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Putting customers’ profitability first to sustain growth

Putting customers’ profitability first to sustain growth
Cover Story Feature in LaMB Magazine By Fermin Diaz
Livestock And Meat Business Magazine Vol. 4, No.5


The multi-billion peso feed industry is increasingly becoming a tougher ground for players to operate that millers are implementing a variety of management strategies to outclass their rivals, earn higher profit and gain a bigger market share.

Typically, the most common approaches they use include offering price discounts to volume orders and providing easier payment terms to their distributors and farmer-clients so as to maintain their patronage.

Some millers also resort to manipulating macro and micro feed ingredients to produce rations at the least cost possible and launching high pressure ad campaigns in various media platforms to promote their finished goods.  Others go as far as pirating their competitors’ salesmen, technical workers, animal nutritionists and feed formulators to accomplish their commercial objectives, among other tactics.

But an emerging feed company in Pulilan, Bulacan, has been adopting a time-tested principle to guide its dealings, one its owners and managers claim has enabled their enterprise to thrive in good and bad times for nearly 6 years now.

For Premium Feeds Corporation, the key to sustaining growth lies not in an overriding effort to sell as many bags of feeds as possible. Rather, it is anchored on a genuine desire to help customers become profitable first by meeting their animals’ nutrition requirements with quality and affordable feeds that ensure good growth.

“What makes us different from the competition is we do not give weight on profit alone. Our mandate is to help our customers become profitable first for sustainable business,” said company President and CEO Jerry Uy during an interview with LaMB Magazine recently.

Uy said part of his company’s corporate stance is to treat clients as genuine friends and partners  by engaging them in a relationship anchored on the values of  honesty, loyalty and working  responsibly to gain trust and being accountable in every function and position where quality and reliability is important.

This is demonstrated, he said, by letting his group absorb risk or cost for as long as it can whenever crisis afflicts the feed business, instead of immediately passing on the same risk to customers in terms of higher prices.

“Customer profitability is more important to us. It has also become our commitment to look at all possible options to mitigate risks faced by customers if there is crisis. We manage to bear the risk as much as possible and communicate to them the realities of the business, like rising cost of feed raw materials, which need to be absorbed depending on the current market price of pork or chicken,” Uy said.

The 40-year top man of Premium Feeds Corporation also shared that when customers are hit by misfortune like floods and animal diseases that result to losses, the company takes effort at helping rebuild their farms by offering support.

“We do not leave clients helpless when they are undergoing crisis,” Uy pointed out, adding that the gesture of providing genuine customer support has become an attribute of the company for years. He said it has become a valued practice carried onto him by his father who founded and started the family enterprise about 37 years ago.

His father started as a feed salesman and later stockholder of Valenzuela-based Far East Agricultural Supply, Inc. Established in July 1980 what used to be known as  Premium Feeds Manufacturing Corporation. He died in 1997 leaving son Jerry, then a third year BS Business Administration student at the University of Santo Tomas, to eventually take over.

“To me, my father was the greatest salesman because he spent a lot of time with customers in understanding their needs, helping address their concerns and offering quality and affordable feeds that helped ensure their profitability and allowed their business to grow,” recalled Jerry, the youngest son in a brood of six.

“I saw these things in my dad so I continue to adhere to his values and follow in his footsteps,” he added.

The early years

The old Premium Feeds Manufacturing Corporation (PFMC) was founded in 1980 by Victor Uy, a businessman of Filipino-Chinese descent, as a feed manufacturing outfit. It was put up out of his commitment to produce quality and affordable feeds to supply the growing animal nutrition demand of mostly backyard poultry and livestock raisers who dominate the market back then.

With less than fifty workers, some basic milling tools and a few trucks for hauling, he started producing feeds in Barangay Santulan, Malabon City, catering mostly to small-scale chicken and pig farmers looking for quality yet reasonably priced rations.

The business was run as a family-oriented enterprise which also diversified into production of day-old chicks in Sariaya, Quezon. At an early age, Jerry and his siblings were tasked to involve themselves in various aspects of milling operation while employees, treated like family members, were given occasional assignments aside from their main job that offered extra income opportunities.

When PFMC began producing feeds for its own poultry farm in the early 1990s, it dawned upon   its management the importance of further enhancing the quality of its finished  goods. This came after officials realized that improving on feed efficiency works positively toward obtaining  better farm performance and attaining higher profit.

PFMC’s move to improve its feed formulation, upgrade operating system and increase output  to produce other feed types were also prompted by growing demand for quality nutrition . Back then, a number of animal raisers were starting to upscale their farm from backyard to semi- commercial operation and going into  production of other poultry species like duck and quail aside from broiler and layers.

Business diversification

While PFMC remained a core family enterprise, it gradually grew in size and stature, enabling it to enhance its capabilities and diversify into other allied businesses in the late 1990s.  This happened even if the animal feed industry saw the entry of new players which started to pose stiffer competition during the period. Other siblings ventured into aquaculture feed production (Feedmix Specialist, Inc.), aquaculture and fish farming (Fisher Farms, Inc.), and contract broiler operation (Foster Foods, Inc.). Thus, became a consortium of the Uy Group of Companies.

Each business unit is being run independently by Jerry’s other siblings. Each one has its separate organizational and financial structure and developed its own core competency. But each unit is being guided by a common set of values and  everyone worked  together in harmony and synergy to achieve their common commercial goals and objectives.   

