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Danish investment firm breaks ground in Chinese pig breeding project

Post a commentBy Mark Godfrey , 08-Jun-2017

China's young pork industry is reaching out to foreign investors for sustenance
China's young pork industry is reaching out to foreign investors for sustenance

A Danish government investment fund is one of four investors in a huge new pig breeding and processing project that has just broken ground in northern China. 

The Copenhagen-based Investment Fund for Developing Countries (also known as the IFU) has joined three Chinese investors in setting up Heilongjiang Ya Ou Mu Yu Co Ltd (a name which roughly translates as Heilongjiang Asia Europe Animal Husbandry Co Ltd) which recently held a ceremony to mark the sod-turning on the RMB918 million project located outside Suihua city and set to finish up to 40,000 pigs per year for slaughter.

Alongside IFU, the other external investors are Hangzhou Jie Dao Investment Management Co and Heilongjiang Green Agricultural Development Co. However the lead investor – and operator – in the project is Zhejiang Nongcun Development Group, based in the populous, wealthy coastal province of Zhejiang. Many breeding projects have been shifted from China’s coastal provinces to the less populous and more economically disadvantaged provinces in the north like Heilongjiang and Inner Mongolia.

Speaking at the event, Heilongjiang Ya Ou Mu Yu Co chairman Gu Bao Jun said the project would meet Chinese demand for “safe” meat products and also said it was in tune with the central government’s One Belt One Road blueprint for advancing Chinese trade in its surrounding regions.

Six experts hired

That could be a hint to export ambitions for the new project. The broader corporate background to the new project is international: the main mover in the project, Zhejiang Nongcun Development Group appears to be a subsidiary of the Hunan Dakang Pasture Farming Co, investors in which include the Shanghai Pengxin Group Co, which itself has invested in agricultural assets in New Zealand.

Travelling to Suihua for the ground-breaking ceremony, Jakob Linulf, the commercial attaché of the Danish embassy in Beijing, was joined by a large presence of government officials and Communist Party leaders.

Staff hired for the new project includes “six foreign pig breeding experts”, according to a statement from Heilongjiang Ya Ou Mu Yu Co. While the site is 1,161 hectares in dimension, the bulk of the site will be taken up with alfalfa production and a feed processing plant as well as a sewage treatment plant. According to the plans, the project will produce 6,000 tons of fodder grown on-site and 20,000 tons of feed processed on site.

While the project aims to produce 40,000 pigs per year the slaughterhouse to be built will have processing capacity for 200,000 head of pigs per year. Speaking at the ceremony, head of the local agricultural ministry office Zhu Liang Kun stressed the animal husbandry capacities of the region, but also pointed to his ambition to increase tourism in the area, suggesting that many of the pigs will be fed outdoors and in organic-style set-ups.

Denmark exports pork to China , and Danish genetics companies have extensive operations supplying the local pig sector. The IFU, meanwhile, declares its mission to be assisting developing nations through trade, while also promoting Danish businesses. While Chinese pig firms have enjoyed a cyclical upturn in prices in the past two years, those prices have recently dropped. Many of the country’s leading pig firms are carrying large debt loads – explaining, perhaps, the need to reach out to foreign investors.

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