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AgFeed splits feed and hog business in China

AgFeed Industries will split up its hog and nutrition business in China in two different divisions, in order to better respond to anticipated growth in these markets.

After successfully executing its previously announced 2009 five-phase strategic plan, the company's board of directors and senior management believes that the development of two strong, parallel business operations is a key to its continued growth in 2010 and beyond.

The company, one of the largest independent hog production and animal nutrient companies in China, will remain the holding company for the two businesses which will be separate, but wholly-owned.

The company will also continue to indirectly hold a 65% controlling interest in AgFeed International Protein Technology, the joint venture it established with M2P2 in 2009. Each business line will have a board of directors, an executive-level management team with strong industry experience, financial systems designed specifically for their operations and internal financing capabilities.

Best people
The company's plan is to ensure that the best people, information, technology and operating tools are in place to propel its growth into a much larger company by pursuing expansion in its two key markets: animal nutrients and genetic hog production.

The company currently anticipates announcing executive-level appointments for each of its business units on January 29, 2010.

Agricultural practices
Dr Songyan Li, AgFeed's chairman, stated, "Our businesses are integrally linked and related to the improvement of Chinese agricultural practices and the standard of living for the people of China. This internal corporate reorganisation will empower our business units to efficiently and aggressively pursue the growth of their respective market position and share, which will create shareholder value."

Animal nutrition
Junhong Xiong, AgFeed's president, added, "Our original core competence is in the animal nutrition business. We believe the new corporate structure will facilitate the expansion of our existing additive pre-mix business to include compound feed and concentrated feed. Today there are over 10,000 feed companies in China each averaging 10,000 tonnes of annual production and resulting in fragmented and inefficient industry capacity.

"In 2009, our animal nutrients business segment delivered over 95,000 tonnes of feed to the market. Through organic growth and strategic acquisitions we intend to become one of the largest market participants in this business over the next three years. The foundation for the future of our animal nutrient business is our 1,200 independent distributors and our 750 commercial farm customers, together with the development and implementation of our strategy to transition from being a price based competitor to being a provider of value based, total solutions to customers in our target markets."

Hog production
With respect to the hog production business, Dr Li commented, "Market forces, coupled with the Chinese government's policy of industrialisation and commercialisation of this key industry, continues to signal positive change for large integrated producers such as AgFeed.

"Our reorganised hog production business, coupled with our new joint venture with Hypor, Hypor AgFeed Breeding Company, will be positioned for aggressive growth in this industry going forward.

"Our breeding systems and commercial farms will produce the highest quality, most robust and healthy animals in the Chinese domestic hog production industry, resulting in products that are very attractive to the urban center markets where meat demands are changing together with the growth of the middle class."

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