SJAP beef cattle in renovated cattle house
Qinghai Sanjiang A Power Agriculture Co., Ltd. (SJAP)

SJAP's Business Activities

Fertilizer, livestock feed and cattle farming operations are conducted in Huangyuan County of Xining City; Qinghai Province, by Qinghai Sanjiang A Power Agriculture Co., Ltd. (SJAP), a majority controlled subsidiary of the Company incorporated in China in 2009. SJAP’S principal revenue generating activities comprise: (i) manufacturing and sale of organic fertilizer, (ii) manufacturing and sale of livestock feed, and (iii) rearing and sale of beef cattle. On February 28, 2013, SJAP completed its development of the Concentrated Livestock Feed Manufacturing Factory, and started the production and sales of Concentrated Livestock Feed (CLF). This CLF complements SJAP’s bulk livestock feed to provide the local cattle and sheep farming industry with a unique and completed feed formula that can cater to the rearing of cattle and sheep at various growing cycles (e.g., specially formulated mixes with efficient nutrients for dairy cows and sheep, weaning, fattening and mature cattle and sheep). The advantage of the formulated feed combination is that the cattle and sheep growers will realize cost savings in production knowing precisely the amount of concentrated feed that will be needed by their livestock, thus avoiding the waste of excess concentrated feed through over feeding, which results in worthless excess fat in mature animals. The Chinese central government has placed an order with SJAP to reserve up to 5000 MT of CLF annually as part of the country’s annual reserve emergency livestock feed inventory. Thus, from March 2013 onward, SJAP has realized additional revenue generated from the sales of CLF.

Dragon Head Status

In recognition of its many contributions to the local farmers in Qinghai Province, SJAP was granted Dragon Head Enterprise Status in October 2013:

On October 28, 2013, Qinghai Sanjiang A Power Agriculture Co. (SJAP), Ltd.'s nomination to apply the merit credentials in China to become a certified China Dragon Head Enterprise was approved by the Government Authorities. “The Dragon Head Enterprise” is a prestigious certification granted by the Government to businesses that demonstrate corporate social responsibility (CSR), coupled with high standards of quality and services, and pioneering and leadership in business. The Dragon Head Enterprise designation in the PRC is a most prestigious recognition awarded by the Government to companies that emerge as leaders in their industry sectors. Dragon Head Enterprise status provides tax exemptions and other financial support for companies deemed to have exceptional merit, and it identifies them as local corporate leaders. Companies with this status are often eligible for additional governmental grants and other forms of assistance and subsidies. Since Qinghai Province has larger numbers of ethnic minorities receiving proportionately higher grants, incentives, subsidies, and other assistance from the Government, SJAP has been well supported by the Government due to our CSR.   We expect to receive even greater support and cooperation from the Government since they granted us Dragon Head Enterprise status.

Continuing and building SJAP's commitment to CSR, in August, 2014 SJAP hosted a dignitary from Qinghai province. For reference, an overview of Qinghai Sanjiang A Power Agriculture Co., Ltd. (SJAP) from November 2014 is available.

   

Abattoir, Deboning, and Meat Packaging Facility

The Company rents part of our cattle housing to farmers since we completed development of all our cattle houses in 2014, and provides slaughter and deboning services to them in our abattoir and deboning facilities. SJAP received a business permit from the Chinese authorities on April 17, 2013, and construction commenced on April 21, 2013 on the abattoir, de-boning factory, and related packaging facility. Since it is rare and difficult to obtain a permit for an abattoir facility in China, having this facility is expected to become a very valuable asset.

Until the abattoir was completed, we sold mostly live-cattle to or through various cattle wholesalers to existing wholesales and distributing markets that did not require much marketing efforts and networking. However in 2014, SJAP began to develop organized marketing networks and successfully launched efforts to sell our beef (meats) and beef products efficiently to achieve better profit margins for our quality meat, and establish our own brands and labels.

Fertilizer and Livestock Feed

On June 16, 2009, Sanjiang A Power produced its first batch of bio-organic fertilizer of 200 metric tons. Laboratory tests carried out by Xining University, showed that the fertilizer met the PRC’s quality standard for bio-organic fertilizer. Sanjiang A Power has completed the development of manufacturing plants and facilities for bio-organic fertilizer with a production capacity of up to 20,000 tons per year.

Sanjiang A Power's stock feed operations and cattle house capacity will allow fattening operations of up to 5,000 heads of beef cattle per year. The Company expects to produce some 30,000 tons per year to be used by both operations and sold to regional farmers.

Concentrated Livestock Feed manufacturing
Concentrated Livestock Feed (CLF) manufacturing facility.

The Company expects its 29 new or fully renovated cattle houses to provide the capacity for the rearing of 6,000 head of cattle annually, based on a six-month rotation. Additional head of cattle are expected to be sold through the cooperative of local farmers.

Bull Restaurant Prototype

In Huangyuan County, SJAP operates its Bull Restaurant as its demonstration model for a franchise plan. Converted from one of our old cattle houses, and situated next to our newly renovated cattle houses at SJAP’s complex, Bull Restaurant has a seating capacity of over 130 and is now a popular local dining facility having achieved sales of just over $420,000 in year 2012 with net profit of just over $50,000 (or netting about 12%) and is using one head of cattle every three days.

Overall, SJAP expects that revenues from operations will multiply and increase rapidly as a result of the addition of further herds, and of comprehensive value added processing and marketing facilities.

Construction of the abattoir, deboning factory and related packaging facilities commenced in April 2013 and the first phase was completed in early 2014. View historical photos of the construction progress, taken in August 2013. By January of 2014, the abattoir was operating in start-up mode.

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