October 28, 2008

China's New Hope Group is planning to capitalise on Beijing's new pro-agriculture policies to rapidly expand its pork, chicken and milk production.

Earlier this month, China announced rural development plans that would allow farmers to have more freedom in how they use their land, as well as more investment into the agriculture industry.

New Hope Group chairman Liu Yonghao, intends to follow up on the government's effort.

"We will invest more than RMB 1 billion (US$146.1 million) in our agriculture business in 2008, and will increase that amount next year," said Liu.

The company expects the new investment will help double revenues to RMB 100 billion (US$14.6 billion) over the next five years, but New Hope's board must first approve the funding, said Liu, adding that group sales this year are expected to reach RMB 45 billion (US$6.6 billion). 

New Hope is also looking at overseas acquisitions but domestic expansion in the group's core agriculture business would account for up to 80 percent of its investments, according to Liu.

New Hope also aims to be China's leading fresh milk producer five years, and has taken initial steps for a possible acquisition of Sanlu Group, the company at the heart of a recent milk scandal that killed four infants and hospitalised thousands more. However, Sanlu pending legal liabilities from the scandal and a brand with tarnished reputation that complicates acquisition plans, said Liu.