Livestock

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Livestock Meat outlook China

• February 25, 2008

Prepared by Shiyao Investment Ltd Shanghai,
ATO Oklahoma Agricultural Leadership Program
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Table of contents

• Shiyao Investment Ltd
• Outlook of China livestock situation in 2008
• Opportunities for US grain and livestock
  producers

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Shiyao Investment Ltd

• Shiyao Investment Ltd is a very focused company
  providing advisory and investment banking
  services with a strict focus on Greater China and
  Japan and on the complete food chain, from the
  farm to the end consumer.
• We are headquartered in Shanghai and established
  since 1999

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Meat consumption in PRC 92-02
Consumption volume of pork, beef and chicken meat
per capita in China (1992 2002)
Consumption trend Fast growing demand of meat
products especially high-grade chilled meat
products in large cities require high quality raw
materials including quality feed ingredients to
insure food traceability.
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Evolution of meat production in China between
1962 and 2002
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Beef meat consumption in PRC
Beef meat consumed in China as a of total meat
consumed per capita per month (2002)

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Beef Consumption in PRC

• There are three forms of consumption for beef in
  PRC
• 1. Frozen beef Chinese beef cooking methods are
  mostly based on frying, and boiling while adding
  many condiments. People are used to buy frozen
  beef products for home consumption especially for
  festivals opportunities.
• 2. Fresh beef This is the main form of
  consumption of residents particularly in rural
  market. Most people wont keep the beef meat more
  than eight hours after buying it fresh.
• 3. Chilled beef this form of consumption has
  developed in recent years. Together with the
  growth of modern retailers in PRC.
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• Consumers' consumption preference has
  evolved (from fresh meat to chilled meat, and
  from fat meat to lean meat, with a tendency to
  high quality consumption).

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Import/Export value of beef meat in PRC for the
last 10 years
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Beef imports forecast

• By 2008, USMEF (US Meat Export Federation)
  expects Chinese beef imports to nearly double
  from levels of 2004. Increases in per capita
  income, improvements in the frozen product
  distribution chain, increasingly Western tastes
  and lower import duties will drive such import
  growth.
• Given the genetic constraints of the Chinese herd
  and the lack of intensive grain-fed production,
  USMEF estimates that China will face a serious
  challenge to meet its demand for high-quality
  beef with domestic sources and will need to
  import more.

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Chicken meat consumption in PRC
Chicken meat consumed in China as a of total
meat consumed per capita per month (2002)

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Foreign Retailers in PRC since 1900
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View from modern retailers in PRC

The Chinese meat market in modern cities is
asking increasingly for more elaborate products
at affordable price
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Comparison of distribution chanels for meat
products
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Main provinces producing meat in PRC
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Top 8 provinces for meat production in PRC
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Top 8 provinces for meat production and their
characteristics
Legend High XXX Average XX Low X
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An example the Shineway Group
Backwards integration of meat processor (Ex
Shineway Group)
Shineway Group is the largest meat processor in
China with total assets of RMB 6.3 billion (USD
759 million equivalent as of 2004) and 1,800,000
tons of meat products production volume, roughly
850 million USD of sales Shineway started its
business from a small meat processing company in
1969. After over 30 years development, Shineway
has moved its business backward to slaughter
house, breeding farm and forward to retail
store. To ensure the quality and safety of their
meat products, Shineway is more and more involved
in backward industries for integration. Recently
Shineway just acquired a feed plant to produce
feed products by themselves, which indicates the
trend of the backwards integration in Shineway
group.
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Traceability challenges
Traceability chances difficulties
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Measures of the Chinese government related to the
administration of food safety and quality

• The Chinese government clearly mentions in its
  Tenth Five-year development plan that it will
  accelerate the establishment of standard system
  to control agricultural products, food safety and
  quality clearly putting food safety concern as a
  priority.

• Food Safety Action Plan
• Food Quality Insurance Program
• Research on the Development Strategy of
  Food Safety in China
• Guidance for Establishment of Food Safety
  Credit System(protocol)

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Needs Opportunities

• Genetic
• Equipment
• Professional farming opportunities, especially
  in
• Beef production
• Dairy production
• Meat exports
• Grain exports

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China soybean production
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China Soybean imports exports94-03
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Shiyao Investment Ltd

• Your contact
• Dr Benoit Rossignol, CEO
• E-mail brossignol_at_shiyaoinvestment.com
• Shanghai Office
• Tel [phone] Fax
  86 21 6507 8354
• www.shiyaoinvestment.com