Manuel Romo, director general, PROAN, said that domestic competition and adoption of the best technologies have helped the Mexican egg industry be competitive on world markets.
Proteína Animal, SA de CV, has 25.2 million layers making it the world’s second largest egg producer, and the largest in Mexico and Latin America. The company is better known by its acronym PROAN or the egg brand San Juan, named after the location of its headquarters in San Juan de los Lagos, in the Los Altos area of the state of Jalisco in Mexico.
Manuel Romo, director general, PROAN, who is the son of the company’s founder, said that in 1954 his father had several businesses and that he got into the poultry business that year. “When the first 500 pullets arrived, which were a novelty and were very many, I was about 7 years old. His passion was always the animal agriculture," Manuel said.
Multi-protein company
PROAN is involved in the poultry, swine and dairy industries; it is a multi-protein global company. "In fact, the name of Proteína Animal [Animal Protein in English] precisely comes from there, of marketing and diversifying animal protein production," points out Manuel. PROAN’s poultry business is fully integrated. In addition to being partners with Hyline, PROAN has hatchery and breeding facilities, a slaughter plant, a feed mill with capacity of 4,000 metric tons per day and an egg products plant. The company also owns cropland, a packaging manufacturing plant and a railway terminal.
Growth and obstacles
Egg production has enjoyed a steady growth, always following market needs. "Our growth stems from the demand and not the supply of our products; our customers and our financial strength tell us the time to grow," Manuel said. The road has not been without obstacles to overcome. "Through the years, we have faced many problems; we all have been through one economic crisis after the other. In the case of loans, devaluations seriously affected us." The biggest problems were those around 15 years ago, with the Mexican crisis known as the Tequila effect, and when there was a strong state intervention, price controls and regulation of raw materials purchases. "At that time we had to do it through CONASUPO (Compania Nacional de Subsistencias Populares an agency of the government which helped set agricultural policies) and the compromise was to keep the product at a certain price, which caused many problems of bureaucracy and low competitiveness," Manuel said.
"While we respected the law, it was the slowness, the procedures that we had to follow that were discouraging. In the economic crisis of 1994, which led us to serious problems, we had to import our raw materials and pay them in dollars, while our product was sold in pesos. But despite the financial crisis, we moved forward," he said.
Egg production
PROAN has 21 layer complexes in production with an average of 1.2 million birds, although there are farms with up to 1.5 million birds. Cal-Maine Foods in the U.S. is the only company with more laying hens than PROAN.
Manuel said, "We have never tried to be the largest company in the world. We just want to work and produce." PROAN has "all in-all out" single-age farms, which coupled with other biosecurity measures and the dry Los Altos area climate gives them good management control.
State of the art operations
PROAN’s Los Cedros farm is an automated facility with a modern inline egg grading and packing facility. The egg sorting machine processes 500 cases/hour of packed eggs. Each egg has traceability information printed on it at packing. "This ensures the safety of the product," explains Gabriel Padilla, manager of the center. Each egg carries the farm number, the printer number and the consecutive day of the year.
These eggs are in the supermarkets in Mexico City the next day in the morning, or the same day in nearby cities. San Juan eggs are distributed in 28 of the 32 states of Mexico.
Value-added products
With a total of 25.2 million laying hens in production, [PROAN] is the second largest producer in the world, and the largest in Latin America. The impressive processing center is a TIF (Federal Inspection Type) plant, which manufactures value-added egg products, both liquid and solid, such as egg yolk with glucose and egg yolk with salt, or dehydrated albumin.
Positive pressure airflow is employed in the plant to prevent outside airborne contaminates from entering the processing area. The plant receives dirty-shelled eggs that are washed, broken, separated into egg white or yolk, or processed as whole eggs as end product.
Each egg is stamped to ensure product safety and traceability.
Pasteurized liquid products are processed at this plant; dehydrated products are produced at another facility. The liquid products are used in the domestic market for baking, mayonnaise, pasta, confectionery, restaurants and other uses. Products range in size from one gallon to a 40,000-liter tanker. Customers range in size from small bakeries to large companies such as Unilever (for Hellmann's), Grupo Bimbo SAB de CV (Mexican bakery company, largest in the world) or Walmart. At the present time all of PROAN’s liquid egg products are sold for institutional use.
New products on the way
PROAN is a restless company; it is in constant search for what to do with its flagship product: the egg. The famous hard-boiled egg is another line that will be launched to the market. "It's just a meal ready to eat, very nutritious," says Benjamin de León. Two hard-boiled eggs are packaged together for direct consumption, as a snack. The machine cooks, cools, peels and packs two eggs per package.
There are plans in place to start distribution of the hard boiled eggs in León, Guanajuato, with Oxxo, the Mexican chain of convenience stores with more than 8,500 stores in Mexico and Colombia. If all goes well, distribution can be expanded to the entire country. The consumer can open the package in the store and will have the option of adding salt, mayonnaise, ketchup or powdered chili pepper which are provided in the store. This plant has Italian, French and Danish technology, and has the following certifications: ISO 22000, 499 of SAGARPA, HACCP quality system and kosher approval.
Hen slaughter increase returns
The slaughter plant processes 30 million spent hens a year. It is unique in terms of volume and type of processes, particularly deboning, that it employs. The plant has increased the value of the spent laying hens from about $0.04 to $0.70 per bird. "Previously, selling spent hens was complicated due to the short time to clear farms and collection, since they were sold to an informal market", says Alberto Romo, director of new business.
Future challenges
A big problem for the poultry producers in Mexico, which is a net importer of grains, is the high grain costs. "I think it is worrying that grains could lead our product to be more expensive and that our market would not respond in the same way," said Manuel.
Speaking about bird health issues, he said, "We try to be strong, but even with very strict biosecurity measures, the potential danger is still there. We are very careful to avoid any contact, because with the large volume we handle, the risk increases."
Are they ready for globalization?
PROAN has basically concentrated on the domestic market. "I think we have an open country, which has brought us benefits because we have imported technologies, automation and productivity has improved a lot. We have a business partner as great as the United States that is one of the leading poultry producers, and we are technically open to them. We can say, yes, we are ready," Manuel said.
A good indication of this is exports. The slaughter plant exports carcasses, combs, legs and wings, which account for 15 percent of production, mainly to Asia and Africa. In terms of shell egg exports, "We will close 2011 with exports of 7,000 metric tons of fresh eggs to 10 African countries and to Dubai and the United Arab Emirates in the Middle East. We already had our first exports to Iran and Hong Kong. As a company, we would be the fourth largest exporter country of shell eggs in the world," said Alberto. "The U.S. is the leading exporter, with 70 thousand metric tons per year. It is an interesting adventure of poultry exports for Latin America, together with Brazil, Argentina or Chile.”
Going shopping abroad?
Considering the purchase by Bachoco, Mexico’s largest broiler producer, of U.S. broiler producer OK Foods, we asked both Manuel, and his son Alberto, about the possibility of PROAN purchasing all or part of a poultry company outside of Mexico. "We have not ruled it out, if circumstances are good, it would probably be a possibility" said Manuel. "Strategically it may be a good move to move forward as a business, if we consider that we have a trade agreement with North America. I think that's what makes it look interesting, as a strategy." Alberto said, "Yes, it's something we have considered."
Manuel believes that "another interesting reason is to examine certain markets, such as Mexicans and other Hispanics living in the United States, which is already a very big market." Mexican brands selling in the U.S. can be marketed to Mexican expatriates who are homesick and are drawn to the national brands from the home country.
Acknowledgements: We appreciate the assistance provided by the National Poultry Producers Association of Mexico, as well as PROAN for the execution of this article.