China Operations

Today in China AgFeed has 21 legacy farms with approximately 16,000 sows and capacity for 19,000. These current farms have the capacity to produce 330,000 – 350,000 market hogs.  These farms were acquired, with one exception, in 2008.  In 2009 we made the strategic decision to invest in science based genetics and breeding procedures in order to improve the productivity of the acquired farms.

Through the implementation of these technologies and procedures our objective is to reduce costs of production by improving feed conversion, increasing birth rates, increasing pigs marketed per sow per year and economically maximizing market weights.

While significant efficiencies have been realized within our initial group of farms, we recognized that these farms could not reach the production efficiencies typical of enterprise scale western hog production systems that integrate state of the art facility design, management techniques and genetics.  Thus as the driver of our future growth we made the strategic decision to invest in the development of a series of enterprise scale sow farms based on our western model.  Our efforts to develop these new facilities are anchored by the transfer of technology and expertise to our Chinese operations from our U.S. operations.

During late 2009 and early 2010 we chose to close a number of our legacy farms following detailed operating analysis.  We determined that the closed farms would not be able to meet our operating criteria and standards.   Thus, they would be an operating and financial distraction as well as a drain on our management who could serve our shareholders more effectively by focusing their energies on those farm assets that can meet our production standards while also growing our modern, enterprise scale production system.

Our current plans for the development of these enterprise scale farms call for farms housing 50,000 breeding sows with annual production capacity of 1,200,000 market hogs by 2016.