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| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. |
Summary of Project Information (SPI) |
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| Project number | 11589 |
| Project name | Jilin Zhengye Agriculture Development Co. |
| Country | China |
| Sector | Food & Beverages |
| Department | Agribusiness |
| Company name | Jilin Huazheng Agribusiness Development Co., Ltd. |
| Environmental category | B |
| Date SPI disclosed | December 24, 2002 |
| Projected board date | January 31, 2003 |
| Status | Active |
| Previous Events | Invested: September 30, 2003
Signed: June 18, 2003
Approved: February 27, 2003 |
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| Project sponsor and major shareholders of project company |
| Mr. Han Zhenfa and the Zhengye Group (ZG) are the project sponsors. In 1992, after having served nearly twenty years in provincial and national government, Mr. Han launched a successful business career. His business activities center on real-estate development in Changchun (capital of Jilin Province) and Beijing and, more recently, on pig farming and pork meat processing. Mr. Han owns ZG, which, in turn, holds 86.5% of Jilin Huazheng Agribusiness Development Co. Ltd. (ADC), the project company. |
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| Total project cost and proposed IFC investment |
| The estimated total project cost is $104.6 million, including working capital. The venture is being implemented in several phases of which the first stage is near completion and has been financed with shareholder funds. The proposed IFC investment is a $22 million loan, of which a $15 million A loan is for IFC’s own account and a $7 million B loan will be syndicated. |
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| Location of project and description of site |
| Project sites are spread throughout the countryside of Jilin Province, in northeastern China (considered to be the “grain belt” of China). The Project is expected to consist of two slaughterhouses, located in GongZhuLing City (existing) and Changchun, respectively. The existing pig farm is in Yinfeng county, Heilinzi Town. Seven of the breeding farms will be located in the vicinity of GongZhuLing City. There will be one pig farm each in Qucaihe town, Panshi county; Shiyan forest center, Shuangliao city; Quanyanling town, Lishu county; and Caoyuan station, Nong’an county, raising the total number of breeding farms to 11. ZG also operates a feed mill. |
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| Description of company and purpose of project |
ADC was established in 1998, when Mr. Han took-over a slaughterhouse in GongZhuLing from a failing state owned enterprise (SOE). With equity funding from ZG, ADC subsequently acquired a pig farm and an 82% stake in a feed mill. IFC will be funding the next phase of the venture that will complete the integration of ADC’s pig breeding operations. The project, to be implemented over five years, will introduce improved slaughter pigs in the Jilin market, and fresh and processed pork products in the Jilin province. US-based PIC (recently renamed Sygen International plc.) is ADC’s technical partner responsible for providing the genetic stock and technical support to breed improved pigs. The PIC pigs yield up to 25% more meat than local breeds and have higher feed-to-meat conversion ratios. The proposed venture involves the establishment of eleven pig breeding farms, a processing plant and the acquisition an existing slaughterhouse. In addition to the assets already acquired.
Development Impact
Upon completion, the project will favorably impact more than 10,000 farmers in Jilin province. They will earn higher incomes derived from productivity gains associated with breeding the improved pigs supplied by ADC. Feed cost savings to the pig breeding industry is estimated at $15 million per annum. These savings will eventually be captured by the end-consumer. Farmers will also benefit from technical support from PIC and ADC as well as from insights to modern pig breeding techniques. The project will be a major source of employment via the creation of 1,200 jobs. The workers will earn approximately 33% above their present wages. In addition, ADC will be undertaking many activities previously done by less efficient and financially impaired SOEs, and in so ding it will promote more efficient allocation of resources. The investment objectives are in-line with the provincial government’s efforts to develop the pig-breeding and corn industries, two priority sectors for Jilin province, considered the “grain bowl” of China. Given its substantial benefits to the local community, the project has strong support from the provincial authorities.
IFC’s Role
IFC will:
provide long-term financing presently not available to support this five year project;
strengthen a private enterprise’s efforts to be the largest fully integrated pig-operation in Jilin province;
support an integrated project that will be the role model for other industry players;
assist ADC in implementing a MIS system, utilizing IFC’s Trust Funds, and
establish a fair pricing mechanism for PIC pigs sold to ADC.
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s environmental review procedure.
Slaughterhouse. In 2000, ADC’s slaughterhouse in GongZhuLing City was awarded ISO 9001 certification. Air emissions and fire protection measures meet IFC guidelines. Some minor upgrades are needed to bring the wastewater treatment plant up to IFC guidelines, and ADC will implement these upgrades. ADC expects to acquire a second slaughterhouse most likely in Changchun in 2003, at which time due diligence will be carried out. Any environmental and health and safety upgrades required in order for that facility to meet IFC guidelines will be specified in the investment documents
Breeding Farms. ADC currently operates one breeding stock farm (PS Farm) and intends to develop a total of 11 breeding farms, with up to 1,000 sows per farm. These farms will be developed in rural areas to meet the highest standards for biosecurity. The coal-fired boiler at the existing breeding stock farm unit meets Chinese emissions standards but exceeds the IFC guideline for particulates emissions. The boiler will be upgraded with improved combustion controls and pollution control equipment to meet IFC guidelines. Wastewater is already subject to basic conventional treatment but will need further improvement to meet IFC guidelines. The company will ensure that wastewater treatment facilities are upgraded on this farm and on future farms as they are developed. Manure is sold to local farmers for use as fertilizer. Manure is in high demand, and there is minimal accumulation on site. No significant odor is produced by the facility or is expected due to the excellent sanitary conditions maintained on the farm (s). Access to the farms is strictly controlled. Workers wear protective uniforms. Vaccines, antibiotics and other pharmaceutical products are carefully controlled. The site has adequate fire safety provisions. The company will also ensure that fire safety is fully addressed in living and working quarters in the new farms to be developed.
Feed mill. The feed mill has appropriate dust control measures and health and safety protection, and raises no significant environmental and social issues.
Village Pig Farms. Young pigs from the parent stock farms are sold to village farmers who independently rear them to market size in enclosed, biosecure pens in batches of about 100 pigs. Typical units are enclosed, single-storey sheds, heated in winter, with adequate room for the animals. Floors are washed down several times per day. Liquid and solid wastes are collected and applied directly to the farmers’ fields. Waste management is handled in an appropriate fashion. The growing units examined at appraisal were located in villages, but some villages are considering consolidating all pig production units in a convenient area outside of the village where the wastes can be handled jointly. ADC will provide advisory services to village farmers to optimize animal health and to transfer new procedures and technology to the farms.
Environmental Management. The company has developed policies to ensure that its operations are carried out to protect the environment and will be encouraged to formalize their procedures and monitoring in an environmental management system. Jilin Province is developing programs to ensure the sustainability of its agricultural base. ADC’s investments will further advance these initiatives.
To view the environmental documents for this project, click here
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| Location of environmental documents in locally affected community |
Municipal Government Office,
GongZhuLing City,
Jilin Province,
Peoples Republic of China |
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| To contact the project company, please write to: |
Jilin Huazheng Agribusiness Development Co., Ltd.
No. B12 Liaoning Road
Changchun City, Peoples Republic of China 130051. |
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