Power Prawns: A new Thai freshwater prawn for export
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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Business plan competitions give young Thai business people an opportunity to test their business ideas out with other promising entrepreneurs from all over Thailand and the world.
The prawn breeding startup in today's article just won the Asian Moot Corp business plan competition and is off to Oregon in the United States this week to match their business ideas with other top competitors in the New Venture Championship.
For further reading, read an article last year about a Thai entrepreneur's business plan for new kinds of abalone for export. Also read about last year's Bangkok Business Challenge at the Sasin School of Management at Chulalongkorn Unviersity in Thailand.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. What is the main idea behind the business plan?
2. Who developed this business plan? What were they doing while they developed the plan?
3. What prize did the business plan win recently? What does this prize qualify them to do?
4. How old are the six members of the team, where did they work before this project, how old are they, and what is their role in the company?
5. How did the business plan leverage one of Thailand's strengths?
6. What proportion of Thailand's prawn exports are freshwater prawns?
7. Why are they trying to minimize the number of female prawns produced in breeding?
8. How man-years take to complete the research necessary to produce only male prawns?
9. What is the essence of their technique for producing all-male prawns?
10. What innovative prawn production process are they proposing?
11. What return on investment (ROI) do they project?
12. How much start-up venture capital are they seeking?
13. Are they aiming for the Thai domestic market or the export market?
Bangkok Post Article April 9, 2007
Gender benders
SRIWIPA SIRIPUNYAWITMaking prawns more profitable by reducing the frequency of females is the key to a business plan that young local entrepreneurs are ready to take onto the world stage
The humble shrimp occupies an exalted position in Thailand's export economy, so finding ways to profit from the resource has long been a preoccupation of researchers and businesses. A team of young entrepreneurs believes it's perfected an approach that could be a big money-spinner.
The team, which calls itself "Power Prawns", has found a way to eliminate smaller, less profitable females from the gene pool, and replace them with mixed-gender prawns. It sounds simple but it was hard work for the six friends, who developed the product while attending university and working part-time. "Those months, we ate, talked, and breathed prawns," says one team member.
Their efforts are may be paying off - the team recently won the the first prize at this year's Asian Moot Corp business plan competition. Now they're heading to the US state of Oregon for the New Venture Championship that starts this coming Thursday, and the Global Moot Corp - a major contest that welcomes participants from around the world.
No matter how the competitions turn out, they are determined to turn their business plan into a reality.
Given the current economic uncertainty, leaving one's job may be the last thing most people would contemplate right now. However, it didn't take the Power Prawns team members long to decide to quit their promising careers and give the venture a go.
"The products and the markets are already there. The only thing we have to do is to execute the plan," says Pipat Srimattayakul, 27, Power Prawns' plant and farming director, who recently left the mobile company True Move.
Like many other projects that have won the first prize in business plan competitions in recent years, Power Prawns took advantage of Thailand's key strength - the fishery industry. The team also benefited from one member's experience as a prawn farmer.
They discovered that even though Thailand is one of the world's largest shrimp producers, freshwater prawns, or kung gam gram, account for only a small proportion of total exports.
"For every 100 tonnes of exported shrimp, only 2% are freshwater prawns. ... We see huge opportunities in the market," explains Janjira Champaiboon. The 25-year-old supply chain director recently resigned as a marketing assistant at Effem Thailand Inc to devote all her time to the new startup.
But profiting from freshwater prawns can be a serious challenge. Females, which are 60% of the population, are much smaller than males, so they only fetch about one-third of the normal price.
"That's why prawn farms are not as popular. ... [Freshwater prawn farmers] earn much less profit than they could from selling any other types of shrimp," Ms Janjira notes.
Thus, producing only males has been every farmer's dream, says Nattakorn Thamhatai, the team's 27-year-old business development director.
It took the two scientists five years to turn the farmers' dream into a reality.
They discovered a way to alter the sexual characteristics of male prawns, removing the androgenic glands so they became "neo female" - "Paula Prawns", the team members called them. Next, whenever they reproduced, the next breed would become all males, which the team named "Power Prawns".
The team's business plan involves asking farmers to raise Power Prawns for three months until they are big enough to be sold.
"Then we will buy back all the prawns from the farmers. We'll give them a good price. They should be able to make a profit of 20%," says Unyarat Pornprakit, the team's finance director.
Using this approach, she says, both the company and the farmers will face much less risk. "We can save a lot by not having to build the farms. The farmers won't face the risks of prawn diseases because we scan them for all viruses when they are still babies being raised in our closed system."
The team expects this win-win business plan to generate a 188% return on investment. Now they are seeking a venture capitalist willing to invest US $1.1 million.
Of the total investment, 55% will be spent building a closed-system farming installation, 29% for working capital and another 16% for marketing.
"The project should be able to reach the break-even point within 13 months with annualised returns of 60% to investors," Ms Unyarat explains.
Currently, the team is in talks with exporters who have expressed interest in buying their prawns. If the deals are closed, they could sell as many as 3,400 tones of prawns every year. Although the venture might not turn out as expected, the team is being flexible.
"Thais are full of new ideas...Getting things executed wisely is the key," Mr Pipat notes.
