Singapore, 21 May 2010 - Singapore Airport Terminal Services Limited (SATS) announces that its wholly-owned subsidiary, Singapore Food Industries Pte Ltd (SFI), has signed a joint venture agreement today with Jilin China-Singapore Food Zone Development Construction Investment Co. Ltd (JCS) and DaChan Food (Asia) Co. Ltd (DaChan) to set up a modern, integrated pig farm (IPF) in Yongji County, Jilin Province, the People's Republic of China (JV Agreement).
The new JV company - Jilin Zhong Xin Cheng Food Co. Ltd - is expected to be incorporated in the next few months, with a registered capital of RMB160 million (approximately S$32 million). State-owned enterprise JCS will hold a 40 percent stake in the JV company, while SFI and DaChan will each take a 30 percent equity stake.
First mooted by the Jilin City Government, the IPF will constitute an integrated end-to-end supply chain, from feed mill and breeding to slaughtering and meat processing. The IPF will be developed over approximately six years in three phases. The first phase will involve the start-up of pig breeder and model finisher farms for 100,000 pigs annually as well as a slaughterhouse. In the second phase, pig production is expected to increase to 300,000 pigs annually and a feed production facility will be set up. In the final phase, the pig production is expected to rise to 1 million pigs annually.
The development of the IPF will see SFI sharing its expertise in food safety and in the production, marketing and distribution of food products. Together, the JV partners aim to have the IPF project recognised as the first food and mouth disease-free zone in the People's Republic of China by both the Chinese Ministry of Agriculture and the World Organisation for Animal Health, through traceability in the entire pork production process. The IPF will comply with the international animal health and food safety standards as well as those standards and requirements of the Agri-Food & Veterinary Authority of Singapore (AVA).
Ms Tan Poh Hong, Chief Executive of AVA said: "The IPF will enable Singapore to diversify its sources of pork supply to meet the growing consumption needs of Singaporeans. It represents an important and strategic step towards securing a safe, reliable and sustainable supply of pork for our country in the long term."
Mr Poon Choon Liang, Chief Operating Officer of SFI remarked: "We are pleased to work with our partners, alongside the AVA, to spearhead this ground-breaking investment in Jilin Province towards an end-to-end supply of pork. Endowed with huge land space and rich natural resources, Jilin Province is sparsely populated, making it conducive for animal farming and in meeting the requisite bio-security isolation requirements."
To market and distribute the meat products from the IPF in the domestic market as well as overseas, SFI intend to set up a separate JV company with a local partner in Jilin. It also aims to secure distribution rights to help other establishments in the China Jilin (Singapore) Modern Agricultural Cooperation Food Zone to market and distribute their products in the region.
In addition to the signing of the JV Agreement, SFI has, on behalf of JCS and DaChan, inked the Investment Agreement for the development of the IPF with the Yongji County Government.
The JV Agreement is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of SATS for the current financial year.