JAPFA: Nourishes Emerging Asia with Quality Proteins

Japfa CEO, Tan Yong Nang. (Photo: Company)

Keeping cows and chickens happy is an important part of Tan Yong Nang’s job description.

The Chief Executive Officer of Singapore-listed Japfa Ltd believes animal welfare is essential to the industrialised agri-food company’s vision of feeding Asia’s developing economies with essential proteins.

“Great milk comes from happy cows,” said Tan, 54.

“Animals that are stressed cannot produce, so we make sure our cows are comfortable in their pens, our chickens have clean coops with low levels of ammonia, and they are physically as well as emotionally healthy.”

To build a good life for its animals, Japfa consulted renowned Colorado cow whisperer and animal scientist Temple Grandin to design its processing yards in 2014, incorporating her famous S-shape design in its beef feedlot in China.

The S-ramp reduces stress to livestock by taking advantage of natural cattle behaviour.

Grandin also spent two days in Japfa’s dairy farms in Shandong province, inspecting the company’s facilities, operating procedures, and working with its livestock handlers.

“We’ve adopted a sophisticated approach to animal health, nutrition, welfare and husbandry – all of which reinforce our high production yields and the quality of our products,” Tan said.

Japfa aims to capitalise on the rising affluence of middle- and lower income consumers in the region’s emerging markets.

“Per capita consumption of protein in the economies of China, India, Myanmar, Indonesia and Vietnam is still low,” he noted.

“There are over three billion people living in our target markets who account for more than 40% of the world’s total population. To feed them, you need economies of scale, as well as scientific and industrialised methods of farming.”

Our dream is to become a pan-Asian multinational with a good handle on all the major protein groups.

- Tan Yong Nang
CEO

Japfa

Before joining Japfa, the Bachelor of Arts in Economics graduate from University of Cambridge helmed Delifrance Asia Ltd in 2003, and was named COO of Li & Fung Group in 2005. Prior to that, he established his career with private equity group PAMA, and was part of a senior team responsible for its overall portfolio.

“I love food – otherwise I would not be able to excel in my current role,” Tan quipped with a mischievous smile.

Genuine farming expertise, however, is hard to find and even harder to develop, with an extended payback period, he added.

“There are many farms around, but it’s not easy to translate those into industrialised businesses as most are home-run outfits, and it’s very hard to consistently build scale.”

Another key element is breeding, which is at the heart of Japfa’s operations.

“Breeding determines the productivity of your offspring and the quality of your products,” he said.

Japfa is focused on bio-security, implementing stringent operating procedures while establishing strategic alliances with global leaders in breeding research. Given mounting concerns over food safety and animal disease, the identification, traceability and tracking of livestock is critical.

“To have traceability, you need to have control of your upstream operations. Animal life cycles are long, and breeding operations could span four generations. It’s not easy to build that up well, and consistently,” he added.

Since livestock farming is intensive in nature, disease control is always a priority, particularly in Asia. This is less of an issue in US and Europe, as those continents are less densely packed, and population and livestock are usually not in close proximity, Tan noted.

“We spend a lot of money ensuring disease doesn’t get into the farm – humans shower three times a day to get into a breeding farm, we have a team of vets and our own animal vaccination facility,” he added.

“The large scale of our operations allows a wider geographical spread of our livestock farms, which mitigate the spread and impact of disease.”

It’s all about being bold in setting goals, and having the tenacity to overcome challenges that arise. “I’m quite stubborn that way,” he smiled.

In the same vein, Tan enjoys building enterprises. “Isn’t it better to construct the clock, rather than just tell the time?”

Since his previous roles in finance and private equity were mostly transactional or passive in nature, he felt the urge to “get my hands dirty”.

“I wanted to put my money where my mouth was – build something, see the results of that labour, and Japfa gave me just that opportunity,” he added.

The next milestone was a public listing. Historically, the company had used internal cash and borrowings to expand.

“We needed other sources of capital to get to the next phase of exponential growth, and that’s why we went for the IPO in Singapore – equity funding is a key avenue for us,” he said.

Japfa's consumer food business has facilities to manufacture and process chilled or frozen poultry, beef, and seafood.
(Photo: Company)
Apart from his passion for management, Tan, who has a daughter, 21, and a son, 16, places a premium on intellectual curiosity.

“Many people are intelligent, but they waste it by not using their brains or thinking, and that really pains me,” he said. “Everyone must learn how to learn – continuously.”

This also forms the basis of problem-solving in any organisation, he added.

Needless to say, Tan rarely loses sleep over any hiccups. “Things that are out of my control are things I do not worry about. I just make sure we have a buffer – if anything goes wrong, we can still survive.”

He believes that in running a business, there are very few situations in which no options are available. “Usually there are solutions, if you think hard or are creative enough,” he said.

“A creative solution doesn’t have to be an Einstein formula – once you challenge the assumptions, you should be able to find the answer.”

• While the Indonesian rupiah has strengthened in 1Q 2016, the Group expects the currency to remain volatile in the near term. In Indonesia’s poultry market, fluctuations in day-old chicks (DOC) and broiler prices are expected, due to the seasonal and cyclical nature of the industry.
• In view of China’s economic slowdown, raw milk prices are expected to remain sluggish in the near term, while feed raw material costs are likely to soften. Other Asian markets could also continue to see fluctuations in raw material costs and selling prices.
• The Group will keep a close watch on the competitive and regulatory landscape, to anticipate and mitigate any challenges. It remains focused on building on its fundamentals and executing its diversified growth strategy to sustain long-term growth momentum.