From Upstream to Downstream: Corporate Responsibility "For the Good of Five Parties"
–Charoen Pokphand Foods–

Highlight in the Field of Respect and Consideration for Human Rights
Highlight in the Field of Contribution to Local Communities

Rika Sueyoshi
CEO, Ethical Association

Rika Sueyoshi has entertained viewers as a "mystery hunter" on the hit TBS show, "Sekai fushigi hakken!" Over time, however, she has become more and more aware of environmental issues, human rights issues, and other problems around the world. As a result, she was moved to establish the Ethical Association in 2015. Since then, Sueyoshi has made it her mission to raise people's awareness and convey the value of "ethical" and "ethical production& consumption" by speaking at companies, high schools, universities, and at events across Japan.

What does it mean to be ethical in our daily lives? It means considering the human, social, environmental, and local implications of both production and consumption, including local development and employment. On a recent visit to Charoen Pokphand Foods (CPF), I learned that this company is deeply engaged with ethical management and production. As consumers, we may be unwittingly complicit in environmental destruction, forced labor, child labor, or animal abuse. More and more, consumers want to know where the products they consume come from and how they are made. Consumers want companies to take more responsibility in reducing risks by making sure the entire supply chain engages in ethical practices. One of the basic challenges facing ethical business is the way that kind of thinking is simply not widespread enough. But if leading global companies like CPF make their products in an ethical way, then consumers can use those products without worrying about whether or not the products are made in an ethical way. As a result, companies will more widely adopt ethical practices and consumers themselves will become more aware of these issues. Let's take a look at how CPF supplies consumers with ethical products.

1. Introduction

One of the most memorable aspects of my visit to Thailand was my visit to the Fresh Mart supermarkets which are part of the Charoen Pokphand (CP) Group. Fresh Mart, with 410 stores in Thailand, carries a wide range of goods, from perishable foods to processed foods, frozen foods as well as convenience store household goods. 70% of Fresh Mart goods are produced by CPF/Charoen Pokphand Foods (CPF). What struck me most as a really forward-thinking and meaningful initiative was this: There is a barcode on all CPF products in the store. Consumers can use a special application to read these barcodes to find out exactly what is in the products and to trace the product's entire manufacturing history. There are numbers on each and every egg so shoppers can find out the farm where that egg was laid. When consumers are given this level of control, they gain peace of mind. It would not be much of an exaggeration to say that I felt I was seeing the future of ethical consumption.
On this trip, I had the opportunity to tour companies in the CP Group, including CPF's Bangkok headquarters, which has overall responsibility for the company's food products and animal feed businesses. I saw both an animal feed plant and a poultry processing factory and I also had the opportunity to visit the convenience store I mentioned earlier. In other words, I could see that the production process - from feed production to poultry processing - is maintained entirely in Thailand. It is a fully integrated production process that is run entirely by the company. The company has a management philosophy that is very similar to sampo yoshi (benefits for three parties: the merchant, the customer, and society at large), the bedrock principles of Japan's Edo-era merchants. It is the philosophy that guided the founder of the trading firm Itochu, Chubei Ito.

2. About the Charoen Pokphand Group

In 2014, Thailand's largest conglomerate, the Charoen Pokphand Group (the CP Group) became the leading shareholder of Itochu. Like most Japanese observers, I was astonished to see these two companies forming a financial and business partnership. With nearly 300 companies in its corporate group, and annual sales of over 4 trillion yen, the CP Group is Thailand's largest private corporation. The Group has nearly 300,000 employees, sells its products in over 100 countries, and is one of Asia's leading conglomerates. Founded by a pair of Chinese immigrant brothers in 1921, the company started out selling vegetable seeds in Bangkok. The company's core animal feed business is one of the largest in the world, and since the CP Group established the integrated corporation CP Feedmill (now CPF) in 1998, the company is involved in feed production as well as livestock and product production, food processing, and retail, with CPF playing the largest role in the corporate group.

3. Mechanized, highly-efficient feed mills

The Pak Thong Chai feedmill

On my tour of CPF, I first paid a visit to the Pak Thong Chai feed mill. The plant is in a suburban area about a four-hour drive to the northeast from Bangkok city center. CPF currently has 12 feed mills in Thailand, and these plants are usually located away from city centers. That's because feed mills need to be close to the farmers who produce corn, the basic raw material for animal feed. These plants also have to have good access to poultry farms. The feed mill has gigantic towers that soar above the plant. On entering the plant, I was amazed at how clean and sanitary it is, how hi-tech the operation is, and how few people seemed to be working there. All production - from running the machines that grind the corn to a size that is easily digestible by chickens, to enriching the feed to make it more nutritious - is highly computerized. Strict measures are in place to make sure that people coming into the plant don't carry in anything that could contaminate the feed. The plant is extremely attentive to sanitation: each and every truck that transports the feed to poultry farms is sterilized. At the same time, feed is shipped using the shortest route possible and the greatest speed to minimize the possibility of bacterial contamination between the plant and poultry farms (shipments are limited to single destinations and shipments are monitored by satellite). There are only about 60 employees working at the plant (an average plant of this size would have around 100 employees). I wondered if this might not be enough people run a plant as large as the Pak Thong Chai feed mill. What I realized is that, by using factory automation systems, this plant can be run by fewer workers. The plant is also designed to be as environmentally responsible as possible. For instance, they use biomass in the form of corn cobs to fire the boilers that bring the feed up to high temperature. And, uniquely, the plant grounds have abundant plantings. Currently, 45% of the plant grounds are forested. It would seem that these sorts of ongoing initiatives provide benefits not just for the employees working at the plant, but for neighboring communities as well. The person showing me around the plant was always using the expression "hygienic feed." There is no question that food safety starts with the feed plants at the upstream start of the food production process. I realized that that is a serious responsibility.

