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<< Back Dec 18, 2012

Thai Union Frozen Subsidiary Entering Farming JV with Mitsubishi

Thai Union Feedmill Co. Ltd. (TFM), the second largest Thai shrimp feed producer and a subsidiary of Thai Union Frozen Products Public Company Limited (TUF) - a leading global seafood manufacturer, has entered into a shrimp farming joint venture with Mitsubishi Corporation (MC), one of the largest trading companies in Japan.

Mr. Rittirong Boonmechote, Managing Director of the shrimp business unit at TUF and President of Thai Union Feedmill Co., Ltd. (TFM) revealed that TFM would hold a 51% stake of this new venture while MC 49%. This joint venture would provide an enhanced supply chain for both TUF and MC, allowing them to procure good quality shrimp raw materials from Thailand and offer their customers of reliable product traceability. In addition, this investment should help achieve both parties' mutual objectives of secured sourcing and sustainability. This strategic initiative will also make use of TUF's feeds and baby shrimps, which in turn helps develop its feed quality and hatchery business, achieving an end-to end integrated shrimp business.

The initial investment will amount to 560 million Thai baht and would eventually increase to 900 million Thai baht in the future. This amount will include purchase of existing mid-scale shrimp farms and setting up new ones (environmentally-friendly) along the Thai coast. Initially, the new firm will acquire two existing shrimp farms in Satoon and Trang provinces, currently owned by TFM. The new venture targets a total annual production capacity of up to 10,000 metric tons by 2018. In order to achieve full product traceability and quality assurance, the new firm will also operate a shrimp hatchery business by acquiring TFM's subsidiary Thai Union Hatchery (TUH).

Thanks to economic development and growing population in emerging countries and consistent demand from the existing markets, the overall demand for seafood is increasing continually, likely outstripping supply in the near future. However, increasing demand also comes with more stringent requirements. For instance, consumers are now asking for higher food safety and security standards for shrimp products.  Therefore, only shrimp suppliers which can offer assurance on food safety and traceability will benefit from these developments.

Through this new venture, TUF will be able to offer an integrated shrimp supply chain network which starts from hatchery, farming, shrimp feed production, processing thru distribution. The ultimate goal is to secure safe and reliable raw materials in order to meet its worldwide customers' growing need for products that provide traceability. It would also help to strengthen and expand the group's global shrimp business going forward, Mr. Rittirong added.