Caribbean Producers bows out of liquid eggs market
Liquid Eggs Limited, the marketing arm of the Jamaica Egg Farmers Association (JEFA), has found a replacement for joint venture partner Caribbean Producers Jamaica (CPJ), which is bowing out of the investment after eight years.
The Montego Bay-based plant was operated through Caribbean Egg Processors Limited, which has been a persistent lossmaker. The plant is being relocated to St Catherine under the new partnership.
Executive Chairman of CPJ, Mark Hart, said on Monday that some
matters relating to the buyout were confidential.
A JEFA director who spoke to Wednesday Business on condition of anonymity said Liquid Eggs and its new partner - which he identified only as a player in the egg market - had decided to buy CPJs' shares and that the decision to "draw the cheque" had already been made. He said the plant relocation was well under way and that while the first deadline for May had been missed, production was expected to resume in June.
"CPJ has decided to come out of the business. When the cheque is drawn on our side, which we have already decided to do, we will issue a joint statement," said the JEFA representative. "That is supposed to happen any minute now," he added.
CPJ disclosed nine-month losses of US$37,600 from the egg plant to March 2015, due to continued suspension of operations. It builds on the US$59,787 of losses disclosed by the company last year for the full financial period ending June 2014. At that point, CPJ's share of losses had accumulated over the years to US$312,241.
The JEFA director said that under the new partnership, Liquid Eggs Limited is planning to roll out a diversified range of products - including egg whites only for the baking, cosmetic and other industries, and eggnog as a valued-added product - and would be pushing into the export market in the Caribbean.
"We had to review the business model from which the plant operated. The supply side was one of the problems," he said.
Its contract to supply Nutrition Products Limited is still in effect, despite the shuttered operation. The contract is being serviced from inventory, said the JEFA representative.
The buyout price being paid to CPJ was not disclosed. The egg plant's fixed assets were last estimated at around US$118,190, but its debts were around five times the asset value. CPJ estimated its share of the plant's net liabilities at more than US$277,000 last year.
The first indication that CPJ was pulling out of the business after eight years came in its half-year earnings report to December 2014, where it indicated that the egg plant's operations had been suspended due to an ongoing shortage of shell eggs. CPJ said then that both partners were reviewing their options.
The JEFA director said that Liquid Eggs itself did not need to raise financing for the buyout, but that the company would invest alongside its new partner in product diversification and outreach to markets in the Caribbean.
"The equipment belongs to us, and that is the biggest item of cost. In the new arrangement, we will continue to own machinery," he said.
Caribbean Egg Processors supplies its liquid eggs product to the hospitality industry, quick-service restaurants and local bakeries.