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AgFeed Splits Pig, Feed Businesses

by 5m Editor
14 January 2010, at 9:25am

CHINA - AgFeed Industries has announced a strategic internal reorganisation, which will include splitting up its feed and pig divisions.

AgFeed Industries, Inc., one of the largest independent hog production and animal nutrient companies in China, has announced that its board of directors has authorised a strategic internal reorganisation of its corporate structure to more efficiently align its business platforms in order to maximize the results of its anticipated growth in the Chinese hog and animal nutrients markets. After successfully executing its previously announced 2009 five-phase strategic plan, the AgFeed Industries 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.

AgFeed Industries will remain the holding company for two separate, wholly-owned businesses, one for its animal nutrients feed operations and one for its genetic hog production operations. The company will also continue to indirectly hold a 65 per cent controlling interest in AgFeed International Protein Technology Corp., the joint venture it established with M2P2 LLC 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. 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 29 January 2010.

Dr Songyan Li, AgFeed's Chairman, said: "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 reorganization will empower our business units to efficiently and aggressively pursue the growth of their respective market position and share, which will create shareholder value."

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 premix business to include compound feed and concentrated feed. Today, there are over 10,000 feed companies in China each averaging 10,000 tons of annual production and resulting in fragmented and inefficient industry capacity. In 2009, our animal nutrients business segment delivered over 95,000 tons 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."

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 reorganized hog production business, coupled with our new joint-venture with Hypor B.V., Hypor AgFeed Breeding Company Inc., 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 centre markets where meat demands are changing together with the growth of the middle class."