GUANGZHOU, CHINA, Feb. 27, 2018 (GLOBE NEWSWIRE) -- With the year of the Earth Dog just beginning, Sino Agro Food, Inc. (OTCQX:SIAF) (OSE:SIAF-ME), also referred to as “SIAF” or the “Company,” would like to extend its enthusiasm, luck, and good wishes to all for this 2018 year. After the transition period of 2017, we hope the earth element will provide a unique stability for the Company, our investors, and consumers. We believe that our continued goal in providing nutritious and high-quality products to our consumers will be rewarded with increased revenues. Additionally, during this Year of the Dog, as we continue developing, expanding, testing, and researching with the aim of revitalizing and modernizing the agriculture industry, we expect to witness the birth of new ambitious industrial projects and novel modes of production and uses of energy resources.
Our development in Q3 of 2017 was a testimony to our ability to perform even under unfavorable conditions and furthermore established a positive baseline for improved results, when external conditions return to more ‘normal’ levels. The past year was especially hard on the cattle market with increased competition from imported beef and the Central Government’s new environmental regulations. However, we pride ourselves in our market-driven approach and adapting to consumers trends by shifting production to certain products that have a greater demand and/or adjusting species composition for optimum profitability. Thus, we reduced the sale of live domestic cattle and increased import sales on quality Wagyu beef from Australia that granted the Company exclusive distribution rights. This was a strategic choice, as imported Wagyu beef carries a higher profit margin, and has seen increasing market acceptance in China. Additionally, fertilizer, and bulk and concentrated livestock feed contributed USD 1.9M or almost 95% of gross profit and, with the organic mixed production plant available for full utilization, the Company expects a return to productive operation levels. To be commercially successful, we rely on knowledge of the Chinese markets, know-how and expertise on each individual species, and vertical integration of farms.
Over the past year, we developed brand names in aquaculture and beef products, added processing facilities, and became involved in sheep farming. However, this year we will be continuing our initiative to expand our aquaculture division. There is a major opportunity to capitalize on the growth of China’s economy as the disposable income of China’s middle class continues to rise, leading to an increasing demand for premium seafood. As stated previously, aquaculture sales are no longer conducted by the Company, but rather by its investee, Tri-way Industries. Research is continuing to extend the boundaries of what has been achieved already. This research includes, but is not limited to: balancing microbial communities; testing alternative approaches of all male or all female populations; alternative culling approaches and water movement designs to reduce electrical costs; and mid-range salinity trials with Pacific white shrimp. Additionally, we tested different fish species in our modules to provide preliminary information on their suitability for the marketplace.
We selected three species of freshwater fish as key targets to be grown commercially in 2017 and 2018 at the existing farms for strong economic reasons. The first, the Mandarin Fish or Chinese Perch (Siniperca chuatsi), has immense demand and targets an untapped, higher-end market because our qualities are marketed as superior, being free of antibiotics, undesired chemicals, and grown in a pollution-free environment. The second is the Jade Perch (Scortum barcoo). While this product does not have a large demand in China, we see potential, as the fish is exceptionally suited and easy to grow in our APM farms and is known to be beneficial for human health and nutrition due to its very high levels of omega-3 fatty acids. Furthermore, its economic profile shows a low input and high profit margin. The last, Pearl Grouper (Epinephelus lanceolatus x Epinephelus fuscogluttatus) has high demand, especially in southern China. Its fast growth rate is certainly an incentive. Nonetheless, in 2017 we also discovered that there is good market demand for smaller-sized PG at the Freshly Chilled wholesale markets of Guangzhou City. We market tested selling fingerling Mandarin Fish, Jade Perch and Silver Cod beginning in Q2 2017. As a result, a nursery is currently in the early stages of being built adjacent to one of the existing AF4 buildings. First production and sales of fingerlings is targeted to begin in Q2 or Q3 2018, depending on available cash flow.
