CEO Agrifood chief fulfils father's rice bran oil vision
Having successfully negotiated his family business' huge Bt100-million debt, Pita Limjaroenrat, managing director of CEO Agrifood Co, has forged ahead in the effort to make his father's dream come true, establishing a rice-bran-oil operation that targets
Pita, 30, had to suspend his graduate studies in politics at Harvard University’s John F Kennedy School of Government and his pursuit of a Master of Business Administration degree at Sloan School of Manage-ment at the Massachusetts Institute of Technology when his father suddenly died of a blood infection in 2006. At the time of his death, Pita’s father was in the process of setting up CEO Agrifood after borrowing Bt100 million, and working out the structure of the company, which was to be the fulfilment of his ambition to set up a family business.
As the oldest son, Pita had to take the helm of the business to complete his father’s work. There was only Bt20 million to Bt30 million in cash left in hand when his father died. He started teaching himself the ropes, but this period of putting the business through a trial run was costing Bt2 million a day at one point.
Pita’s father wanted to set up a manufacturing plant for rice-bran oil, ensuring value creation for Thai rice production. He had also looked forward to marketing the oil in modern packaging, rather than the usual plain plastic bottle.
To achieve the goal, technicians from India, Brazil and Germany were brought in to help set up machinery and a processing line to ensure high-quality production. The company’s Japanese shareholder was satisfied with the standard of quality and placed orders for export back to Japan.
CEO Agrifood is a joint venture between Thai and Japanese partners with a 73:27 shareholding structure, respectively. Japan is also the firm’s main market; the country cannot increase its rice production because of high land prices and wages.
In 2007, the first lot of the product was marketed, half locally and half as exports. Total sales revenue was Bt400 million.
In the past few years, the price of oil has risen, peaking at US$150 per barrel, taking with it the prices not only of fuel crops, but also of vegetable oil. It is forecast that the price of petroleum and vegetable-oil products will continue to rise. As a result, the company targets Bt1.1 billion in sales this year, 70 per cent from the domestic market and the remainder from exports. The sales forecast for next year is Bt1.6 billion.
Pita has since finished his two master’s degrees after a hiatus of three years. He is now in full command of the family business, which hopes to put Thai rice-bran oil on the front lines of the global oil market, along with olive oil from Italy, rapeseed oil from Canada, soybean oil from the United States and palm oil from Malaysia.
“We have proved that Thai rice-bran oil is of the highest quality in terms of smoke point [the temperature at which a cooking fat or oil breaks down into glycerol and fatty acids], freedom from genetically modified organisms, and its ability to be used for multiple purposes. Thai products have good potential to become market leaders,” Pita said.
Pita differs from those who want to make Thailand the “kitchen of the world”. Instead, he said, Thailand should try to increase demand for its rice-bran oil to the level enjoyed by global coffee brand Starbucks.
“Successfully creating such global demand will create real value-added for Thai products and supply-chain businesses, instead of simply supplying raw materials.”
The company’s products are traded under its own brand, TRBO (which stands for The Rice Bran Oil Company), covering not only rice-bran oil but also refined rice bran. Products include TRBO food supplements, male and female cosmetics, and snacks.
Rice-bran oil is a new sector with room for growth. Moreover, the current market leaders – particularly the biggest and second-biggest firms – are concentrating on cooking oil.
“Our business is in an unexplored market, so we have few competitors,” Pita said.
He has drawn up a blueprint for the company through 2020, which targets total sales of Bt10 billion and a business network operating in three regions. The final stage of the plan is to list the firm on the Stock Exchange of Thailand, not only to mobilise funds, but also to boost the rate of return from the company’s growth.
The company’s factory is in Sing Buri and employs a total of 120 administrative staff and workers with a production capacity of 120,000 tonnes of rice-bran oil per year. Pita plans to invest Bt30 million next year in new machinery.