November 12, 2008

Yurun Food Group, a major pork producer in China, plans to double its pork production capacity with HK$4 billion (US$516 million).

The investment will be used to buy out smaller rivals and improve production facilities, the company said.

Yurun currently produces 15 million pigs per year, but the company plans to increase to 30 million pigs, producing 8,000 tonnes of pork per week.

Yurun chief operating office Zhang Yuanfei said the company has enough capital to fund the expansion, therefore it requires no financial injection from the markets or the banks.

"The company has HK$1.7 billion of cash on hand, with cash flow of HK$7-800 million and a bank loan in place for HK$450 million," said Zhang.

Zhang also said the current financial crisis will have limited impact on China and household income will continue to grow despite of the recession.

Rising incomes in China have increased meat demand, with 70 percent of meat consumption being pork. Domestic pork prices have also fallen by 16 percent this year.

China has come down hard on licensing rules on small meat processors, in the wake of the recent melamine scandal in the dairy sector. The current 20,000 processors will be scaled down to 7,000 modern facilities within 10 years.