August 10, 2006

 

HQ secures cooperative agreement in China's Hainan to produce tilapia

 

 

HQ Sustainable Maritime Industries, a toxin-free aquaculture producer and processor, said Thursday (Aug 10) it has signed an agreement with the Government of Tayang Town in Hainan Province, to partner with cooperative farms operating 1,647 acres of ponds.

 

This acreage is expected to be able to produce some 20,000 tonnes of tilapia live weight.

 

The area would double HQ's current farming capacity and its management believes would make it the largest producer of organic tilapia in the world.

 

The company said such agreements are possible because of the leadership role HQ plays in developing Hainan's aquaculture industry to global standards.

 

The agreement is conditional upon the completion of financing for the construction of a new feedmill and processing plant in the vicinity of the farms.

 

Products would meet organic standards as defined by Naturland, whose standards are currently adopted by the FDA.

 

The region is about 40 minutes from HQ's current cooperative farms in Wenchang. All the farms in the agreement are clustered in one township, a factor required for organic certification.

 

The total project cost is an estimated US$30 million. HQ management expects to see strong growth and increasing consumer awareness of its toxin-free aquaculture products with the implementation of the agreement. 

 

The cooperative farms have accepted terms and conditions which management believes are much more beneficial for HQ than current cooperative agreements, the company said.

 

Farms would use feed from HQ's mill and accept company feed financing to access HQ's new processing plant.

 

The arrangement reduces the risk exposure for the farmer and provides the company a much better profit margin, a statement said. These organic farms are not allowed to sell their production to other processors unless HQ is unable to buy their production.

 

The new processing plant will have 6 production lines with value-added capabilities, allowing HQ to make fish sticks and fish patties as well as fillets and whole round products.

 

The new feedmill, the only floating or organic feed production in Hainan currently. would produce organic floating feed

 

The feedmill would supply the company's operations in Wenchang and Qionghai and other aquaculture operations in Hainan.

 

The plant would manufacture some 100,000 tonnes of feed annually and would source for organic non-GMO corn and soya from China and abroad.