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AgFeed to Open 900th Premix Distribution Chain

by 5m Editor
8 September 2008, at 12:35pm

CHINA - AgFeed Industries, Inc., China's largest commercial hog producer and the largest premix feed company, today announced the opening of the 900th independently owned premix feed product distribution chain store in China exclusively distributing AgFeed brand premix feed products.

AgFeed has two profitable business lines - premix animal feed and hog production.

AgFeed sells its premix feed products directly to large commercial hog farms and through a unique independently owned chain store distribution network targeting the vast individual backyard hog market. Approximately 75% of China’s total 600 million annual hog production is from individual backyard hog farmers.

AgFeed is on track to meet or exceed its previously announced goal of being associated with a total of 1,000 independently owned chain stores by year - end 2008. Approximately 65% of AgFeed’s total premix feed sales are generated through such retail channels. AgFeed believes such channels build strong brand loyalty and generate greater profit margins by directly targeting end user retail customers.

AgFeed Benefits from Declining Commodity Prices and China’s Harvest of New Crops

Corn and soy bean meal are two major feed input costs for hog production. China is currently experiencing a year of good harvest in both domestic corn and soy bean crops. Prices for both commodity products have continued to decline and AgFeed is currently seeing expanded profit margins on hog production.

Hog prices in target markets of South China have increased steadily since cooler weather conditions in the fall and winter seasons are typically the strongest pork consumption months in China. Demand for live hogs continues to be strong. Market hogs are currently sold at more than $240 each based on 110kg in average weight.

Songyan Li, Ph.D., AgFeed’s Chairman commented: "AgFeed continues to execute well our growth plan. Declining hog feed input costs compared to the 2nd quarter and rising hog prices are within our expectations. Increased operating efficiency and excellent progress made in hog disease control measures at our hog farms are positively impacting our business. We look forward to continued strong financial performance."

5m Editor