Food scare in China is good news for Thailand's CP Foods

Mon Aug 18, 2014 7:22am EDT
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By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK (Reuters) - Business is booming at Charoen Pokphand Foods Pcl (CPF) (CPF.BK: Quote), Thailand's biggest meat and animal feed producer, especially now it has won orders for chicken products from McDonald's Holding Co (Japan) (2702.T: Quote) after a food scare in China.

The Asian food giant is also benefiting indirectly from the conflict in Ukraine: after Moscow imposed a ban on many food imports from Western countries in retaliation for their sanctions, some Russian firms turned to CPF for chicken.

The resulting demand for exports has boosted meat prices in Thailand and that could help CP Foods post revenue growth of 15 percent this year, higher than its target of 10 percent, said President and CEO Adirek Sripratak.

"We have received orders from McDonald's. Strong demand for exports helped push up chicken prices and the company will move orders from the domestic spot market to export to customers," he told Reuters in an interview.

Regional companies including Japanese firms turned to Thailand for chicken after Shanghai Husi Food, a unit of U.S.-based OSI Group LLC [OSIGP.UL], was accused in a TV report of having improperly handled meat and using expired food.

McDonald's has said it had shifted business to Thailand by boosting purchases from existing suppliers McKey Foods Services (Thailand) Ltd, a unit of Keystone Foods, and Cargill Thailand.

"The industry is short of supply and we've got a full order book now as people are asking us to accelerate our shipping after the China food scare," Adirek said. "This is a good opportunity for CPF."

"Russia is very keen to buy chicken from us. They contact us every day and they want to secure food supplies," he said, adding CPF was negotiating on prices and the volume of exports.   Continued...

Passersby walk past a McDonald's store in Tokyo July 31, 2014.  REUTERS/Issei Kato