For the past few years, the Dutch group has been exporting feed products to Myanmar from Vietnam, where it already has a strong manufacturing base.
The new facility is said to be strategically located in Yangon, close to the prime agriculture production areas in Myanmar. It has current capacity of 120,000 tons per year, with expansion potential for up to 240,000 tons on an annual basis, said the company.
“We expect that the economy will recover fast in the coming years. Driven by this economic development, the need for animal protein will grow, livestock farming has to professionalize. Our ambition is to contribute to this process,” said a spokesperson for De Heus when asked what the trigger was for the Myanmar investment.
De Heus Myanmar will focus mainly on the poultry sector, but it also sees ample growth opportunities, it said, in the pig and cattle sectors.
Hatching a plan…
This is not the only investment by De Heus in that country. It is also involved in the development of hatchery operations in Myanmar.
The spokesperson told this publication: “To ensure a healthy operation, poultry farmers in Myanmar depend greatly on a constant supply of high-quality day-old chicks. That is why we have the intention to set up our own hatchery, together with Belgian company, Belgabroed. It will comprise multiple breeder farms. These allow us to ensure a constant supply of sufficient day-old chicks to our customers in Myanmar.
“This hatchery will be in operation in the middle of 2017 and will be subsidized by the Dutch government. The development is part of a complete approach with the goal to support the independent farmers in their further professionalization.”
Market insights
Agriculture is the backbone of the Myanmar economy: the sector accounts for about 30% of GDP, over 50% of total employment and approximately 20% of exports. Cultivated land, covering 12.8 million hectares, has the potential to be increased by nearly 50%, according to a report produced by officials at the Dutch embassy in Yangon last year.
Commercial livestock production in the country centers on broiler and layers and to lesser extent on dairy cattle.
Alongside the growth of incomes and population, the demand for livestock products will rise sharply. The poultry meat market is expected to grow around 15% annually, noted the authors.
They forecast the market for dairy products there will grow at an even faster rate - 30 to 100% in the next decade.
But, at 6kg of poultry meat and 40 eggs per person per year, existing consumption levels of poultry products per head are still low compared to other countries in the region, said the authors.
Charoen Phokphand Company (CP) has been active in the Myanmar poultry sector for more than 10 years and is the major vertically integrated player in the market. Japfa Comfeed Myanmar started a vertically integrated poultry business two years ago that includes feed mills, poultry breeding farms, hatcheries and commercial and contract farms.
Dairy dynamic
Myanmar’s dairy sector is still underdeveloped, according to the Dutch report. Dairy imports were valued at USD$75m in 2012.
There are currently only around 400,000 dairy cows in total, with six large dairy farms around Yangon. The majority of dairy farms have 20 or fewer heads of cattle.
The authors said the demand for fresh milk in the country is much higher than existing output and demand is expected to continue to increase considerably in the coming years. The Netherlands, they added, has been requested by the Myanmar government to assist in the development of the dairy sector.
In addition, there are projects underway to develop the aquaculture industry in the Asian country.