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Company name

Porcikowi S.A. de C.V. ("Porcikowi"), y Genetikowi S.A. de C.V. ("Genetikowi")

Project number

12292-01

Category B projects have potential environmental and/or social impacts and risks that are less adverse than those of a Category A and which are generally limited to the project site, largely reversible and can be mitigated via measures that are readily available and feasible to implement in the context of the operation.

E&S category
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B

Country

Mexico

Sector

Agribusiness

Status

In implementation

Disclosed date

10/25/2018

Projected date at which a project will be put forward for the Board of Executive Directors’ approval.

Projected board date
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11/27/2018

Approval date

01/07/2019

Signed date

12/23/2020

Sponsoring entity

Grupo Kowi, S.A. de C.V. (“Kowi”)

Investment Operations Department Contact

N/A

Investment type

Syndicated amount

N/A

Financing amount

USD $ 21,639,600

Currency

MXN

Project scope and objective

The operation consists of a loan in Mexican pesos of up to MX $400 million to Kowi Group, S.A. de C.V. ("KOWI"), to finance fixed asset investments in pig farms related to installed capacity expansion processes in different stages. The detail of the investments is the following: (i) Placement of 10,000 sows on maternity farm Site I; (ii) Implementation of wean to finish farms on Sites II and III; (iii) Permanent working capital (Jointly, (i), (ii) and (iii) are hereinafter called the "Project").



KOWI comprises 78 partners, both companies and individuals, where none of the shareholders has more than a 10% stake in the Group and control is distributed among a maximum of 10 families. Until 2012, all live pigs were purchased by the Group from third parties, with KOWI shareholders being the main suppliers (around 60%). At the end of 2012, KOWI began the construction of its first operating unit (Site I: maternity farm), thus achieving greater vertical integration in the process that covers everything from the insemination of sows to weaning, participating through its subsidiary companies and their partners in all stages of the value chain. The high degree of vertical integration that KOWI seeks to achieve and the proximity of its suppliers allows it to, on the one hand; (i) rigorously control the quality of the product, guaranteeing compliance with high animal welfare and nutrition standards, and on the other hand (ii) minimize the distance for transporting pigs to the cold storage slaughterhouse, which directly impacts the quality standards demanded by its main international clients.



KOWI’s pig production companies are: (i) Porcikowi S.A. de C.V. ("Porcikowi"), with Site I farms dedicated to breeding stock and piglets until weaning, and (ii) Genetikowi S.A. de C.V. ("Genetikowi"), with farms Sites II and III dedicated to pig fattening, from 7 kg to an average of 120 kg. Through the Project, Porcikowi's own capacity will increase from 21,500 sows to 31,500 sows (46% capacity increase), achieving an approximate production capacity of 1,250,000 piglets per year; while for Genetikowi, the own production/fattening capacity will increase from 167,000 piglets per year to 237,000 piglets per year (42% capacity increase).



KOWI's strategy is based on consolidating its position in the export market by increasing its customer base in Japan, the United States and Korea. In turn, the company will continue to penetrate the market in the western region of the United States (California, New Mexico, Arizona, Colorado and Nevada) through Alimentos Kowi USA (affiliate marketing company).



KOWI exports to Japan and the United States represent, respectively, 19% and 25% of the total exports of Mexican pork to those markets, holding the third largest market share among companies exporting to those countries. Its sales also represent 23% of branded pork products in the national market; it is important to emphasize that Mexico is a country where pork meat is sold live and unbranded, with very few companies having managed to position their brand through processed products and specific cuts of their products. The Group's client base is well diversified, with its main clients being two Japanese companies, Nicherei and Green House, each representing approximately 4% of annual sales. The company also sells in the national market, through its own stores located mainly in the Northwest of the country.



In this sense, the Project will strengthen the integration of the production chain for KOWI, helping the company to achieve vertical integration, which will, based on scale economies, cause the company to improve its margins and stimulate its productivity. In addition, this investment will be developed in a rural area far from the main suburban areas of the state of Sonora, Mexico, bringing benefits to the area, such as strengthening economic development in the rural community through an increase in the demand for jobs (approx. 150 direct jobs), which are scarce or nonexistent in this region of the state.


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Environmental and social review

IDB Invest conducts an environmental and social due diligence (ESDD) commensurate with the nature, scale, and stage of the project, and with its level of environmental and social risks and impacts. The ESDD will confirm the project E&S categorization and assess the project with respect to the client requirements in IDB Invest Environmental and Social Sustainability Policy. The results of the ESDD, including any identified gaps are described in the Environmental and Social Review Summary (ESRS) provided below. For projects approved as of 2016, any gaps with respect to IDB Invest's Environmental and Social Sustainability Policy at the time of the ESDD are addressed in the Environmental and Social Action Plan (ESAP) presented below, to comply with the date mentioned above.

ENVIRONMENTAL AND SOCIAL REVIEW

97.7 Kb

Client files

This section provides the key environmental and social assessment documents produced by the client for this project.

ENVIRONMENTAL AND SOCIAL ACTION PLAN - GRUPO KOWI

80.2 Kb

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Contact information

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Alternatively, you may also use the following contact information :

Client Contact

EMAIL

N/A

PHONE NUMBER

N/A

POST OFFICE ADDRESS

N/A

IDB Invest Contact

EMAIL

requestinformation@idbinvest.org

PHONE

+1(202)-566-4566

ADDRESS

1350 New York Ave NW, Washington, DC 20005

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