Bangkok Ranch resumes exports to EU

Resumption of exports to the European Union and new offshore markets has Bangkok Ranch Plc coming back stronger than ever, according to Joseph Suchaovanich, CEO.

After being hit hard by trade restrictions and a slump in demand caused by the global Covid-19 pandemic,  Bangkok Ranch shipped around 1,000 tonnes of duck meat to the EU in Q4 2020.

The company has recently begun exporting its products to New Zealand, and now plans to develop an export market in Australia. Its new processing plant in Sa Kaew now has a license to export to Japan. It is working closely with Thailand’s DLD to have the plant audited to be qualified to export to the EU.  Exports to the Middle East also got underway in 2020.

The company began to export meat to China in Q1 2020. Unfortunately, China is not a profitable market because the price of locally produced duck meat is highly competitive. Instead, byproducts earn fatter margins. As a result, it is looking to apply for a license to ship byproducts to China. It is also exploring opportunities to develop new markets in Laos, Cambodia, Myanmar, South Korea and the Middle East. 

In his view, the United Kingdom’s withdrawl from the European Union represents a big opportunity for Thai exporters to obtain quota for the UK. 

Exports to the UK and the EU could be split 50:50 in the future because the UK is the largest duck market in Europe. Besides the UK, Germany, Holland and Japan are among the largest importers, he added.

The plant in Sa Kaew will be operable in Q4 2021 or Q1 2022. The final commissioning has been delayed because of Covid-19 which hampers international travel. It plans to ramp up processing capacity at Sa Kaew to replace the current operation in Bangplee which has been in service for 30 years. 

The company has staged a strong recovery after its subsidiary in the Netherlands saw its annual turnover plunge dramatically as a result of a local lockdown aimed at containing the coronavirus.

The Netherlands plant closed in March of last year and remained shut until September. Currently, the plant is processing around 50,000 ducks/day, or 80% of its designed capacity. Nevertheless, it is now earning better margins as competitors in the Netherlands and Germany have suspended their operations.

He said the company was faced with extreme financial hardship because of Covid-19 in Q1, 2020.  Financial performance hit a trough in Q2 with a loss of 95 million baht. Things improved in Q3 when a profit of 1 million baht was reported. Currently, with the resumption of exports to the EU, the company is on track to report 16 million baht profit. Total reported net loss was 36 million baht in 2020. 

In 2020, Bangkok Ranch reported 6.2 billion baht in turnover and a net loss of 123 million baht for the fiscal year. Sales in 2020 declined 1.4 billion baht, around 18% vs 2019.  Operating costs have been cut around 20%. 

With the current lackluster market, it forecasts to process less than 12 million birds/year in 2021 vs 13.6 million birds in 2020. At present, the ducks are processed at the Bangplee plant, which has a processing capacity of 50,000 ducks/day.

He added that Food City, a subsidiary specializing in ready-to-eat meal production – operates below capacity due to the lackluster market. It is looking for strategic partners in food businesses.

With increasing raw material costs, the company is renegotiating with suppliers, rearranging procurement and adjusting its feed formula to cope with soaring raw materials which are the highest they’ve been in eight years. Therefore, there will be no major investments in the next few years as optimizing production capacity is the company’s main agenda.