January 30, 2008
AgFeed benefits from China's income tax exemption for hog growers
AgFeed Industries announced today that the Chinese government has declared the hog raising sector as an income tax exempt industry due to hog shortage in the country.
China has a flat corporate tax rate of 25 percent on earnings.
Songyan Li, AgFeed's chairman pointed that the company will benefit from record high hog prices in 2008 due to rising consumer income levels and estimated strong demand for premium priced lean and safe meat associated with the coming Olympic Games.
AgFeed sells meat hogs at around US$221 each with average net income margin of approximately 37 percent.
This year, Agfeed estimates to produce 120,000 hogs with a target total production of 400,000 hogs, Li said.
The China Feed Industry Association disclosed that over 530 million hogs are raised in China each year compared to approximately 100 million in the US.
Pork represents 65 percent of all meat consumption in China, with 70 percent coming from individual hog farmers in a highly fragmented market.
AgFeed is a US public company listed on the NASDAQ Global Market with operating subsidiaries in China.
It entered into China's hog raising industry since 2007 through multiple acquisitions and is currently the market leader in China's fast growing premix animal nutrition industry.