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September 23, 2020

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.”   Source: The Jamaica Gleaner by: Neville Graham

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Port of Kingston Retains Ranking Amid Pandemic

Port container volumes in Kingston have fallen during the pandemic. The contraction still resulted in Kingston ports outperforming more than half of the other city ports in the Americas, regional shipping data shows. Cargo shipments into Kingston dipped 12 per cent year over year when measured in tonnages, while export tonnages fell 7.0 per cent between January and August, based on data released to the Financial Gleaner by the Port Authority of Jamaica, PAJ. However, the change narrows to a decline of 2.7 per cent when shipments are measured in container volumes rather than tonnage. Meanwhile, other port data produced by regional UN agency ECLAC shows that Kingston still ranks as eighth largest in the region among 47 city ports. The best-performing port in the review period was San Marta in Colombia, up 32 per cent in container movements, while the worst performer was Buenaventura, also in Colombia, down 38 per cent. The ports in Kingston are comprised of Kingston Container Terminal Limited, which is operated by Kingston Freeport Terminal Limited, KFTL; and Kingston Wharves Limited, KWL. Together they handled over 850,000 containers over the first half of the year. The Port Authority expects volumes to improve over the rest of the year. “At KFTL, volumes have increased steadily since the beginning of the third quarter. Kingston Wharves Limited displayed a similar pattern with the low point recorded in June 2020 and a boost in volumes afterwards,” the agency said in response to Financial Gleaner queries. While much of the economy went dormant during the early period of the pandemic, ports remained open because they are viewed as an essential service, required to facilitate international trade and the transport of goods. “Ports utilised viable shipping connections and alternatives to meet consumer demand,” said the PAJ. “As a consequence of the impact of the COVID-19 pandemic, the second quarter results are likely to be the lowest point in terms of volumes handled at the ports. However, as countries relax restrictions and economies begin to recover, volumes are expected to improve for the remainder of the year due to an increase in the demand and consumption of goods,” the port regulator said. French-owned Kingston Freeport operates the Kingston Container Terminal under concession from the Port Authority. KWL is a publicly traded company, whose leading shareholder is food and logistics conglomerate Jamaica Producers Group. Kingston Wharves specialises in motor vehicle imports, but also handles other cargo.   Source: The Jamaica Gleaner by: Steven Jackson/Senior Business Reporter

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Seprod Builds Out $2.5-Billion Distribution Operation

After securing another good financial year despite the effects of the COVID-19 pandemic along with increased cost from discontinued operations, Seprod Limited said that the company is further seeking to expand its distribution footprint in the domestic and international markets. Speaking in a livestream of the company’s 81st annual general meeting held on Monday, Richard Pandohie, managing director and chief executive officer (CEO), said that while the business has doubled down on equipment investment and retooling activities over the last few years, the entity now intends to give greater focus to distribution (domestic and export), warehousing and logistics. “These areas are the lifeblood of the organisation connecting our factories, production and the brands of our partners to consumers and customers. We are projected to spend a total in excess of $2.5 billion to build out and consolidate our warehousing operation and create a distribution organisation that will be cost competitive, agile and with a customer footprint second to none,” he told shareholders present at the Jamaica Pegasus hotel in Kingston. Pandohie said that with the first phase of the project done last year, the commencement of the second phase, which has already started, is expected to be completed by the third quarter of next year. With the company’s foray into the Trinidad markets through its Serge and Supligen brands, it further hopes to take advantage of export opportunities in other countries of the region including Guyana, where the group already operates other types of business. “Opportunities do not come in a linear fashion and if opportunities came for purchasing and distribution business or working closely with the people that we work with or any opportunity, we will certainly look at that, but we do have relations in Guyana that we would want to grow and maintain.” “We see Guyana as a big opportunity, we’re going to work with our partners in that country to continue in building out that market,” said Seprod’s Chairman P B Scott in responding to questions from shareholders. Among the new products up for disribution are Supligen’s newly added cookie & cream and coffee flavours as well as a gluten-free cassava flour which was launched a week ago. “We are targeting a 20 uplift in volumes primarily by increased export sales. We have a very active innovation pipeline, as this will be key to improving our volume and profitability. The target is to launch a minimum of three new products quarterly, some will be renovations of existing products,” Pandohie told the Business Observer. Source: Jamaica Observer By: KELLARAY MILES

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