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18 July 2017.

DAF INVESTS IN NEW CHINESE PIG BREEDING FARM

In cooperation with Chinese partners, the Danish Agribusiness Fund is investing in a new pig breeding farm in Henan Province in China. The new joint venture will contribute to a higher supply of gilts that is needed to make China a modern pork producing nation based on large-scale farms.

China is moving towards becoming a modern pork producing nation with large-scale farms of typically between 5,000-6,000 sows. To stock the production base capacity for the expected large number of new sow farms in China a stable supply of quality gilts is needed. At the moment, Chinese breeding companies cannot deliver the required number of gilts. A partnership between the Danish Agribusiness Fund (DAF) and two Chinese partners will target this production gap by establishing a modern breeding farm that will be able to supply up to 40,000 gilts per year.

– In China, we will be able to stock and/or replace gilts for commercial production of 80,000-100,000 sows per year. This is equal to 8-10% of all the Danish commercial sows. Therefore, this investment will have a rather big impact on the development of the Chinese pig farming industry. Also, Danish equipment and technology suppliers will have a chance to expand their business in China in the tailwind of this investment, said Martin Hjorth, Founder of CM Consulting Ltd.

A unique three-party joint venture

The uniqueness of this project is the combined strengths of the three partners: DAF, CM Investment Management and Huayang Animal Husbandry. CM Consulting which will provide farm management for this project is a leading sow-management company in China with 58,000 sows under management. DAF has experience from successful investments in pig farming in developing countries and will push for long-term sustainable development. Huayang Nongmu as local partner with access to land plots will assist with local government relationships and local knowledge.

– By combining the experiences and talents of all three parties, this partnership will provide a fantastic platform for a successful three-party joint venture in the less developed Ruzhou City in Henan Province, said Lu Gaoxing, Chairman for Huayang Animal Husbandry Co. Ltd.

DAF is investing in sustainable pig farming

 DAF is already investing in two other pig farms in China and will invest DKK 34.9m in share capital in the new project. With China’s approx. 36 million sows compared to Denmark’s 1 million sows, the local impact will be significant if more local Chinese pig producers are encouraged to move towards a sustainable business model. Among other things, pollution from modern pig farming can be reduced and food safety secured.

– Most Chinese pork consumers prefer “fresh pork meat” in their food culture. Therefore, we cannot only export frozen pork from Denmark to China. We must ensure local production of pork in a sustainable way. This project will ensure just that, as it will be designed in accordance with Danish standards in terms of construction, animal welfare and environmental protection. This will provide for a sustainable but also a commercially attractive project, said Max Kruse, Vice President for the Danish Agribusiness Fund.