, HIC is expanding the air-shipped fresh vegetable and
fruit business, which has excellent prospects, as export demand
continues to grow. At the same time, HIC continues to expand its
core business to increase revenue potential and diversify risk.
In
2004, HIC will emphasize improvements in production efficiency
to achieve more appropriate operating cost levels to accommodate
increases in various cost factors and fluctuating currency exchange
rates, particularly of the US dollar - baht rate, which has reduced
gross profit margins. Other focuses will be on increasing sales
to quality-conscious customers who accept price increases; on
improving packaging by using advanced technology; and on niche
markets that provide higher gross margins than traditional commodity-driven
markets.
Industry overview
At present, RKIFI is the sole producer dedicated to processed
sweet corn in Thailand. Other producers handle a range of vegetables
and fruits, producing sweet corn only occasionally.
1. Data from the Customs Department indicate Thailand exported
57,442 tons of canned sweet corn in 2002, valued at 1,581.3 million
baht, and 76,118 tons, valued at 2,078.5 in 2003 to the following
countries:
|
SWEET
CORN EXPORT MARKETS BY VALUE & GROWTH : 2001-2003
(millions of baht)
|
|
2001
|
2002
|
2003
|
|
Rank
|
Country |
Value |
Rank |
Country |
Value |
%Change |
Rank |
Country |
Value |
%Change |
|
1
|
Other |
339.51 |
1
|
Other |
466.4 |
37.4% |
1
|
Other |
530 |
13.6% |
|
2
|
Korea |
156.1 |
2
|
UK |
324.9 |
142.7% |
2
|
UK |
390.7 |
20.2% |
|
3
|
UK |
133.9 |
3
|
Korea |
193.1 |
23.7% |
3
|
Korea |
225.6 |
16.9% |
|
4
|
Taiwan |
47.0 |
4
|
Russia |
132.0 |
305.4% |
4
|
Spain |
190.5 |
95.0% |
| 5 |
Japan |
68.6 |
5 |
Taiwan |
116.8 |
57.8% |
5 |
Germany |
189.7 |
65.2% |
| 6 |
Germany |
66.8 |
6 |
Germany |
114.8 |
71.9% |
6 |
Taiwan |
141.1 |
20.7% |
| 7 |
Russia |
43.2 |
7 |
Spain |
97.7 |
- |
7 |
Japan |
102.4 |
320.1% |
| 8 |
Lebanon |
42.1 |
8 |
Lebanon |
56.7 |
34.6% |
8 |
Holland |
99.6 |
234.1% |
| 9 |
US |
37.3 |
9 |
Holland |
29.8 |
73.7% |
9 |
Russia |
82.9 |
-37.2% |
| 10 |
Holland |
17.2 |
10 |
US |
24.6 |
-34.2% |
10 |
US |
67.6 |
175.2% |
| 11 |
Spain |
|
11 |
Japan |
24.4 |
-64.4% |
11 |
Lebanon |
58.4 |
3.0% |
|
Total |
978.8 |
|
|
1,581.3 |
61.6% |
|
|
2,078.5 |
31.4% |
Source
: Customs Dept. Product category 2005800005
|
RIVER
KWAI EXPORT VALUES : 2001-2003
(millions of baht)
|
|
2001
|
2002
|
2003
|
| Value |
%
of total exports |
Value |
%
of total exports |
%
growth |
Value |
%
of total exports |
%
growth |
| 325.8 |
33.3 |
491.7 |
31.1% |
50.9% |
598.1 |
28.8% |
21.6% |
The
following table ranks the various export markets by share of total
exports and the rates of growth of those markets.
|
EXPORT
MARKETS : 2003
|
|
%
share of total
|
Fastest
growing by rank
|
|
25.5%
|
Japan
|
320.1%
|
|
18.8
|
Holland
|
234.1%
|
|
10.9%
|
US
|
175.2%
|
|
9.2%
|
Spain
|
95.0%
|
|
9.1%
|
Germany
|
20.7%
|
|
4.9%
|
UK
|
20.2%
|
|
4.8%
|
Korea
|
16.9%
|
|
4.0%
|
Lebanon
|
3.0%
|
|
2.8%
|
Russia
|
-37.2%
|
2.
Prices of processed sweet corn products in major world markets
are dictated by large producers, especially those in the US, with
competition based on price and quality.
3.
In the global market, the consumption of processed sweet corn
has great potential for growth and the Thai share of that market
is still relatively small, offering plenty of opportunity for
continuing growth.
4. The Thai domestic market for processed sweet corn is expanding,
as the product becomes increasingly popular. This has attracted
some big players, increasing competition.
Important producer countries
The
largest producing countries are in North America - the US and
Canada - and Europe - France, Hungary, and Italy. The ten largest
exporting countries accounted for some 97 percent of the world
total in 2002 with Thailand ranking 4th and accounting for some
8%, and HIC accounting for between 31 - 33% of that amount.
|
TOP
10 SWEET CORN EXPORTING COUNTRIES BY VALUE & RANK 2001-2003
(US$ millions)
|
|
2001
|
2002
|
2003
|
| Rank |
Country |
Value |
Rank |
Country |
Value |
Rank |
Country |
Value |
| 1 |
US |
138.7 |
1 |
France |
133.2 |
1 |
France |
127.8 |
| 2 |
France |
112.0 |
2 |
US |
123.0 |
2 |
US |
125.5 |
| 3 |
Hungary |
67.8 |
3 |
Hungary |
72.4 |
3 |
Hungary |
100.7 |
| 4 |
Canada |
17.2 |
4 |
Thailand |
22.0 |
4 |
Thailand |
36.9 |
| 5 |
Belgium
- Luxembourg |
16.0 |
5 |
Canada |
17.2 |
5 |
Canada |
18.8 |
| 6 |
Thailand |
15.7 |
6 |
Belgium
- Luxembourg |
16.4 |
6 |
Belgium
- Luxembourg |
16.9 |
| 7 |
Germany |
9.2 |
7 |
Italy |
10.7 |
7 |
Italy |
7.9 |
| 8 |
Italy |
9.1 |
8 |
Germany |
9.0 |
8 |
Germany |
7.2 |
| 9 |
Singapore* |
4.3 |
9 |
Holland* |
5.7 |
9 |
Holland* |
6.5 |
| 10 |
Holland* |
2.7 |
10 |
Singapore* |
4.4 |
10 |
Singapore* |
4.8 |
|
Total
: |
392.6 |
|
|
413.9 |
|
|
452.9 |
|
Other
: |
10.1 |
|
|
12.8 |
|
|
15.6 |
|
Grand
total : |
402.7 |
|
|
426.6 |
|
|
468.5 |
*
Trading only
Source : FAO (Sweet corn prepared
or preserved other than by vinegar or acetic acid, not frozen)
