Acquisition of Hog Farm Closed by AgFeed

NEW YORK - AgFeed Industries, Inc., China's leading premix feed and hog raising industries have announced the acquisition of a producing commercial hog farm serving China's Shanghai region.
calendar icon 26 June 2008
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AgFeed acquired 100% ownership of this farm. As a result of this acquisition, AgFeed is positioned as the largest commercial hog producer in the Shanghai region.

Shanghai represents one of the wealthiest consumer markets and one of the highest hog prices in China. AgFeed expects the acquisition to be immediately accretive to 2008 earnings.

AgFeed now has a controlling interest in 25 producing commercial hog farms strategically located in the Southeastern region of China, providing close access to end user consumers, including two of China's wealthiest regions where hog prices are also the highest in China: Shanghai and GuangDong Provinces. Due to the Chinese cultural preference and consumer insistence on daily slaughtered fresh, not chilled or frozen pork, close access to consumer markets is a key to efficient and profitable hog production in China.

China's abundant domestic corn supply, restriction on corn export and ethanol production, plus AgFeed's increasing benefits from larger economy of scale in its synergistic hog production and feed business have led to efficient feed cost for AgFeed.

Dr. Songyan Li, AgFeed's Chairman, commented: "As global agricultural companies seek to gain access to the vast consumer pork markets in China, inability to control hog supply is a real impediment to profitability in the Chinese marketplace. AgFeed stands to benefit as a stable and reliable supplier of a large number of quality live hogs. Our market leader status in China's key consumer markets further positions AgFeed as a fully integrated hog industry player in China. Securing a reliable hog supply while controlling hog input feed cost is the key to successful pork marketing in China, in which hog production is the only income tax free segment of a fully integrated hog/pork model. AgFeed has a strong management team and an expanding infrastructure to deliver these critical elements of success."

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