Philippine agriculture company turns global | Philippines Today US

MANILA ? Filipino firm ANI (AgriNurture, Inc.), the country?s first publicly listed farm to market firm, has successfully transformed itself into a global agricultural company.
?As of today, we are more global, by end of the year, two-thirds to three-fourths of our business is overseas,? declared ANI chairman Antonio Tiu.
?We are now doing businesses in at least seven countries and exporting to various countries after a series of offshore acquisitions,? Tiu said at the opening of the third quarter earnings season where he also announced a robust second quarter and first half performances this year.
According to Tiu, the series of acquisitions of agriculture-related distribution companies abroad has started to impact on their revenue generation.
?We have organic growth, but growth in acquisitions would push for a triple-digit growth in our second half performance of this year,? Tiu said.
ANI created local entities for its newly acquired businesses in China, Hong Kong, Taiwan, Australia, Indonesia, US and EU. Its acquired assets in these countries have revenue turnover of between USD20 million to USD100 million.
Normally, ANI either owns 100 percent or over 50 percent of its overseas assets saying it has been a company policy to be in control of their acquired assets.
ANI, however, has initially gone into the distribution businesses in their overseas acquisition rather than on agricultural production because they are not yet familiar with the local market.
Recently, Tiu said ANI had to divert some of its exports, particularly bananas to the Middle East and Russia because of the strict quarantine measures following the Philippine-China territorial dispute.
At least 50 percent of its mango exports go to Hong Kong and Taiwan but bananas and pineapple are mostly for the mainland China.
ANI is also strengthening its existing brands which include Big Chill (fresh juices), Tully?s (coffee), Vita Coco (a US brand where it supplies coco water).
Going into the distribution channel would also provide more cash flow for the company, Tiu explained.
With its global expansion, Tiu said that ANI has incurred higher operating expenses as shown in its second quarter earnings report because they have to establish the their local entities abroad and hire more talents.
?As the operating expenses stagnate, this would translate into higher profit margin and bring in more revenues,? Tiu added.
ANI?s aggressive forays overseas do not mean diluting its Philippine operations, which is 50 percent geared for the export market.
?The vision is still to venture in the Philippine agriculture and expand outside,? Tiu said.
Tiu, however, noted the challenges in the Philippine agriculture business, especially agricultural infrastructure like irrigation, farm to market roads, lack of micro-finance programs for farmers, research and development, and marketing support.
Aside from poor agriculture infrastructure, the vegetarian Tiu blamed the very low vegetable and fruits consumption in the country pegged at only 28 kilos per capita compared to 180 kilos per capita consumption based on the standards of the World Health Organization.
?ANI should have grown six times based on that purchasing necessity of Filipinos,? Tiu pointed out.
Tiu expressed hope that the Philippines can catch up with the agricultural development of neighboring countries.
Other factors affecting land productivity in the country is the agrarian reform program, having old farmers with no succession in the family, and the OFW phenomenon.
The kind of agricultural production and focus given to this sector has presented more opportunities for an agricultural companies like ANI.
For its part, ANI is spending P1 billion in cap expenditures to support its 13 percent growth in rice as against the industry?s very low growth or even nil at times.
The Philippines has the lowest productivity rate per hectare of land among the ASEAN countries. Yield of rice per hectare is only at 3.6 tons.
ANI is also providing micro-financing to rice farmers in terms of hybrid rice seedlings to increase their yields or double their yield per hectare. As much as 80 percent of its lending to farmer is insured by Landbank.
Meanwhile, he said that the last flooding catastrophe that inundated some of its rice fields in Pampanga had little impact because the farmers have just planted their seedlings and could still be salvaged.
Moreover, ANI is allocating P1 billion capital expenses for its coconut water facilities. Out of the seven coco water manufacturing facilities in the country, ANI owns two.
It has also expanded the capacity of its Bulacan and Cagayan de Oro cold chain and a bigger facility on a property along the South Luzon Expressway.
ANI remains the country?s biggest supplier of vegetables and fruits to supermarkets and is rapidly expanding to wet markets and the hotel, restaurants and conventions market.
?We have a big cash cow in bananas, mango, coconut water, and rice trading,? said Tiu.
ANI?s global expansion would focus on the adding value to its products and creating more brands because these would bring higher revenues.

Source: http://www.philippinestodayus.com/news/business/philippine-agriculture-company-turns-global/

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