January 6, 2012

With a total investment of RMB860 million (US$136 million), China's Yurun Group Co started operating the first phase of a meat processing subsidiary in Shanghai on a trial basis.

The meat processing subsidiary, named Shanghai Furun Meat Processing Co, began construction in August 2008 in Baihe Town, Qingpu District. The project covers a floor area of 450 mu and will have 220,000-square-metre building areas.

Upon the completion of the construction, it will be able to slaughter two million pigs every year to produce 66,600 tonnes of carcass meat, 39,960 tonnes of cut meat, 10,000 tonnes of meat products and 49,950 tonnes of pork by-products. In addition, Shanghai Furun Meat Processing Co will produce 5,000 tonnes of soy products, 5,000 tonnes of leisure foods and 5,000 tonnes of poultry products every year.

The second-phase project will be completed by the end of 2012. Upon the completion of the entire project, it can realise approximately RMB3 billion (US$476 million) in annual sales and RMB100 million (US$16 million) in profits.

Nanjing-headquartered Yurun Group now has over 200 pig, cow, goat and poultry slaughtering houses in China, of which over 100 ones have been put into operation. The group actually slaughtered 20 million pigs in 2011 and has ranked No.1 in the domestic low-temperature meat products market for consecutive 14 years.

To ensure meat products quality and food safety, Yurun Group took the lead to set up a food traceable information management system and spends around RMB500 million (US$79 million) annually on inspection of drug residue in pork. Every pig will be tested for clenbuterol, a chemical which can prevent animals from gaining fats.

To tighten control over its upstream industry chain, Yurun Group will shift the business focus to pig breeding from slaughtering in the coming years as it expects to be fully self-sufficient in pig supply by 2020. Currently the group's self-sufficiency is only around 5%.

Furthermore, Yurun Group aims to vertically expand the industry chain to cover planting, feedstuff, livestock breeding, slaughtering, fine and deep processing, fresh meat chain operation, cooked food retail and e-commerce.

The company will also expand the industry chain laterally to cover bio-pharmaceutical, cold chain logistics and electronic trading of agricultural products. The whole industry chain will involve pigs, cows, goats, poultry and rabbits, it said.

Yurun Group is working towards becoming an agricultural technology company from a labor-intensive one, the company added.