Operations in Brief

Leading Agro-Industrial and Food Conglomerate

Charoen Pokphand Foods Public Company Limited is the leading agro-industrial and food conglomerate in the Asia Pacific region. The Company operates in both the livestock (swine, broilers, layers, and ducks) and aquaculture (shrimp and fish) businesses. The vertically integrated businesses incorporate the manufacturing of animal feed, animal breeding and animal farming; meat processing, the manufacturing of semi-cooked meat and fully-cooked meat; food products and ready meal products, as well as the meat and food retailer and restaurant businesses.
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CPF is a pioneer and leader in the production and sale of animal feed in Thailand. The major products include swine feed, chicken feed, duck feed, shrimp feed and fish feed. CPF produces various form of feed, such as concentrate, powder and pellet, with feed-mill plants located in every region throughout Thailand. The Company sells to small independent farmers and large farms, both directly and via appointed agents or distributors across the country.

CPF’s feed formulas are produced with adherence to the nutrition requirements specified for each animal type and its stage of growth. All production processes are computer controlled to ensure the uniformity of quality and compliance with exacting standards. As a result, CPF is able to produce feed of a high quality and a low feed conversion ratio to help farmers reduce their farming costs. These feeds are distributed under Company-owned brands such as CP, Hyprovite, Hi-Gro and Star Feed; Novo, Safe Feed and Erawan;, Hogtonal, C.F. and Anvipro; Marine, Hi-Grade, Turbo and Hilac, Blanca, Stargate, Safe Fo and Safe Fish.

The Company has set up a central purchasing unit which is responsible for the procurement of major ingredients used in the production of feed. The main ingredients for feed production are agricultural products such as corn, soybean meal, fishmeal, wheat flour, etc. The Company’s procurement policy does not encourage the monopolized purchasing of raw materials from any particular traders. Additionally, the purchases must be conducted with strict adherence to the related standards regarding the source and quality of raw materials, the Company’s corporate social responsibility policy, environmental policy and costs that are competitive in the industry. The central purchasing unit acts as a center for information collection both locally and internationally. The Company’s procurement policy also accords priority to domestic raw material producers, particularly those situated in close proximity to our feed-mill plants. This is to support local farmers, as well as to minimize transport costs. Only when domestic supply is insufficient, or is of inferior quality, would the Company resort to the importation of raw materials.

CPF places significant importance on innovations for technology improvement, with the aim of developing quality and efficiency in the production processes to obtain safe products of good quality while maintaining its cost competitiveness in the industry. In process-control at every stage of the production, as well as raw material control, are implemented in order to ensure quality. Our feed-mill plants are equipped with a laboratory and facilities for the quality control of raw materials prior to them entering the manufacturing process. Furthermore, CPF has a team of technical experts that assists the customers and guides them toward successful farming by providing technical knowledge regarding animal nutrition, which can be adapted for each location. This knowledge is provided through seminars and academic service centers. Our technical experts are available for consultation and to give advice on animal husbandry. Useful information on animal husbandry is disseminated regularly through printed materials and electronic media, via the internet.

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CPF operates major livestock farming in Thailand, with swine, broiler, layer, duck, shrimp and fish as the main products. Company-owned animal farms and breeding farms are located in numerous provinces throughout Thailand. The products under livestock farming business include animal breeds, live animals, products from live animals and basic processed meat, as details as follows:

Animal breeds
The Company is a leader in the research and development of natural genetic selection, with the aim of obtaining quality breeds that are healthy, sturdy and suitable for farming conditions in each country. The Company produces parent stock of the animals as well as piglets, broiler chicks, layer chicks, layers, table ducklings, egg-laying ducklings, shrimp fry and fish fry. Some of the animal breeds are imported from abroad. Then the Company breeds and raises the animals for its own use as well as for sales to independent livestock farmers and agents/distributors in Thailand.

Live animals, products from live animals and basic processed meat
Products in this category consist of live swine, live chicken, live ducks, chicken eggs, duck eggs, live shrimp, live fish and basic processed meat. These products are distributed to end consumers by Company-owned food processing plants and other processing plants in Thailand, and they are sold to wholesalers, retailers and agents/distributors throughout the country. Outputs from farming then undergo various basic meat-processing, such as cutting and trimming, depending on market requirements. Subsequently, the products are processed as either fresh, chilled, or frozen, and then sold under CP brands to wholesalers and retailers, both domestically and internationally

In order to promote animal welfare, the Company attaches the utmost importance to research and development in the fields of natural genetic selection, farming technology and techniques that are suitable for local growing conditions. In conjunction with a modern farming system, numerous standards are also implemented, including various internationally recognized standards, an environment management standard, the Animal Welfare Standard, and the Good Manufacturing Practices standard of the Ministry of Agriculture and Cooperatives.