4. A poultry processing plant where not a single drop of water falls

CPF Executive Vice President of Poultry Business, Mr. Siripong Aroonratana

Before I get into a discussion about the poultry processing plant, I should say something about what kind of poultry CPF handles. Many years ago in Thailand, free-range chickens were raised by farmers. But there is a limit to how many chickens can be raised this way and due to inconsistencies in bird size it is hard to process them using machinery. To deal with these issues, in 1970 the CP Group decided to introduce broiler chicks from Arbor Acres in the US. A broiler is basically a chicken that is bred for its meat. These birds grow to maturity faster than regular chicken and they grow to more or less the same size. They also produce a lot of meat. From the beginning, the CP Group contracted with farmers to provide them with financing and instruction in how to build poultry houses. The farmers were also provided with chicken feed. In this way, the CP Group has expanded contract production and won the trust of the poultry farmers. In the late 1970s, the CP Group began building a system that integrated feedmills, chick hatcheries, chicken farms, slaughterhouses, and processing plants into a single production process, or "extreme vertical integration." An approach that consolidates mass production from upstream processes to downstream processes in a single area makes it easier to reduce the risks and facilitate early detection of disease that can be a problem in the feeding of poultry. An integrated process is also essential to ensure that the final products have traceability and that it be safe. Before I took the plant tour, I spoke with CPF Executive Vice President of Poultry Business, Mr. Siripong Aroonratana. CPF contract farms are currently divided into areas where employees live and work and poultry farming areas where broiler chickens are raised, and careful attention is paid to both areas. The CP Group is also proactively engaged in animal welfare in response to the demands made by consumers and distributors in the countries to which the company ships its products. Chicken produced by the CPF Group meets the tough standards of the UK grocery chain TESCO, which is known for its rigorous standards even in the UK itself, which means it can meet the standards of virtually any country in the world. Animal welfare initiatives would seem to be pretty popular within the company itself: Consumers are protected when the birds are well cared for and that in turn leads to increased exports.

I next toured a poultry processing plant about 30 minutes by car from the Pak Thong Chai feedmill. What I realized when I entered the grounds of the facility is that it's not so big that you can't walk all around the plant. In some places, there were plantings that brought to mind an English garden, and you'd never know that this is a poultry processing plant. The processing plant itself is an enormous oblong building. I had the opportunity to view the various processes. Chickens that have been carefully raised on the farm are shipped to the facility where they are processed by a combination of machines and human hands. I was able to see before me the entire production flow to the final product. The thing that I found most surprising was that I could not find a single drop of water or blood on any of the floors or shelves of the plant. I assume that this is a result of the plant operators' unwavering pursuit of food safety and hygiene. The only tasks that are performed by human hands are the process of cutting up the chicken into parts for various purposes and product inspections. Everything else is done automatically by machine. The plant processes and ships 380,000 birds every day. The frying oil used to prepare frozen food products like chicken nuggets and deep-fried chicken is Roundtable on Sustainable Palm Oil (RSPO)-certified. The plant continually monitors the oil's degree of oxidation, and when the oil can no longer be used, it is recycled as fuel for the vehicles used in the plant. Something I found particularly striking is the how strongly the CP Group embraces diversity. Although around 60% of the 6,000 people who work at the plant are Thai, the remaining 40% are Cambodian. So they can be readily identified and responded to in their own language, Cambodian workers where different uniforms from their Thai co-workers. Much the plant's signage is in Thai, Cambodian, and English. There is a dormitory on the plant grounds to house Cambodian workers.

At the entrance to the Nakhon Ratchasima Factory (CPF Korat)

What I found remarkable was the crisp, efficient way the workers do their jobs, and the evident pride they take in their work. Respect for the human rights not only of the people working at the plant, but of everyone involved in the supply chain is crucial for the sustainability of a global company like CPF. Mr. Siripong emphasized that one of the features of his company is that it meets the strictest international standards (HACCP {hazard analysis and critical control points}, Animal Welfare, etc.) because, as I mentioned earlier, the company does a lot of business in Europe. And CPF participates in the United Nations' Global Compact initiative in support of human rights, labor, environment, and anti-corruption efforts. I saw that this is a workplace where there would be no problem at all for snap inspections to be made by anyone at any time. I could see how motivated both management and employees are to maintain the highest of standards and practices.

