Unrealistic, says Hanley
Published:Thursday | September 8, 2011 | 12:00 AM
... for Jamaica to invest in the cultivation of corn or soya bean
Christopher Serju, Gleaner Writer
IT IS IMPRACTICAL at this time for Jamaica to invest in the cultivation of corn or soya bean with the aim of offsetting the high cost of these raw materials that account for at least 97 per cent of the ingredients used locally to produce livestock feeds.
"Unrealistic. In my opinion it is unrealistic at this time" is how Dr Fred Hanley, technical research/development manager at the Hi-Pro feed mill in Old Harbour, St Catherine, described such a venture during a recent tour of the facilities. While the company has started preliminary research into using some substitutes such as cassava, this is not likely to have the desired cost reduction impact anytime soon.
The main reason, according to Dr Hanley, is the unavailability of enough land space to make such an undertaking commercially viable. He should know, given that the Jamaica Broilers Group subsidiary churns out 235-240 metric tonnes of animal feed each year, with an estimated 110,000 metric tonnes being used in its poultry and fish operations.
"Quite frankly, producing the kind of volumes of corn and soya bean meal we need to make the feeds here would not be feasible under the present structure of acreage that's available," he told the AgroGleaner. "It would take hundreds of thousands of acres."
Hi-Pro produces more than 30 different types of feeds for poultry, cattle, goats, sheep, fish, horses and ostriches, and with the high cost of raw imported material, any hike in the price of corn or soya bean on the international market is likely to be reflected locally.
Limestone and molasses - which are sourced locally - account for very little in the composition of these feeds, with wheat middlings bought from Jamaica Flour Mills also a by-product of imported produce. Therefore, finding local substitute ingredients makes sense, at least in theory. The required economies of scale, however, in this case, makes it impractical, according to Dr Hanley.
"It is very difficult for us to substitute under the volumes we product at. The corn coming out of the United States is from millions of acres, and that puts a cost to it that's lower than what we could manage to compete with here, were we to try and do it, even as high as the cost seems," he declared.
Cost of grain
Meanwhile, Robert Levy, president and CEO of the Jamaica Broilers Group, was cautiously optimistic when asked about the likely impact of natural disasters in the United States on grain prices, and potential impact on local chicken meat prices.
"The big issue that we are watching in the United States is really the cost of grain," he disclosed. "However, we do think that there is going to be some stabilisation over the medium terml, and it is just something that we have to watch, almost on a day-by-day basis. We are very aware of the challenges we face in Jamaica with rising raw material costs, and we do everything to be as efficient as possible," said Levy.
Continuing, he explained the rationale for being optimistic: "We benchmark everything we do against the top operations in the US and we are very efficient at what we do. At this point, I think we are in a real wait-and-see mode. It's a bit early to say."