China One Corporation Signs Contracts to Expand Canadian Dairy Herd Population in China
China One, through its operating subsidiaries, is an emerging raw milk producer in China that is seeking to become a leading provider of high quality raw milk to the Chinese dairy industry. To meet China's increasing demand for dairy products, the Company is using Canadian cattle genetics and North American farming practices to establish and increase its dairy herd in China.
01/04/09 China One Corporation is pleased to announce it has signed a number of additional contracts in China to develop dairy farms at various locations in China. The contracts are between China One, operating as IND DairyTech Ltd., and a variety of strategic third parties. A series of new cooperation agreements, entered into since the last quarter of 2008, cover five farms. Total commitments for cows to be delivered in 2009 under these new agreements are approximately 11,000 cows.
China One's contractual partners have also agreed to provide China One with, or assist the Company in obtaining, term loans for working capital as Canadian Holsteins are delivered to the farms. Under one of the contracts with Meishan City, China One is to deliver 2,000 cows by the end of 2009 and another 3,000 cows by the end of 2011. Under another contract with Lingbao City, the Company is to deliver 3,500 cows by the end of 2009 and another 2,500 cows by the end of 2011. Both contracts include a loan of 10,000 RMB per cow delivered and the contract with Meishan includes 3,400 RMB per cow subsidy from the local government. To date, the Company has received a subsidy of 1,600,000 RMB and a loan for 6,000,000 RMB at an annual interest rate of 7.29% for three years. In certain other agreements, China One may receive up to 13,000 RMB per cow by way of loans and, if certain production standards are achieved, subsidies.
"These agreements allow us to better capture incentives that have been introduced by the Chinese government to stimulate and improve the Chinese dairy industry following the scandal involving the contamination of milk with melamine," said Mr. Jesse Zhu, CEO, China One Corporation/IND DairyTech Ltd. "These contracts also represent a means to more rapidly fulfill our goals and commitments to develop Canadian-style dairy farms in China. Canadian Holsteins on a Canadian-style dairy farm typically produce the highest levels of volume and quality in the world. We currently have approximately 9,000 Canadian Holsteins in China at various stages of maturity with approximately 2,200 of them having reached milk production ages. With favourable financing facilities and terms provided by local partners and subsidies from government agencies, and taking into account certain planned purchases of Chinese Holstein cows, we expect to see the total herd size increase to 30,000 by the end of 2009 and to 60,000 by 2010, making IND the largest Canadian Holstein dairy company in China."
In order to accelerate herd development, the Company plans to buy Chinese Holstein cows, which are now available at very favourable prices. The Company has established a significant inventory of approximately 200,000 Canadian Holstein embryos that it intends to use to impregnate surrogate cows, which will include the Chinese Holstein cows. This new program enhances the Company's existing program of utilizing local Chinese yellow cows as surrogates and purchasing the offspring from the owners of the host Chinese cows.
In mid-November, 2008 the Chinese central government set goals for reforming the dairy industry in China. These goals include an increase in the number of large dairy farms in China from the current 20% to 30% of the total, and having dairy processors obtain 70% of their raw milk from managed sources, by October 2011. The Company will continue to differentiate itself from typical Chinese dairy farms by establishing large scale farming operations that follow North American farming practices, consistent with the reforms prescribed by the Chinese government.
China One, through its operating subsidiaries, is an emerging raw milk producer in China that is seeking to become a leading provider of high quality raw milk to the Chinese dairy industry. To meet China's increasing demand for dairy products, the Company is using Canadian cattle genetics and North American farming practices to establish and increase its dairy herd in China. At its 2009 shareholder meeting, China One intends to seek shareholder approval to change its name to IND DairyTech Ltd.
The Company plans to develop its herd in China through the use of advanced breeding techniques employing Canadian Holstein embryos that it intends to use to impregnate surrogate cows. These embryos have been created through in vitro fertilization using sexed semen to achieve an approximate 90% female birth rate. The use of these advanced breeding techniques is expected to allow the Company to rapidly expand its herd. The use of Canadian Holstein embryos also provides a practical solution to China's ban on the import of live Canadian cattle.
