Overview of SIPRA: Société Ivoirienne de Productions Animales

Interview with Sylvain Gotta, General Manager of SIPRA (Société Ivoirienne de Productions Animales)

What is your overall vision for the poultry industry in Côte d’Ivoire? What is your assessment? What has changed since 2011?

The poultry industry in Côte d’Ivoire is doing relatively well. A strategic development plan from 2009 until 2019 has been implemented for the sector, which would double the rate of consumption in Côte d’Ivoire.Today, we are ahead by about 20% compared to the expected development in the strategic plan. In both chicken and egg segments, the rate of per capita consumption is rising a little faster than what we expected in the plan. So we take the advantage of the improvement of the economic environment, the economic growth in Côte d’Ivoire, and also the work done in the sector to improve self-sufficiency. Côte d’Ivoire is highly on livestock imported from the outside. So the sector, with the help of the Ministry, has implemented a development plan, a plan of popularization of poultry products in Côte d’Ivoire, and this plan is running smoothly.

How is SIPRA positioned within the sector? Are you the leader?

We are not alone in our sector, yet we are the leader at the Ivorian level and also the sub regional one. There are challenges stemming from our leadership: we must guide the market towards products with greater added value and more competitive products.

What do you mean by greater added value?

When you speak about poultry meat in Europe, drawn chicken does not represent the major part.You have chicken parts, developed products, cooked products etc. Today, the industry is mainly operating in the area of live chicken farming; we are practically the only ones who operate in the drawn chicken and have a poultry slaughterhouse – this we consider as the first step in increasing the value of our products. Moreover, we feel that today even small individual farmers try to provide their customers with slaughtered chickens.

What prevents large international groups from coming here to directly provide these value-added products?

The problem is that their products are not competitive here; they are too expensive. These are changes that will be in the long term. Today, if you flood the market with ready meals, it will not work. So, these are developments that would take 10 years, 15 years or even 20 years.

So for now, what you propose is a product that is exactly adapted to the consumer’s demand.

Absolutely, we have some local realities here that are different from Europe. In Europe, you will not find any drawn chicken sold with its feet. Here, the client will not accept to buy a chicken without feet. So western chicken has some difficulties to compete with the local chicken at the same price. We also benefit from some protection, since there is a tax on frozen chicken that is imported from outside Africa.

You are developing in the Ivorian market and of course in the sub-regions. Can you give us more details?

We operate in several segments. We are fully integrated from the reproducers livestock to chickens and eggs. We have several ranges of products. We have two major markets: the breeders market that we supply with the food and chicks, and the end consumer market – chickens and eggs. So for example, on the chickens and eggs market, we voluntarily limit our activity to Abidjan, and on the breeders market, we operate also in the interior of the country. We are looking forward to expand our activity in this B to B market to allow breeders in other countries: Burkina Faso, Mali, etc., to have inputs with high quality, which is a necessary condition, not sufficient but necessary to have a minimum viability of the industry.

Is it difficult to approach an entire country, the sub-regions, breeder by breeder? How do you approach these markets?

It is one of the advantages of a small company. We have more patience to address small markets compared to multinationals who need large volumes, require contracts of significant size, require certain criteria to settle, and which are less malleable and flexible than the small companies. Thus without being a micro company in the neighbourhood, we are still at a human scale that allows us to address those markets, going into the detail, breeder by breeder, managing to address clients in their specificities, even in the management of customer credit, etc., with a good knowledge of these customers.

In Côte d’Ivoire you are dealing with your customers breeder by breeder throughout the country, how many customers do you have? This is phenomenal!

We have thousands of customers. We have small breeders who take 500 chicks or 800 chicks; we don’t have a very large poultry industry in Côte d’Ivoire.

How do you manage to address all these people?

We have a very dense sales capacity compared to the number of our customers. We have a distribution network with points of sale in all major cities. Within the distribution network we have technicians who sell door to door, etc.

There are no intermediates that could be the link between you and the breeder, who would take care of those annoying aspects of credit? We were in Egypt last month and we met a similar business, they address the Egyptian market directly as you do, but they had a whole network of distributors, which in turn made the link with the farmers and which also allowed them to avoid being a bank for all these breeders.