In the early 2000’s, the feed market became increasingly competitive and price no longer served as the sole determinant for staying in the business. Small and mid-sized pig and poultry farmers who have learned the importance of farm efficiency and competitive performance became more demanding in their feed choices in order to cope with challenges posed by larger farms determined to increase their market share.

It was also around this time that more players carrying local and foreign feed brands were entering the market and expanding their footprint. PFMC stood up  to the challenge and continued to thrive in producing affordable feeds by maximizing the core values of every business unit of the Uy Group of Companies.

From flooded waters to plant transfer

Disaster befell on PFMC in September 26, 2009 when Typhoon Ondoy induced history’s highest rainfall over Metro Manila that day, bringing heavy flooding in the nation’s capital and placing its feed plant in Malabon under water for several days.

Company officials disclosed that some P100 million worth of assets were lost in the flood, notably thousands of tons of soaked feed raw materials and finished products  that became unfit for animal consumption and had to be condemned.

Working on a crisis mode, Uy narrated that he had to struggle for weeks to put the enterprise back in shape and to send a message of assurance to clients, distributors and employees that the company will remain in business and will prevail amid the adversity.

“We resorted to toll milling just so we can meet prior purchase orders from customers and to supply the feed requirements of sister company Foster Foods,” Uy,  then barely 32 years old when the flood happened, said.

After the tragedy, the company President decided to  gradually decommission the Malabon plant for good and began relocating  the business  to the north by investing in the construction of a new facility in Bulacan using internally generated funds.

The birth of Premium Feeds Corporation – modern plant, state-of-the art feed technology

By 2012, Premium Feeds Corporation started full operation of its new, fully automated  feed manufacturing facility along Maharlika Highway in Dampol 2nd A, Pulilan, Bulacan.  It is located less than a kilometer away from the Pulilan exit of the North Luzon Expressway.

The plant complex, built on a three-hectare acquired property, boasts of three pellet mills that finish up as two production lines that are capable of churning out 60 metric tons of feeds per hour at any given time. Its enormous output potential is a marked contrast to the 8-ton per hour production capacity of the dismantled facility in Malabon, company executive said.

The plant features six steel grain silos – each silo capable of accommodating up to 2,000 mt of feed raw materials. The facility is also equipped with a modern feed laboratory, a quality control section, a two-storey office building, a large flatbed storage area that can handle up to 5,000 mt of raw feed ingredients or finished products in sacks, among others.

“Our facility in Pulilan is considered one of the largest single-site feed plant in the country today,” shared Dr. Rodel Brucal, Premium Feeds Corporation Sales and Marketing Director.

While the company takes pride in using modern production system and state-of-the-art tools and equipment, it also endeavors to live up to the vision of its founder, which is to be able to continue producing quality and affordable rations for poultry and hog raisers so as to make their enterprises profitable.

Market reach; customer relations

Today, a wide selection of Premium Feeds Corporation products find their way in the market, notably in Northern and Central Luzon where the company has strong presence. Through its network of distributors  located in  various strategic areas, market coverage has reached far and wide, with some of its rations  sold even in remote places like Apayao. The company also serves commercial farms in Luzon through direct placement.

Officials said about 60 percent of the feed they produce consists of hog rations, the other 40 percent for poultry. Of the poultry feed that goes out from the plant, a big portion is made for layers and ducks, the rest for broiler and quail.  

According to Dr. Rodel Brucal, the company maintains a strong client base among backyard raisers. But since a large number of them are evolving into semi-commercial farm owners and operators, Premium Feeds Corporation sees this growing trend as an opportunity to  serve and engage in all types of customers regardless of size.

“In all opportunities, we are open to all who need our help,” Brucal said. “We are ready to serve everyone the best way we can.”

Challenges and opportunities

While the entry of large multinational players in the feed industry is seen by the firm as eating up the market pie and posing a challenge to its operation, officials  have expressed confidence that a key to their sustainability would be in maintaining  loyalty of current  farmer-clients and developing and nurturing genuine relationship with them and with new ones.

Towards this goal, Premium Feeds Corporation has committed itself to delivering products and services consistent with standards that merit total customer satisfaction at optimum cost. The company also engages in a work environment that imbibes quality as a way of life for its employees and customers even as it is creating opportunities that develop and apply manpower competencies and capabilities to serve customer needs.

Officials also pointed out that the threat – and actual incidences, of animal diseases especially among backyard raisers also serves as serious challenge to their business. To address the issue, Premium Feeds Corporation allocates part of its budget for the conduct of veterinary missions  to farmer- clients of its distributors as part of its extended or after-sales service to them.

“We try to educate backyard raisers on the importance of proper animal health care and maintenance,” Brucal shared. ” In these vet missions, we provide our clients free vitamins, iron, and dewormers.”

For all the downside of the business, officials said outlook of the feed industry remains positive and opportunities continue to  abound  because the demand for meat is rising  to cope with  the growing  need of the country’s ‘ expanding population and requirement for animal protein.

“We are a pork and chicken eating country and demand is strong due to our rising population,” Brucal said.

As Premium Feeds Corporation positions itself in the marketplace filled with players of various sizes and with different business propositions, it wants to remain distinct, giving stronger preference to keep its values of trustworthiness and dependability intact over the desire to attain the highest sales revenue and to be at the top.

“It doesn’t matter if we will be Number 1 or Number 2,” Uy said.

“We want to be known more as a very reliable feed company offering quality feeds and services and with a reputation of trustworthiness and dependability.”