TUF subsidiary in shrimp business JV with Mitsubishi

TFM, the second largest Thai shrimp-feed producer and a subsidiary of Thai Union Frozen Products (TUF), will hold a 51-per-cent stake while Mitsubishi will have 49 per cent in the joint venture. Initial investment will be Bt560 million, which will be increased to Bt900 million in the future.
Rittirong Boonmechote, managing director of the shrimp business unit at TUF, said that the joint venture would provide an enhanced supply chain for both TUF and Mitsubishi, allowing them to procure good-quality shrimp raw materials from Thailand and offer their customers 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.
Rittirong added that the investment would include purchase of existing mid-scale shrimp farms and setting up environmentally friendly new ones along the Thai coast. Initially, the new firm will acquire two existing shrimp farms in Satun and Trang provinces, currently owned by TFM. The new venture targets total annual production capacity of up to 10,000 metric tonnes 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 the 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 who 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 that starts from hatchery, farming, shrimp feed production, processing through 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, Rittirong said. It would also help to strengthen and expand the group’s global shrimp business going forward, he added.