NEW DELHI/TOKYO -- Suzuki Motor is working with Ise Foods to grow and distribute eggs in India, tapping the Japanese egg producer's proprietary technology to assure quality and safety to the nation's growing middle class.
The automaker and the Saitama Prefecture-based company will set up a joint venture, with Ise contributing 60% of the 100 million yen ($879,556) capital and Suzuki holding the remaining 40%.
Ise will handle the management of poultry farms and production. The plan is to first open a farm of 1.2 million chickens and a processing plant in the western state of Gujarat. In addition to fresh eggs, the plan will produce liquid and powdered eggs for use as cooking ingredients.
The eggs will be priced around 20 rupees (30 cents) apiece, three times the common egg price. The duo seeks to cultivate demand in large cities like Mumbai and Hyderabad with the aim of eventually providing 4 billion eggs a year, equivalent to 5% of some 80 billion eggs consumed in the country.
Suzuki's local unit Maruti Suzuki India, which controls about half of India's passenger car market, will contribute its know-how accumulated through years of operations in the country. It may provide vehicles for delivering eggs under the joint venture.
Ise's egg factories are known for strict quality control based on the company ethos, described by Chairman Hikonobu Ise as, "consumers are the first to touch the egg."
Advanced technologies like an automated egg collection system will be adopted, and an efficient distribution network will be put in place to bring freshly laid eggs to store shelves within three days. Thorough temperature control will keep eggs fresh and prevent bacterial contamination on the shell.
In addition, solar panels will be set up at the plants to provide electricity in case of power outage. This would prevent growth of bacteria and death of chickens from overheating. The venture may also provide chicken manure as a fertilizer for suppliers of corn used as feed.
With farmers accounting for a half of India's 1.3 billion population, productivity improvement is vital for economic growth. Prime Minister Narendra Modi aims to double farmer income in India by 2022.
If the Suzuki-Ise venture takes root widely in India, it could help tackle these challenges for the country.
Rising food safety awareness
In Asia's emerging economies, eggs are prone to salmonella and other bacteria infection due to slow delivery and inadequate temperature control.
Amid outbreaks of bird flu, Asian companies are eager to tap Ise's technology. The company has reached a basic agreement with 110 companies to provide technology and sales training, according to the chairman. Ise aims to have its technology account for 17-18% of the Asian market. In April of this year, Vietnamese partner DTK opened an egg farm of 600,000 chickens. Despite a price premium of around 50% over the competition, the eggs have been selling well, prompting DTK to decide to double the scale in two years.
In the Philippines, Ise joined with fast-food restaurant operator Jollibee Foods in 2016. The duo has selected a location in a suburb of Manila for a 1.2 million-chicken farm to open by 2019.
Ise is also in talks with companies in Indonesia and Thailand to set up egg factories. In Bangladesh, Ise has formed a technical partnership with a broadcasting company.
In addition to setting up local plants, Ise will bring workers from India and Thailand for training in Japan, with the aim of expanding its operations across Asia.