China’s CITIC Agri Fund Management and Beijing Capital Agribusiness Co. have acquired UK-based Cherry Valley Farms (CVF), the world’s top breeder and supplier of Pekin ducks, from Malaysia-based Navis Capital Partners.
The deal, which is reportedly valued at approximately $183 million, includes breeding technologies and patent rights belonging to CVF, which first entered the Chinese market in the 1990s.
Founded in 1958 by Sir Joseph Nickerson, CVF breeds, produces, and sells Pekin ducks to more than 30 countries. It is the oldest and leading genetic selection and breeding program for ducks in the world, and has grown to have operational centers in England, Shandong Province, China, and Germany, and to hold an 80 percent market share in the Chinese market – the world’s biggest market in terms of both farming and consumption, and accounts for approximately three-fifths of global production, according to The Poultry Site.
“Cherry Valley is an outstanding, cutting-edge genetics business with an industry leading position. The new owners are inheriting a strong management team and an excellent platform to grow particularly in China and Southeast Asia,” said Davie Ireland, senior partner at Navis Capital.
Breeding research is carried out in the company’s UK facility, the World Centre [sic] of Pekin Duck Genetics, and the company’s Germany-based hatchery has a production capacity of 2.5 million ducks per year, and ships to the Netherlands, Hungary, the Czech Republic, Poland, and Russia.
“We are pleased to add CVF to the portfolio of unique animal genetics businesses at Beijing Capital Agribusiness,” said Liu Jiantong, vice chairman of Beijing Capital Agribusiness. “With a long history of investing in multi-species breeding, we are redoubling expansion in this sector with an aim to becoming the foremost animal genetic business in China, the fastest growing and largest animal protein market globally.”
China Targeting Genetics
With the ever-present need for food security in mind, China has shifted its strategy somewhat – targeting the acquisition of genetic information that can be a foundation for improved future domestic agricultural output rather than buying food products on the global market, and CITIC appears to be at the forefront.
In July of this year China’s CITIC Agri Fund agreed to acquire a portion of Dow AgroSciences’ corn seed business in Brazil for $1.1 billion.
The deal included seed processing plants, seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand, and a license to use the Dow Sementes brand for a predetermined period of time.
The deal also is reflective of China’s push to gain a more controlling stake in the global seed market – a strategy also demonstrated through ChemChina’s deal to acquire Syngenta for $43 billion.
Home to 21 percent of the world’s population, but only 9 percent of its arable agricultural land, China is being driven by the expansion of its middle class, a limited arable land base, and challenges regarding pollution to look overseas for food security solutions. Despite being the second biggest corn producing country in the world, yields in China are 44 percent below those in the U.S., according to U.S. Department of Agriculture data, reports Bloomberg.
More than just representing the largest potential takeover for a Chinese company, the acquisition of Syngenta also will give China a huge bank of intellectual property that will be key for developing strategies for meeting domestic food security in the coming years.
This strategy also was evident in May of last year, when Australia Aulong Auniu Wang (AAAW), the cattle arm of Chinese supermarket and department store giant Dashang Group, acquired the key Australian Wagyu beef operation, Kuro Kin, in an off-market deal.
The deal brought together Kuro Kin’s pool of some of the best Wagyu genetics outside of Japan, and AAAW’s extensive and established distribution and sales network, setting it apart from rival Chinese companies.
With a fully-integrated, completely traceable supply chain in mind, Dashang plans to breed its own Angus and Wagyu cattle on its own Australian farms. The cattle will then be processed and sold as branded beef through the group’s retail outlets on the Chinese market, reports The Australian.
The deal for CVF follows much the same design, giving CITIC control of the company’s pedigree selection program and husbandry protocols that have made CVF’s ducks recognized as the highest quality.
“This acquisition is momentous in which Chinese ownership of a leading animal genetics supplier happened for the first time ever,” said Shi Liang, general manager of CITIC Agri. “CITIC, in partnership with Beijing Capital Agribusiness, looks forward to a transformation time globally in seed and animal genetics industry where Chinese companies will play a much bigger part.”
-Lynda Kiernan