AgFeed Industries, Inc., one of the largest independent hog production and animal nutrient companies in China, has announced that it has agreed to invest in a hog production project in conjunction with Xinyu City in Jiangxi province. The two-year project encompasses the building of five western-model hog farms, totaling 25,000 sows. The initial phase of the project will encompass an investment of US$18 million to build two 5,000-head sow farms, one 200-head boar stud farm and one 2,600-head multiplier facility. Upon completion, the first phase of this complex will have an annual hog production capacity approaching 230,000.

Construction for the initial phase will begin in May 2010, with the goal of completing the second phase during 2012. The Xinyu complex will have annual production capacity of up to 600,000 hogs.

As part of its agreement with AgFeed, the local authorities will be responsible for clearing the land and developing the necessary infrastructure for the new farms. This will include the required water supply, electrical systems and the construction of the roads and highways necessary to accommodate all of the farms.

Dr Songyan Li, Chairman of AgFeed, said: "The Xinyu site is located 80 miles from our company's Nanchang headquarters and 530 miles from Shanghai, one of our major markets. It is ideally located to support our plans to establish our company as a fully integrated producer. The agreement is consistent with our core strategy of 'AgFeed, Government, Farmer', all working collaboratively to meet growing consumer demand and assuring the highest standards of food safety. AgFeed providing the western production systems, including genetics, the government providing support for our production systems and philosophy towards its goal of assuring food safety, and the farmers, who are trained in modern western hog raising methods and will experience increased earnings."

Junhong Xiong, President and CEO, stated: "The Xinyu city government was very active in recruiting and selecting AgFeed for this project. We look forward to working on a cooperative basis with local; farmers, banks and government in arranging financing so that the local farmers can establish modern finishing facilities of AgFeed's design. Our team will train, provide nutritional and other technical support, and guide the local farmers to assure that the hogs are finished to our high standards. We believe that the local farmers will make a fair and consistent profit while successfully implementing our programmes. This project is similar to our project in DaHua, Guangxi Province, where construction began in November 2009. Together our Xinyu and DaHua complexes will have the capacity to produce over 800,000 top-line hogs a year."

Gerry Daignault, Chief Operating Officer, commented: "Our joint venture partner M2P2 will direct the process of designing and building the facilities in Xinyu, just as they are currently doing in DaHua. Our feed division will be building new feed mills in these cities in order to supply our new centers of hog production. As part of the development of these new feed mills, we will also introduce western-style bulk delivery of our complete hog feed, a first of its kind in China. All these initiatives move us forward in our plan to own all three verticals of production: feed, hog and processing."