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Tianli Acquires Land Use Rights, Facilities for Hogs

by 5m Editor
6 October 2011, at 12:10pm

CHINA - Tianli Agritech, Inc. has acquired land use rights and facilities in the Osmanthus Village Industrial Park, Xiangfeng Town in Laifeng County, on which it also intends to build a 50,000-ton feed production facility.

A leading producer of breeder hogs and market hogs based in Wuhan City, the Company believes the property, which is approximately 2.1 acres, can be quickly and economically converted into a feed production facility. The property was acquired at a public auction for RMB3,220,000 in cash (approximately US$510,000). This new feed facility will be dedicated to supplying feed to black hogs in Tianli's Enshi Black Hog Programme starting in February 2012.

The Company obtained exclusive rights to breed and sell black hogs in Enshi Autonomous Prefecture in Hubei Province in May 2011. After engaging in discussions with several local feed suppliers, Management decided to acquire 2.1 acres of land use rights in Enshi City in Hubei Province, together with the facilities located on the land which it will convert into a feed production facility. By having its own feed production and mixing facility for its Black Hogs Programme, Tianli, which already prepares its own pre mix for its hogs, will be able to ensure the consistency and quality of the feed necessary for its high-margin Black Hogs Programme.

The purchase price of the land and facilities consists of the following:

Land use rights:

Buildings : RMB 1,415,000
___________________________
TOTAL RMB 3,220,000

Tianli plans to spend an additional RMB 1,300,000 (approximately $210,000) to renovate the facilities and RMB 2,700,000 (approximately $436,000) for new equipment to achieve 50,000 tons of annual feed production capacity at the facility.

As of 4 October, the Company has signed agreements with 111 farming households in Enshi Autonomous Region, which will raise black hogs for Tianli's Black Hogs Programme. The Company estimates that these 111 farming households have an initial annual aggregate production capacity of 11,100 hogs. Tianli will market its black hog meat in leading supermarkets in the Hubei province through its cooperation with An Puluo Food Co. Ltd.

"We are making good progress on our Black Hog Programme and the acquisition of the property for a feeding facility is a critical component in our plan," stated Hanying Li, Chairwoman and CEO of Tianli. "Once we complete renovations at our new feed facility, we will be 100 per cent self-sufficient with our initial black hog breeding. We continue to have productive conversations with prospective hog breeders in Enshi City, Hubei Province about joining our Black Hog Programme."