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Bachoco bought 79% of its grains from the US

 

Bachoco reported that it purchased approximately 20.7% of its total grains from the domestic market and the remaining 79.3% from the United States.

In Mexico, grain harvests are limited, so a significant percentage of the needs for these inputs is imported from the United States.

For the industry in which Bachoco competes, 2021 was a challenging year in terms of raw material cost.

Bachoco reported that it purchased approximately 20.7% of its total grains from the domestic market and the remaining 79.3% from the United States.

During the year, the company observed increases of around 40% in grain prices, and around 30% for soybean paste. This translated into a higher cost of feed and a higher cost of sales.

The most important component of the cost of sales is the cost of the grains used to prepare balanced feed, mainly including sorghum and corn, as well as some other ingredients such as soybean paste, among others.

Bachoco is a vertically integrated producer, its main line of business is poultry and it also has another line of business which includes: the production and marketing of live pigs, the production and marketing of value-added turkey and beef products, the production and marketing of balanced feed mainly to other poultry and livestock producers.

Bachoco and its investments

In 2021, the company made property, plant and equipment acquisitions of 3,479.5 million pesos that were mainly used for its productivity projects, the replacement of part of its transportation fleet and other equipment for its facilities, as well as its plans of organic growth.

In December 2020, Bachoco announced that it had reached an agreement to invest in the company RYC Alimentos (RYC), a multi-protein processor and distributor with production operations in Puebla, Mexico.

Founded in 1983, RYC is a meat processor and distributor of primarily beef, pork and chicken with national coverage that participates in all distribution channels with fresh and value-added products. The acquisition was approved and completed in January 2022 by the Federal Economic Competition Commission (Cofece).

The purchase price was 1,251.5 million pesos. The agreement contemplates the acquisition of two plants located in Puebla, Puebla, as well as its scheme of approximately 21 stores located in four states of the Mexican Republic (Puebla, Oaxaca, Veracruz and Tlaxcala).

 

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