Pork processor looks to expand in Southwest China feed market
Last week, China Xiangtai Food Co., Ltd., (PLIN) whose operations span the pork processing value chain, including slaughtering, packing, distribution, and wholesale, announced that its subsidiary, Chongqing Ji Mao Cang Feed Co., Ltd. (JMC), completed around US$7.2m in sales of SBM over three months to pig, poultry and duck farmers in the Chongqing and Sichuan regions.
JMC had taken hold of 18K tons of SBM from China's state grain stockpiler Sinograin, with which it has a long-standing raw material purchasing relationship. It also has established alliances with COFCO and grain traders and processors like Cargill and Louis Dreyfus.
It was only in April this year that China Xiangtai acquired a 51% controlling interest in JMC, which is one of the leading feed suppliers in southwest China. According to China Xiangtai, JMC has more than 200 customers in the farm industry and nearly 100 customers in the feed production industry. In 2019, it sold more than 200,000 tons of soybean meal, exceeding US$70m in sales.
China Xiangtai said it will continue to leverage JMC's expertise in animal feed raw material procurement and formulation services combined with its own commercial strength to expand into the southwest China market and “create value for our shareholders”.
When asked whether China Xiangtai would look to increase its 51% equity stake in JMC anytime soon, a spokesperson for the pork processing group told FeedNavigator it was willing to increase its share of that business but a timeline for such action was not yet clear.
M&A is a key growth strategy for China Xiangtai, added the spokesperson.
Jiaping Zhou, general manager of JMC, commenting last April, said the feed distribution company welcomed the opportunity to start a partnership with a Nasdaq listed company, adding that JMC stands to benefit greatly from China Xiangtai’s experience and food industry reach, as it looks “to further expand JMC's profitability with the development of production capability and enhancement of our distribution channels."
There are multiple opportunities for JMC to grow its business in China, said the spokesperson for China Xiangtai, considering the significant and stable demand for feed, particularly in the Chongqing and Sichuan region, which has a population of 130 million.