Seprod adds Latin flavour - Enters two South American markets, eyeing three more for grain export
Manufacturing and distribution company Seprod Limited has landed new markets in new territory for the group that will see its grain venture putting another 15 per cent of unused capacity into play.
Jamaica Grain & Cereals Limited is currently exporting a by-product from its mill, called wheat middling, to two South American countries, and is looking to finalise negotiations for distribution arrangements in at least three other Latin American countries.
The additional production needed to serve those markets is expected to grow capacity utilisation at the mill on the Kingston waterfront by 15 per cent to around 65 per cent, but is gunning for even more. Seprod CEO Richard Pandohie says breakeven for the plant, which was commissioned over two years ago, in March 2018, was 30 per cent utilisation.
“We are now at 55 per cent capacity on the wheat mill and 50 per cent capacity on the maize mill,” Pandohie told the Financial Gleaner following Seprod’s annual general meeting on Monday.
Jamaica Grain is one of two company’s milling flour locally, the other being market leader Jamaica Flour Mills Limited, which is owned by American company Archer Daniels Midland.
Jamaica Grain – which itself is a 50/50 joint venture between Seprod and an American partner, Seaboard Overseas Trading Group, a division of Seaboard Corp – currently lays claim to a 30 per cent share of the domestic market.
“At a minimum we want to have about 80 per cent capacity utilisation which would take it to about 40 per cent market share, plus a strong export market,” Pandohie said.
He adds that the market opportunities that have opened up in the Latin American region is due to the pandemic.
“We can sit and whine about COVID-19, but it’d be foolhardy to pass up the opportunities opening up as a result of the disruption. It’s opening the doors to markets that we’d never had access to before now,” he said.
Wheat middling is used for animal nutrition.
“We’re shipping four container loads of product per month to Ecuador. We’re also in Colombia,” he added.
Jamaica Grain’s links to the Latam markets were facilitated through the partnership with Seaboard. The current contracts are valued at approximately US$70,000 per month. That translates to around $9 million to $10 million monthly at current exchange rates.
Pandohie says Seprod is further targeting Ecuador, as well as Panama, Chile and Costa Rica for more business – for supplies of middling, flour, maize and pre-mixed baking products – markets he said that as far as he knows have never been supplied with milled products from Jamaica.
It’s always been Seprod’s plan to make inroads into the export market through Jamaica Grain.
Closer to home, the pandemic has also opened up markets for the grain mill in Caricom neighbour Trinidad & Tobago.
“The mills do both corn and wheat, so we’re now supplying raw material to the Trinidad market for their snack manufacturers,” said Pandohie.
“Why, you may ask. That is because the disruption in Brazil has created some opportunities,” he said.
Seprod currently earns 15 per cent of its yearly $32 billion of revenue from exports, but he expects that ratio to grow to 32 per cent by the end of financial year 2021.
Pandohie says he is looking to finalise at least three export deals, the first of which is expected to close in early October and the others by the end of that month.
“We’re looking for global brands where we say to them ‘we’ll make your product in Jamaica’,” he said. “With our contract manufacturing capability, we’re attracting business where we are producing in Jamaica but for overseas consumption.”