AgFeed Industries: Positive outlook in China
Agfeed, the largest commercial hog producer and the
largest premix feed company in China, has announced record financial results for
the quarter ended June 30, 2008.
AgFeed generated record sales and earnings across the
board. China's corn prices have stayed relatively flat due to the country's
abundant domestic corn production, coupled with government restrictions on corn
exports and ethanol production.
"AgFeed has direct access to the
wealthiest pork consumer markets in China and captures some of the highest hog
selling prices. We anticipate continued rapid expansion in these key consumer
regions and expect to deliver strong financial results in our 3rd and 4th
quarters," Songyan Li, Ph.D., AgFeed's Chairman, commented.
the world's largest and most profitable markets for hog production with
approximately 600 million hogs produced annually. More than 1.2 billion Chinese
consume pork as their primary source of meat. 65% of all meat consumed in China
is pork. Chinese consumers consume more pork each year than the rest of the
world combined. Hog production in China is exempt from all taxes.
Agfeed's strategic positioning in the wealthy Shanghai and Guangdong
regions caters to high income levels as well as deep pork consuming cultures.
Four feed manufacturing plants are located in the same regions as the hog farms,
permitting significant cost savings on raw material purchases from which greater
economies of scale are realised, thanks to an integrated feed to hog production
AgFeed is in discussions to acquire multiple producing hog farms
which will strengthen 2008 earnings. The company's growth model for 2009 will
continue to be both organic growth and strategic hog farm acquisitions.
AgFeed intends to implement a superior hog genetics program beginning in
the remainder of this year to further reduce our hog production costs. A quality
hog genetics program utilising the right hog types can drastically reduce hog
production cost by up to $35 per hog from current cost levels.
continued: "On the strategic front, AgFeed is a ready platform for entering
China's vast and highly profitable integrated hog/pork markets. We believe
AgFeed is currently the only hog supply source in China capable of delivering
more than half a million quality raised hogs annually on a contract basis.
Poorly raised hogs could put consumer health at great risk and jeopardize one's
well established brand name. AgFeed is open to a variety of options in our
ongoing strategic discussions with several leading global players."
â€¢ Agfeed Industries
to the Pig Progress newsletter
To comment, login here
Or register to be able to comment.