In any case, the members realise that in addition to making the most of natural resources, they have to carefully harvest financial resources as well. "Cash is necessary in running any business. Making the best use of it, therefore, is essential," Ms Janjira says with a smile.
Vocabulary (in discussion above)
business plan - (See Wikipedia on business plans and read a presentation on mistakes to avoid in a business plan)
breeding - to raise animals to produce more baby animals (with certain desirable characteristics)
startup - a new business venture in its earliest stage of development (See Wikipedia)
Return On Investment (ROI) - measures the success of an investment, ratio of money gained or lost on an investment relative to the amount of money invested. (See Wikipedia)
humble - not too proud, does not behave as though they are better than other people
exalted - praised very highly
an exalted position - a position that is praised very highly (for example His Majesty the King is in an exalted position in Thai society)
x is a preoccupation of y - y thinks about x all the time
genes - the body's 50,000 to 100,000 genes are part of its cells DNA and determine characteristics such as hair color, eye color, and height, as well as susceptibility to certain diseases which are passed from parents to child (See Wikipedia on genes)
the gene pool - all the genes in a breeding population
gender - being male or female (or a little of both)
mixed-gender - part male, part female
we ate, talked, and breathed prawns - this means they spent all their time working on their prawn business idea (they had no time to anything else)
Asian Moot Corp business plan competition - a business plan competition between teams from different countries in Asia, hosted each year by a different country
New Venture Championship - (See website, read about the 2006 winner from Mahidol University in Thailand)
Global Moot Corp - (See website)
the last thing most people would contemplate -
promising careers - a job that will lead to success
a fishery - fish farms where fish are breed and raised
freshwater - water without salt (like that found in a river or a lake)
supply chain - (See Wikipedia on Supply Chain)
x fetches price y - people pay price y for x
glands - "Endocrine glands secrete things into the bloodstream, like hormones. Exocrine glands secrete things that go outside of the body, like mucus and sweat (Source)
scan them for all viruses - check for viruses
win-win - a deal or arrangement in which both people gain, one of the five habits of efffective people, in a "zero-sum game" when one party gains the other loses)
venture capitalist - financing startup businesses as well as businesses in "turn around" situations, usually high risk investments but with a potential for high returns. A venture capitalist (VC) is a person who makes such investments (See Wikipedia on venture capital, and social venture capital)
working capital - Money used to operate a business from day to day (See Wikipedia on working capital and working capital management)
the break-even point - the revenue needed so that revenues = expenses and the company does not lose money (profit = 0) (See Wikipedia on break even and break even analysis)
annualised - per year, in a year
Answer Key:
1. What is the main idea behind the business plan?
The main idea is make prawn production more profitable by breeding less females.
("Making prawns more profitable by reducing the frequency of females is the key to a business plan that young local entrepreneurs are ready to take onto the world stage.")
2. Who developed this business plan? What were they doing while they developed the plan?
A group of six friends. They were attending university and working at part-time jobs while they produced the plan.
3. What prize did the business plan win recently? What does this prize qualify them to do?
The business plan won the "Asian Moot Corp business plan competition." Winning this competition will allow them to compete in the New Venture Championship in the United States this week as well as the worldwide Global Moot Corp.
4. How old are the six members of the team, where did they work before this project, how old are they, and what is their role in the company?
The article gives some information for four members of the team:
Member Age Role Work
a. Pipat Srimattayakul, 27, Power Prawns' plant and farming director, True Move mobile phone company
b. Janjira Champaiboon, 25, supply chain director, marketing assistant at Effem Thailand Inc
c. Nattakorn Thamhatai, 27, business development director, NA
d. Unyarat Pornprakit, finance director.
5. How did the business plan leverage on of Thailand's strengths?
The business plan took advantage of of Thailands' strong fishery industry. One member of the team even used to be a prawn farmer.
6. What proportion of Thailand's prawn exports are freshwater prawns?
Only 2%.
7. Why are they trying to minimize the number of female prawns produced in breeding?
Female freshwater prawns are much smaller and fetch only a third of the male price. They are also normally 60% of the prawn population, so freshwater prawn farmers earn less than non-freshwater prawn farmers.
[Note: Non-freshwater would probably be salt water]
8. How man-years take to complete the research necessary to produce only male prawns?
10 man-years. (or person-years)
(2 scientists X Five years of research each)
9. What is the essence of their technique for producing all-male prawns?
They removed the androgenic glands from the prawns.
("They discovered a way to alter the sexual characteristics of male prawns, removing the androgenic glands so they became "neo female" - "Paula Prawns", the team members called them. Next, whenever they reproduced, the next breed would become all males, which the team named "Power Prawns".")
10. What innovative prawn production process are they proposing?
a. The prawns are first raised as babies in their closed system and scanned for viruses.
b. The prawns are raised for another three months at large prawn farms.
c. The prawns are bought back from the farmers, who are given a 20% profit, and then resold.
11. What return on investment (ROI) do they project?
188%
12. How much start-up venture capital are they seeking?
US $1.1 million dollars
13. Are they aiming for the Thai domestic market or the export market?
The export market.
