Integrated Cattle Farm (SJAP)

The Integrated Cattle Farm business segment of Sino Agro Food is active in beef cattle rearing and value added processing of domestic and imported beef meat. Qinghai Sanjiang A Power Agriculture Co. Ltd. (“SJAP”), in HaungYuan, near Xining in Qinghai province, began as the Company's first major demonstration cattle farm. Now, SJAP is not only the model farm for other SIAF stand-alone cattle farms, but it is SIAF’s flagship beef operation, integrating the on-site production of its proprietary fertilizers and livestock feed with an innovative cooperative farmer model. SJAP provides local farmers with fertilizer and feed, and buys their cattle after initial growth. SJAP continues the fattening process at its own facilities until the cattle are fully mature and ready to be sold. In addition SJAP is the 100% owner of Qinghai Zhong He Meat Products (“QZH”), which operates its abattoir for deboning, slaughter, and packaging on premises, to prepare sale of quarter cut deboned beef and/or packaged products.

Revenue for three months ended 30 September 2015 was USD 35.5 million, or 28 percent of the Group's total revenue of USD 124.7 million in the same period. Gross profit for SJAP in the three months ended 30 September 2015 was USD 6.7 million, or 21% percent of the Group's total gross profit of USD 32.3 million in the same period.

SJAP was awarded prestigious Dragon Head Enterprise status by the Chinese government in October 2013. The SJAP model promotes significantly improved income for the local farmers, and allows the company to effectively market to government officials and investors from surrounding districts to build additional farms.

Sino Agro Food, Inc. operates cattle farms in Qinghai, Guangdong, and Hunan provinces, and a cattle station in Beijing. The Company holds patents for a modern livestock feed manufacturing process and produces its own blends of enzymes for both fertilizer and feedstock production for various climates within China. These technologies combined with farm services make up the core of the Company's livestock operations, run through its joint partner business model, featuring project development from the outset, and for expansion.

     

Using the Company's modern farming methods and feedstock have yielded above average results, reducing fattening time and producing the highest quality aromatic beef. The Company intends to become one of the highest quality producers of organic beef to meet the demands for quality, healthful food by China's growing middle class.

Recent Developments

  • In early 2015, in response to the Chinese government relaxing import restrictions and tariffs on imported beef SJAP devised a strategy to transition its herd to premium quality Wagyu and Angus cattle, grain fed day for 550 days. The strategy foresaw a decline in standard beef prices, which has occurred in 2015. The Company believes that the premium cuts of beef will provide higher gross profit margins. In addition to transitioning its herd, and to offset the declines in local beef prices, the Company has increased import of Australian quarter cut beef for deboning.

  • Revenue at SJAP grew in both the 3 month and 9 month year over year comparisons to September 30, 2015 from $27.9M to $35.5M (27%) and from $79.7M to $108.2M (36% ), with deboning activity accounting for all the gains, as sale of live cattle remained flat to slightly down.

  • SJAP’s expansion to increase its deboning capacity to 12,500 MT/year and its freezer capacity to 10,000 MT is in progress. As of the November, 2015, part of the finished developments are operational, allowing the capacity to debone more quarter-cut beef imported from Australia.

  • On October 23, 2015, the Agriculture Development Bank of China increased SJAP’s bank facility by RMB 35M, comprised of a term loan of RMB 25M, short term loan of RMB 35M and a new project loan of RMB 35M. The project loan can be applied for purposes of new developments and mergers, acquisitions etc., which, subject to its final application, may be converted to long term debt.


Inside SJAP's Concentrated Livestock Feed (CLF) manufacturing facility.

 

Other currencies