Cattle Farms (MEIJI)
The Cattle Farms business segment, overseen by Macau Eiji Co., Ltd. (MEIJI), comprises SIAF’s beef cattle operations in southern Guangdong Province. Currently there are two operations in this segment, Cattle Farm 1 and Cattle Farm 2.
MEIJI’s revenue for fiscal year 2016 was USD 29.8 million, nearly 9 percent of the Group's total revenue of USD 342.9 million in the same period. In Q1 2017, revenue from MEIJI increased by 75% to USD 8.4M (4.8), with live cattle sales amounting to 4 401 head in Q1 2017 versus 3 032 in Q1 2016. Gross profit increased by 531% to USD 1.4M (0.2) equivalent to a margin of 17.0% (4.7%).
The major factor behind the increase was the significant demand for our locally bred “Yellow Cattle,” which are garnering approximately USD 36 / kg (live weight) in sales, which when compared to SJAP’s average of RMB26 / Kg for Angus and Simmental, provides perspective on the benefits from having adjusted the breed of cattle being raised. Market prices of MEIJI’s Yellow Cattle breed do not exhibit the same sensitivity to beef imports, since the imported beef originates from other, more common breeds.
Cattle Farm 1: Cattle Farm 1 was built as a demonstration farm to show that cattle can be raised in a semi-tropical climate using the Group's semi-grazing and housing method. Using the Group's semi-free growing management system, the cattle are allowed to graze in the field during the early morning and kept indoors and out of the sun during the hot summer days. This method has proven reliable, with the growth rate of the cattle measuring slightly higher than the cattle at SJAP (i.e., averaging some 0.28 kg per day per cattle more).
Cattle Farm 2: Cattle Farm 2 is a beef cattle farm situated in Guangdong Province, Guangzhou City. Cattle Farm 2 is operated by a private company formed in China with Chinese citizens acting as its legal representative as required by Chinese law. EAPBCF will become a Sino Agro Food subsidiary when its SFJVC is officially formed. This is expected to occur during 2016 or 2017 pending availability of free cash flow of the Company; however, no guarantee can be made that the SFJVC will be formed.
Cattle Farm 2 is complementary to Cattle Farm 1, having an additional 76 acres of land suitable for growing the Group's type of pasture (a cross between elephant grass and yellow grass) that has a very high yield rate of over 35 MT per 1/6 acre per year, and containing an average of over 9 percent protein that is very suitable for the consumption by cattle. Between the two farms, under normal seasons, they have a capacity to produce up to 30,000 MT of pasture/year collectively that is capable to feed up to 5,000 head of cattle/year based on the consumption rate of average of 6 MT/head.
MEIJI is the marketing and distribution agent for all cattle farms that are and will be developed by MEIJI using its "Semi-free growing" management systems and aromatic-feed programs and systems to grow beef cattle.
Similar to CA in its business model, MEIJI purchases fully-grown cattle from Cattle Farm 1 and sells them to the cattle wholesalers. MEIJI also buys young cattle from other farmers and sells the young stock to Cattle Farm 1. All cattle farms developed by MEIJI will utilize its "semi-free growing" management system and aromatic-feed programs and systems to raise beef cattle.
Beef is traditionally a high-end market in China, as it is mainly sold to expensive restaurants or upscale hotels rather than to Chinese consumers. This situation is rapidly changing, though, owing to urbanization and rising incomes, the rising demand for a high protein diet, and the rise in restaurant dining due to work demands.
Using the Company's modern farming methods and feedstock have yielded above average results, reducing fattening time and producing the highest quality aromatic beef. The Company intends to become one of the highest quality producers of organic beef to meet the demands of China’s growing middle class for quality, healthful food.
Photos from Cattle Farm 1 (JHMC):
Aerial view of Cattle Farm 1
Cattle are sheltered during the heat of the day, and graze in early morning.
Cattle Farm 1 houses 900 head of beef cattle
Beef cattle on their way to market.
Entrance to Cattle Farm 1