In terms of expanding our infrastructure in the next coming months, we plan to complete Phase 1 at Aquafarm 4 with all needed components and build ODRAS ponds and next generation GODRAS ponds for production of Pacific white shrimp (L. vannamei) and other species with targeted production to start Q2 2018. We experienced financial setbacks that delayed our commercial prawn production at Aquafarm4 until proper funding was in place to finish the facility and tanks, and install the boiler and water pre-treatment systems as originally designed. These are needed to replicate the optimum water quality and year-round rearing temperatures for prawns that currently exist at our Enping facilities (AF1 & AF2), where the technology for prawns was developed and where proof-of-concept was confirmed before proceeding with large-scale plans. Our decision to not proceed with commercial prawn production at AF4 was to ensure the technology would be successfully implemented, as planned. If all moves effectively we aim to organize enough production to support 12 APM units in AF4 to start the final staged grow-out of Mandarin Fish starting from Q2 2018. Additionally, the construction and development of Aquafarm3a located in Sanjiao Town, Zhongshan City started in 2012 and its completion by 2018 is contingent on sufficient development funds. Alternatively, organic growth could occur through generated profit and be completed by 2019. We are working towards our target of 6,000MT by the end of Q1 2018. Completion of the third building will bring total PF3 production to 10,000 MT by Q2 2019.
Our longer-term goal revolves around the development of a pedigreed selective breeding program. Selective breeding is a common, signature approach used in animal agriculture to improve production; an approach we deem additionally beneficial because of the lack of such pedigreed programs in China, especially for prawns or marine shrimp. We will continue to strive to improve our technology and stay on the leading edge of development to maintain our competitive advantage. The immense potential of prawn and white shrimp markets in China warrants our concerted attention. While we have extensively performed research with careful consideration of markets, species mix, biology, and biosecurity requirements in hopes of meeting profitability targets, our APM units’ productivities are variable subject to: (i) the initial species and developmental stage being stocked; (ii) the optimum growth rate of the animals and biological limits; (iii) how well the supporting supply chains from Stage 1 & Stage 2 growers are organized to maintain continuous supply. In P.R.C. the rapid progress of industrialization of the last decade has unbalanced the needs of developments and activities of the agriculture industry, (i.e. diminishing of agriculture land, scarcity of farm laborers, industrial pollution and the generally over usage of chemical etc.). The Company has related to these issues, navigated through the introduction and revisions of many regulations, and has paved new paths into untapped markets. In an industry that is constantly evolving, we believe that the future holds the potential for new successes, discoveries, and bountiful harvests.
About Sino Agro Food, Inc.
SIAF is a specialized investment company focused on protein food. The Company produces, distributes, markets, and sells sustainable seafood and beef to the rapidly growing middle class in China. Activities also include production of organic fertilizer and produce. SIAF is a global leader in developing land based recirculating aquaculture systems ("RAS"), and with its partners is the world's largest producer of sustainable RAS prawns.
Founded in 2006 and headquartered in Guangzhou, the Company had over 550 employees and revenue of USD 343 million in 2016. Operations are located in Guangdong, Qinghai, and Hunan provinces, and in Shanghai. Sino Agro Food is a public company listed on OTCQX U.S. Premier in the United States and on the Oslo Børs' Merkur Market in Norway.
News and updates about Sino Agro Food, Inc., including key information, are published on the Company's website (http://www.sinoagrofood.com), the Company's Facebook page (https://www.facebook.com/SinoAgroFoodInc), and on twitter @SinoAgroFood.
Forward Looking Statements:
This release may contain forward-looking statements relating to the business of SIAF and its subsidiary companies. All statements other than historical facts are forward-looking statements, which can be identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. These statements involve risks and uncertainties that may cause actual results to differ materially from those anticipated, believed, estimated or expected. These risks and uncertainties are described in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are based on SIAF’s current expectations and beliefs concerning future developments and their potential effects on SIAF. There is no assurance that future developments affecting SIAF will be those anticipated by SIAF. SIAF undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.