China: Zhengbang to sell substantial feed assets to Dabeinong

Dabeinong, which is one of China's leading feed manufacturers, will take full ownership of three of the companies and a 51% stake in five others.

The divestment gives Dabeinong full ownership of Deyang Zhengbang, Danling Zhengbang and Chongqing Guanglian, as well as majority stakes in five Zhengbang subsidiaries based in the southwestern provinces of Yunnan and Guizhou.

The deal was made to reportedly strengthen Dabeinong’s competitiveness in the feed industry and improve its footprint in feed supply in China's southwestern region; the company outlined last month how it wanted to have a 10% share of that country's feed market in the near term and 20% in the mid-to-long term.

Also active in seed technology, Dabeinong has several GM traits approved as safe and is expected to be one of the first firms to commercialise GM corn in China.

Zhengbang, which is headquartered in Nanchang City, Jiangxi Province, is said to be navigating financial challenges after major expansion during 2020 left it vulnerable to the drop in pig prices in 2021. 

On January 29, Zhengbang reported that it had increased its sales by 56% to almost 15 million hogs last year, but that it has been affected by the decline in prices and the loss of over two million sows due to disease and efforts to reduce costs.

The firm recently announced an agreement with a local government-backed Jiangxi Railway Aviation Investment Group, worth $1.6bn, to fund some of its feed purchases, said Reuters. 

Early last month, the media outlet revealed that Jiangxi Railway had already purchased about 80 million yuan ($12.6m) worth of feed for Zhengbang and that it would continue to help it buy feed and other products.