AgFeed Industries Acquires Two Additional Producing Commercial Hog Farms, Anticipates Strong Hog Sales in the Second Quarter and High Hog Prices in China to Continue
(Marketwire Via Acquire Media NewsEdge) NEW YORK, NY, May 29 / MARKET WIRE/ --
AgFeed Industries, Inc. (NASDAQ: FEED), a
leader in China's premix feed and hog raising industries, today announced
the acquisition of two producing commercial hog farms in China's Fujian
province, including a breeding hog farm, the Company's second such farm.
AgFeed acquired 100% ownership of these farms. AgFeed's management is
already in place operating the newly acquired hog farms.
With the addition of these newly acquired hog farms, AgFeed now owns
controlling interest (on average more than 90%) in 24 producing commercial
hog farms in several provinces in China, including two breeder hog farms,
with an aggregate annual hog production capacity of approximately 550,000
hogs. AgFeed expects these acquisitions to be immediately accretive to
AgFeed anticipates strong hog sales through the remainder of 2008. AgFeed
plans to acquire additional producing commercial hog farms as several new
opportunities have been identified. Building of a new hog farm takes
approximately 3 to 4 years from obtaining a license to initial hog
AgFeed's hog farms are strategically located in the Jiangxi Province,
FuJian Province, Guangdong Province, Guangxi Province and the Shanghai
area. These producing hog farms serve two of China's wealthiest regions:
the Shanghai area and the Guangdong Province. Both regions have the highest
hog selling prices and the largest pork consumer base in China.
AgFeed benefits from strong synergies between its feed and hog production
businesses. AgFeed has existing feed manufacturing facilities in these
regions as well as management staff in place to run any newly acquired
Songyan Li, Ph.D, AgFeed's Chairman, commented: "In early 2008, we
anticipated rising hog prices throughout the year and we adjusted our hog
marketing strategies in our first quarter to benefit from higher hog
prices. We are pleased to see the effectiveness of such strategies as we
are experiencing both significantly increasing hog sales as well as high
hog selling prices." Dr. Li went on to address the effect of the recent
earthquake in China's Sichuan province, stating, "The earthquake in Sichuan
has not negatively impacted our business. However, the Sichuan province is
both one of China's most populous regions with a population of 100 million
people and a significant hog grower region that traditionally exports hogs
to neighboring provinces. The hog losses and the necessity for Sichuan to
import pork from other neighboring regions has put further stress on
China's hog supply and led to additional inflation of hog prices throughout
Due to hog growth cycle of approximately 6 months from piglet size to
market size, the current hogs sold in the marketplace in China were in fact
born in late 2007, before a severe winter snow storm earlier this year
caused significant piglet losses, particularly among backyard hog farms.
It is anticipated that this loss will result in hog shortages throughout
the summer months of 2008. AgFeed's commercial hog farms were not
materially impacted by the snow storm.
About AgFeed Industries, Inc.
Through its China-based operating subsidiaries, NASDAQ-listed AgFeed
Industries (www.agfeedinc.com) is a market leader in China's fast growing
pre-mix animal feed and hog raising industries. The pre-mix market in which
Agfeed operates is an approximately $1.6 billion segment of China's $40
billion per year animal feed market, according to the China Feed Industry
Association. There are approximately 600 million hogs raised in China each
year, compared to approximately 100 million in the U.S. Approximately 75%
of China's total hog supply is from backyard individual hog farmers, while
approximately 65% of China's total meat consumption is pork.
Safe Harbor Statement
All statements in this press release that are not historical are
forward-looking statements made pursuant to the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. There can be no
assurance that actual results will not differ from the company's
expectations. AgFeed's actual results may differ from its projections.
Further, preliminary results are subject to normal year-end adjustments.
You are cautioned not to place undue reliance on any forward-looking
statements in this press release as they reflect AgFeed's current
expectations with respect to future events and are subject to risks and
uncertainties that may cause actual results to differ materially from those
contemplated. Potential risks and uncertainties include, but are not
limited to, the risks described in AgFeed's filings with the Securities and
Mr. Arnold Staloff
Independent Board Member
AgFeed Industries, Inc.
Mr. Sam Zhou
AgFeed Industries, Inc.
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