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BUSINESS & TECH

Food Group Oinks Up $300 Million for Sichuan Pig-Breeding Base

By Huang Shulun and Coco Feng
New Hope Group plans to build eight farms to raise 30,000 pigs for breeding, and about 130 centers to raise pigs for slaughter in the Liangshan Yi autonomous prefecture in Sichuan province. Photo: Visual China
New Hope Group plans to build eight farms to raise 30,000 pigs for breeding, and about 130 centers to raise pigs for slaughter in the Liangshan Yi autonomous prefecture in Sichuan province. Photo: Visual China

Agricultural company New Hope Group has struck a $300 million deal to build a massive pig-breeding base in Sichuan province, playing to Beijing’s campaign to improve food safety by boosting large-scale production.

The new deal with the government of the Liangshan Yi autonomous prefecture in northwestern Sichuan also plays to another recent Beijing campaign to raise living standards for China’s poorest people, and will help pull at least 5,000 locals out of poverty, according to an announcement on the company’s website.

Under the plan, New Hope will build eight farms to raise 30,000 pigs for breeding, and about 130 centers to raise pigs for slaughter.

Like many agricultural and livestock industries, pig-raising in China is transitioning from family farming to intensive, large-scale facilities. Beijing is encouraging the drive to encourage greater efficiencies, and also to raise standards to prevent food-safety scandals that have become common with the country’s rapid economic rise.

One of the biggest deals in the sector came in 2013, when domestic pork producer WH Group purchased U.S. giant Smithfield Foods Inc. for $4.7 billion. WH was back in headlines late last year when it announced a smaller deal to buy another major U.S. pork processor, Clougherty Packing LLC, for $145 million.

China’s Ministry of Agriculture unveiled a plan in 2015 aiming to raise the proportion of facilities with annual production of 500 pigs or more to 52% by 2020, up from the 2014 level of 41.8%. Farms with capacity of more than 5,000 pigs are eligible for subsidies of at least 500,000 yuan ($74,800) to upgrade stalls.

In March 2016, New Hope started building pilot large-scale pig farms around a village in northern Liangshan, one of Sichuan’s poorest areas. So far, two farms with annual capacity of more than 1,000 pigs have been built, providing jobs for 81 locals, said a New Hope employee who is in charge of the project.

Shares of Shenzhen-listed New Hope declined 2.53% on Thursday.

Contact reporter Coco Feng (renkefeng@caixin.com)

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