Chaoda plans to expand production

Agricultural produce grower Chaoda Modern Agriculture (Holdings) will expand its production base by between 15 per cent and 20 per cent annually over the next five years to tap domestic and export markets.

The move comes as the government institutes preferential policies, such as tax exemptions, to bolster China's beleaguered agricultural sector. The company also hopes to capitalise on bourgeoning overseas demand for organically grown vegetables.

Executive vice-president Gordon Wang Xiaogang said his company would double its crop area to 200,000 mu (13,340 hectares) by the end of 2009.

The company plans to spend between 800 million yuan and 900 million yuan annually over the next three years to expand its crop, livestock and supermarket businesses. Chaoda wants to see its supermarket chains contribute 10 per cent of total sales from a present 8 per cent.

The company posted a 47.5 per cent year-on-year gain in net profit to 402.55 million yuan for the six-month period to the end of last year. Revenue rose 31.8 per cent to 858.39 million yuan. Fruit and vegetable sales accounted for 88 per cent of turnover, while livestock contributed 2 per cent.

Chaoda runs seven supermarkets in China and Hong Kong at a gross profit margin of 10 per cent, compared with 69 per cent for crops and 78 per cent for livestock.