5. Into the hands of consumers

The final products are shipped not just within Thailand, but around the world. In Thailand, the products can be purchased at supermarkets and Fresh Marts that are affiliated with the CP Group. There is always a barcode on CPF products sold in the extraordinarily clean Fresh Mart stores. The barcodes allow consumers to track the materials and production processes associated with the products, as I mentioned at the beginning of this article. We can say that CPF is contributing to the SDGs (Sustainable Development Goals), which has been announced by the UN in 2015, target 12: responsible production and consumption. I think the pace of ethical approaches throughout the food system will really pick up once this system expands worldwide.

CP Fresh Mart
Inside a CP Fresh Mart
Inside a CP Fresh Mart
Attractive display of CP Group products in the store
Eggs have 100% traceability

I tried out some fried chicken at Chester's, a fast food chain that is also part of the CP Group. The chicken was juicy and absolutely delicious without even the hint of an odor. Even though my visit was on a weekday, the store was bustling with Thai customers, from children to seniors, and everyone was enjoying the chicken.
What are we going to do in the year 2050 when the world's population is going to be nearly 10 billion people? CPF has a business strategy that extends that far into the future. Under the banner of "becoming the world's kitchen, Kitchen of the World" CPF is now exporting safe foods to over 30 countries (40% of which goes to Japan) and feeding a total of nearly 300 million people. I could readily see that the company is moving forward boldly with this remarkable initiative.

The Three Benefits: For the Country, For the People, For the Company

(From the left) CPF CSR & Sustainable Development Senior Vice President Mr. Wuthichai Sithipreedanant, the author, Ms. Murakami of Itochu, CPF Global Sustainability Network Assistant Vice President Ms. Patcharaporn Sagulwiwat

The CP Group's company policy/philosophy is the Three Benefits: "For the country, for the people, for the company." One of the cornerstones of this magnificent business philosophy is CSR & Sustainable Development, which is spearheaded by CPF's CSR&SD Department. I spoke with Senior Vice President Mr. Wuthichai Sithipreedanant, who leads that organization.
CPF's CSR initiatives are focused on Food safety, Self-sufficient societies, and Balance of Nature. The most interesting thing for me in this context is the strong support that the company provides to small farmers, the community empowerment that CPF supports in the areas around its farms and plants, and the education that the company provides for children. CPF will have a positive impact on communities through the creation of win-win partnerships with nearly 50,000 small farmers, which are the mainstays of agriculture and food, by the year 2020. Mr. Wuthichai is also enthusiastic about supporting senior citizens living in rural areas. In addition to the CPF employees who volunteer to go out each month into the community and provide personal assistance to seniors who have been left behind by their families and society, donations are made on behalf of seniors by a foundation that is bankrolled by CPF. In partnership with the Thai government, CPF is sponsoring "Growing Happiness, Growing Future Project" for more than 600 schools in the vicinity of company plants and farms. The program has educated nearly 150,000 schoolchildren about food safety, agriculture, poultry and fish farming. The company launched an interesting project in 1989, "Raising Layers for Student's Lunch Project." This program teaches students how to raise layer chickens that produce eggs which are rich in excellent protein. And of course the chickens themselves provide protein. This is truly an example of the old adage, "give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."
No matter what the project, it takes a highly-motivated workforce to get good, long-term results. A total of nearly 100 CPF employees, including the organizational heads in each business division, are involved as CSR leaders. These are the people who are blazing a trail for the rest of the employees in advancing vigorous CSR activities. I learned though my tour of CPF's operations that CPF's engagement in CSR initiatives goes well beyond Thailand, and its reach is beginning to extend throughout Asia.

6. Conclusion

In my visit to CPF, I saw only a small portion of the company's feedmills, processing plants, and retail stores. However, I did get to see with my own eyes the actual places where the food we buy every day here in Japan is made. In that sense, I learned a lot. Although it is hard to image that a gigantic global corporation like the CP Group would be managed in a sustainable and transparent way all the way from the upstream end to the downstream end of the production process, it turns out that this company has a very clear sense of mission and a firm commitment to society and to people even as the corporation continues to grow and develop. It would not be overstating the case to say that this company offers compelling evidence that there is no need to make compromises in balancing sustainability against business growth. In its engagement with sustainability, the CP Group is succeeding in reducing costs, innovating in its use of energy, and hiring and retaining top-quality human resources.
I would like to close with a proposal : The corporate philosophy of the "Three benefits," i.e., "For the benefit of the country (society), the people (purchasers), and the company (the seller)" actually accords quite nicely with Itochu's concept of sampo yoshi, "the good for three parties," i.e., for the seller, the buyer, and society. That's why I am convinced that good things will come of these two companies joining hands. To "the good for three parties" I would like to add two more "goods": good for the producer and good for the future. I would like to see the CP Group continue to show to the world this philosophy of "the good for five parties."