The Company also employs the best practice on Biosecurity as a standard operating procedure for effective disease prevention. A closed and evaporative cooling system with computer-controlled feeding has been implemented in all of our livestock farms. The ventilation and lighting of housing units are properly adjusted to provide appropriate conditions for each type of animal, and the closed system is bio-secure to prevent the possible entry of potential carriers. All of these are computer-controlled throughout the farming process in order to maintain suitable growing conditions.

The Company also controls the animal population in each unit to retain proper density. There are also preventive and handling measures for animal injury and diseases. Our on-site veterinarians conduct health checks on the animals both during the farming period and prior to transportation. Animal transportation is performed in a manner that minimizes discomfort, by using specialized vehicles.

Our aquaculture business employs probiotic farming technology, where the utilization of chemicals is minimized. The Company has also implemented a closed re-circulating water system for shrimp farming in order to save water, prevent possible epidemics, and operate in a more environmentally friendly way.

The Company has committed itself to sustainable development by implementing equipment and technology for animal husbandry that promotes animal welfare and well-being. In addition, the Company has incorporated the ‘Five Freedoms of Animals’ into its farming system. The ‘Five Freedoms’ consist of freedom from hunger and thirst; freedom from discomfort; freedom from pain, injury or disease; freedom to express normal behavior and freedom from fear and distress. More importantly, CPF is the first company outside the European Union to be certified under the Assured Chicken Production (also known as Red Tractor Assurance), which is a poultry welfare standard from the United Kingdom.

The Company has implemented strict procedures and standards for animal welfare from the farming period, through the transport phase, and to the processing step. In addition, the Company does not use hormones, which are prohibited substances according to the Agricultural Standards Act and the Food and Drug Administration, or antibiotics to stimulate growth in its farming processes.

In addition to its Company-owned farms, the Company also promotes broiler and swine farming by providing animal breeds, feed, drugs and technical knowledge to independent farmers who have passed the screening processes. The farmers are compensated for production outputs that meet the standards set by the Company.

The Company’s strategies emphasize the research and development of animal breeds and the implementation of farm management technology for a standard farming system. The aim is to improve the farming system in order to meet the market’s requirements and local environmental conditions, and consequently to achieve higher quality and efficiency in production, as well as to raise work standards to an international level. An information technology system is employed for quality management, which enables the traceability of information during every process. As a result, the enhancement of efficiency for the whole production chain is achievable. In addition, the Company regards post-sales services highly, as evidenced by a high number of representative offices throughout Thailand, which act as academic service centers that provide technical knowledge about farming, farm management, marketing and sales to independent farmers.

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The Company adds value to its basic processed meat by additional processing in order to produce cooked, semi-cooked and ready-to-eat food products. The products are then packed, chilled or frozen, and distributed either under private brands, or the Company-owned CP brand via retailers and wholesalers, fast food operators and modern trade outlets such as convenience stores, supermarkets and superstores. The Company also has representative offices set up in 17 countries, and its products are exported through importers in their respective countries. Currently, the Company exports to over 40 countries in five continents, with the European Union, the United Kingdom, Japan, the United States, and other Asian countries as major export markets.

The Company has a research and development team for the food product line which specializes in developing food products that meet consumer demand and changing lifestyles. The Company places the utmost importance on product quality in terms of nutrition, taste, and most importantly, safety for the consumer. Some of the cooked products that are available domestically and internationally include frozen karaage chicken, seaweed roll chicken, grilled teriyaki chicken, green curry chicken with rice, savoury soya duck with egg noodles, roast duck, meatballs, sausage, kurobuta pork, shrimp wonton and spaghetti with carbonara sauce. The Company produces and brands its products under CP, Kitchen Joy, Five Stars, BK, and BKP, as well as using private brands.

