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Agri-products companies under pressure

By Liu Mingtai (China Daily)
Updated: 2009-02-10 07:48

The deepening financial crisis has taken a toll on local agri-products processing companies in Jilin province, as orders slow to a trickle due to sluggish domestic and abroad market demand.

Related readings:  Jilin details plans to up grain output  Special Supplement: Jilin: Building wellbeing in an economic storm  Financial storm adds fuel to Jilin reform and growth

A steep drop in the number of orders and plunging prices have affected the revenue of Jilin Deda Co Ltd, a poultry processing company in Jilin province, Chen Yuhe, its vice-executive said.

The average price of chicken meat was 9,395 yuan ($1,400) per ton in the first nine months last year, but the price fell to 8,000 yuan per ton in October and slid another 500 yuan in November.

The price drop could inflict a revenue loss of 150 million yuan, he said.

Wang Wei, deputy manager of COFCO Bio-Chemical Energy (Yushu) Co Ltd, said falling starch prices and corn price hike have put his company "on the brink of bankruptcy".

"The downstream industries like beer and paper making are all suffering amid the economic crisis," he said.

"Thus, the low demand for starch has led to a sharp price drop."

The plant, which has an annual production capability of 400,000 tons of starch, has seen a deficit since October and registered a loss of about 20 million yuan during the fourth quarter, he said.

The plight of Wang's plant is just a miniature of the agri-processing companies in the province.

Statistics from the Jilin agricultural committee show most corn deep processing firms in the province suffered losses last year.

The operating rate of major process plants is only 70 percent, the committee said.

Chen Yuhe from Deda said the only way out is to further tap potential.

"We are hoping to develop more added value for our products and will explore the domestic market," he said.