Sector News

Cargill's South Korea unit launches $100 mln feed plant

November 12, 2015
Food & Drink

(Reuters) – A South Korean subsidiary of U.S. food and commodity company Cargill is set to launch an 870,000-tonne-per-year (tpy) feed plant on Thursday, with full capacity to be hit next year.

Cargill Agri Purina – 100 percent owned by the Cargill parent – started commissioning the plant in February, after spending $100 million on its construction since 2012.

The plant will replace two other facilities with a combined capacity of 720,000 tpy that were shut down this year. Located in the western port city of Pyeongtaek near Seoul, the new plant produces feeds for cattle, hogs, poultry and pets, mainly for the South Korean market.

Cargill Agri Purina currently has about 9 percent of South Korea’s feed sector, where around 60 producers compete for market share, but Lee Bo-kyeun, president of the South Korean unit said on Wednesday the producer has room to grow.

By 2020, the company is aiming for a 12 percent share of the South Korean feed market, he said.

The company processes mainly corn, wheat and soybean meal bought via tenders that can be awarded to suppliers in South America, Europe or the United States.

YunJ Choi, a professor in the agriculture and life sciences department of Seoul National University, said South Korea’s feed industry was estimated to be worth 8.9 trillion Korean won ($7.7 billion) in 2013.

Choi sees local compound feed demand rising to 22 million tonnes in 2020 from 18 million tonnes a year now.

Asia’s feed demand – including China’s and South Korea’s – is expected to be “bullish”, along with regional macroeconomic growth and an emerging middle class, despite some short-term corrections, Rob Heithoff, vice president of Cargill’s Compound Feed and Nutrition Group, said in the Wednesday press briefing.

“Over the long-run we still believe there will be an increase in protein consumption,” and that will require more livestock feed, he said.

He did not provide any detailed growth projections.

Cargill’s South Korean subsidiary formed in 2007 in a merger of Agribrands Purina Korea and Cargill Korea Inc.

($1 = 1,154.2000 won) (Reporting by Meeyoung Cho; Additional reporting by Rebecca Jang; Editing by Tom Hogue)

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