Management towards Product Sustainability
As a fully-integrated agro-industrial and food conglomerate that produces to serve ‘from feed to fork’, the Company strictly enforces quality control practices throughout the whole production chain, from its feed-mill plants to its food processing plants. Of equal significance, the Company is also well aware of its social responsibilities to both the consumers and the Company’s clients in producing and selling food products that are hygienic and safe for consumption. These management approaches ensure product sustainability, and can be categorized into three components:

1. Quality
The Company attaches the utmost importance to product quality. The products must be safe, nutritious, hygienic, and manufactured according to production processes that meet established standards, ranging from the raw materials for animal feed that are required to pass quality control and are traceable from the sources to in-process controls for every step of every production line. The Company is committed to improving production processes to meet efficiency levels recommended by international standards. Furthermore, various internationally-recognized management systems have been employed, such as ISO 9002, Good Manufacturing Practices (GMP), Good Agricultural Practice (Global GAP), British Retail Consortium (BRC), and Assured Chicken Production (ACP).

2. sumer Health and Safety
Currently, consumers are demonstrating an increasing demand for reassurance regarding the safety of food products. As a result, the Company is dedicated to the development of its products in order to meet the consumers’ requirements. Modern technology has been implemented in all production processes so as to increase the efficiency of the evaluation and diagnosis of possible health risks that each food product bears. This analysis is conducted at every step, ranging from the raw materials, the production process, and the transportation, until the product is in the hands of the final consumer. Moreover, a control system has been implemented to eliminate or minimize the causes of hazards. The standard systems that are employed are the Hazard Analysis and Critical Control Point (HACCP), and the Occupational Safety & Health Administration Management System (OSHAS).

3. Environment
In addition to the product quality aspects of nutritional value, taste and safety; CPF also emphasizes minimizing the environmental impacts of its production processes. In its search for ways to reduce environmental impact, the Company endeavors to reduce its energy and resource consumption, and re-use as much as possible. The Company implemented the environment management standard (ISO 14001) to its production process. In addition, information about the carbon footprint are included on product labels, in order to provide the consumers with greenhouse gas emission details for each product, so as to facilitate the decision making process at the point of purchase, as well as to increase the competitive capability of Thai industry in the international arena. At the end of 2012, the Company was able to add the carbon footprint information to the labels of 93 products.

Food Retail Outlets
The Company is investing in order to expand distribution channels through its own outlets and retail shops, selling chilled and frozen ready-to-eat products under thebrand as well as cutlets or basic processed meat, according to customers’ requirements. The Company operates six types of outlets as follows

1. Five Star Business   operates as a franchise business. There are seven types of Five Star kiosk, namely the roasted-chicken kiosk, the fried-chicken kiosk and the Hainan chicken rice kiosk; the noodle soup with shrimp wonton kiosk, the ready-meal kiosk, the sausage kiosk and the steamed duck with soy sauce kiosk. As of 31 December 2012, there were 4,752 Five Star kiosks across the country.

2. Chester’s Grill   is a fast-food restaurant business. As of 31 December 2012, Chester’s Grill had 176 branches, 68 of which were Company-operated, while 108 were franchisee-operated. In 2013, Chester’s Grill will be rebranded as ‘Chester’s’.

3. CP Kitchen  is a fast-serve restaurant, operated under the concept of a ‘fresh, full and fair price’. The first branch of CP Kitchen was opened in 2011, and as of 31 December 2012, there were 7 branches of CP Kitchen.

4. CP Fresh Mart  engages in the retail business, selling fresh food, cooked food and ready-to-eat products under the CP and CP Fresh Mart brands. CPF is committed to making CP Fresh Mart a center of fresh, clean, safe and quality foods. CP Fresh Mart has two key operations, namely its retail store, and its community refrigerator. As of 31 December 2012, CP Fresh Mart operated 623 retail stores: 270 in Bangkok and its vicinity, and 353 in provincial areas, as well as 9,100 community refrigerators.

5. CP Fresh Mart Plus   is a new-format retail business known as a ‘super convenience store’. CP Fresh Mart Plus provides a retail space for selling food and consumer products, and is equipped with dine-in areas, which emphasize a new convenient lifestyle for consumers. The first CP Food Market store was opened in 2011, and as of 31 December 2012, there were 4 CP Fresh Mart Plus in operation.

6. CP Food World CPF   opened the first ‘CP Food World’, its food court business, in late 2012 at Siriraj Hospital. This food court provides consumers with diverse food shops, both Company-owned and private. The Company also plans to expand the business into business areas, office buildings and educational institutes. As of 31 December 2012, there was 1 branch of CP Food World in operation.