We have a fight which is lower cost. The more you integrate intermediates in your system, the more you increase the margins of each, so it rather helps to raise the cost. Instead, we opted to reduce the number of intermediaries, because in our environment, intermediate traders often require margins that are above even the manufacturer. It’s more tedious, more tiring and more laborious, but we have opted to directly address this market, whether on food, chicks or eggs. We launched our own distribution network for chickens and eggs. We took this option that is the most difficult, but that allows us to have more customer proximity and to control the final product price.

So the farmer comes to you, there is the distribution centre in the nearest town, and he comes as a customer, you don’t go to him. There are sometimes veterinarians who must travel, who are there to provide technical assistance and advice…

We have the SIPRA reputation. In general, when someone starts a breeding activity, he comes to see us at least to get pro-forma, business plans, elements to mount the project, etc. I don’t think there are any new operators who don’t even come to see Ivograin, I may be wrong but I don’t think so. And then, they may analyse multiple offers and go elsewhere, but I think they consult at least Ivograin. So we often have information about what is happening. Ivograin is the cattle feed department and is also responsible for the distribution of chicks.

Are you looking for investors for your growth? Are you going abroad? How are you planning your international development? You are establishing a new production unit, what does it imply?

We are in the process of significant investment. We are creating new production tools in all our segments: we will implement a new feed cattle factory, we will install a new hatchery in Côte d’Ivoire and we will fully restore our chicken slaughterhouse. Today we have the financial standing; we have the capital and also financial partners that allow us to grow. We also believe that we should take into account the absorption capacity of these sites by a company. We are not looking for 100 billion CFA francs or 200 billion CFA francs regardless of our ability to absorb these funds and translate it into concrete profitable investments. We are very fussy about our financial structure, and therefore we conduct our growth by ensuring that the financial balance of our business is not degraded.

So you have a pretty conservative approach.

Absolutely, because we are in environments where markets change quickly, so we must also take into account the environment.

Let’s talk about exports now, what is your plan regarding export?

We will start by Burkina Faso through a company, which is expected to start operations during the month of September, or no later than October. For export, we are on the cattle feed and chicks. At first, we don’t intend to go to integration and an implementation of a slaughterhouse, etc. We started by contacting breeders in the countries of the sub region. After that, if things go well, we can go further. But initially we will address breeders, so that they can develop their farms and develop general farming in these countries. Because, as I said earlier, a necessary condition, not sufficient but at least necessary, is to have quality inputs throughout the year. Quality inputs are at least chicks and feed. So this is what we bring to these countries. We believe that we have the expertise in management of farms in hot countries, we have management expertise in feed cattle, knowing the financial and cultural constraints of clients, etc. We believe that after almost 35 years of presence in the market, we have a good knowledge of these trades and of the rural customer.

Are you also targeting other countries?

Yes, once we have finished the opening in Burkina Faso we will go into other countries in the sub-region.

In terms of image and quality, you want to have a European standard – that’s what you said last time – to continue the good practices as leader of this sector. Have you attained that standard?

Today, with the entry of the IFC, we are in a heavy program to improve all health conditions etc. We are now ISO 9001 certified on Ivograin and we are expanding it to all our production units. On Coqivoire we seek a HACCP certification. We take into account environmental standards; we take care of the waste of our plants and facilities in our projects. The IFC has strong environmental requirements, so we consider all these aspects in the projects we do, while looking for greater energy efficiency and better control of production waste etc. In addition, we have to maintain the prices and product quality. Even though customers are primarily looking for low-priced products, we believe it is the role of the leader to improve the quality, and then everyone will follow behind.

What is your strategic vision for the future? How do you see the company in two or three years? What is your dream?

Over the next 5 years, it is simple: we aim to double the size of the company, we want to develop our export activity, we want to have costs that are significantly lower than what we have today, improve productivity at all the links, and increase our integration. In summary, it’s basically what we are doing and we are doing it especially with the IFC, who accompanies us in this strategic vision and its implementation.

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