The FINANCIAL — The Asian Development Bank (ADB) on May 18 signed a $95 million private sector loan with Jiangsu Lihua Animal Husbandry Stock Company (Lihua) to develop inclusive and sustainable livestock farming in the People’s Republic of China (PRC).
ADB’s assistance includes a direct loan of up to $62.5 million equivalent in yuan and a complementary loan of up to $32.5 million equivalent in yuan through commercial banks, with ADB acting as the lender of record.
“Lihua has shown that it is a proven leader in the modernization of the PRC’s agriculture industry, which is critical for the country’s food security and economic growth,” said Martin Lemoine, Agribusiness Investment Unit Head in ADB’s Private Sector Operations Department. “ADB’s assistance will help the company expand its inclusive and sustainable business model, with smallholder farmers at the core of the production process.”
The PRC is already the world’s largest consumer of meat. While the demand for meat is expected to continue to grow significantly, the livestock sector has been associated with serious pollution, animal disease, and food safety issues. If not properly managed, the development of livestock farming could harm the environment and threaten public health, according to ADB.
ADB’s financing will help Lihua play a leading role in the PRC’s efforts to fully modernize its agriculture sector by establishing an inclusive, sustainable, and replicable livestock farming business model. The assistance will support Lihua to expand breeder farms as well as contract farming in rural areas and to increase capital expenditure for the environment, animal health, and food safety.
The project is ADB’s first inclusive business nonsovereign assistance to an agribusiness project in the PRC. Lihua’s “farmer-cooperative-company” partnership model will provide decent and stable income to thousands of smallholder farmers and serves as a model for the livestock industry.
The assistance will help Lihua achieve its goal to increase the number of contract farming households by 24%, to at least 5,600 by 2020, alongside a doubling in the individual farmer’s annual income from CNY40,000-70,000 before engaging with Lihua to CNY100,000-150,000 once enrolled into the partnership. Lihua’s workforce is expected to increase from around 3,000 employees in 2015 to more than 4,500 in the next 4 years.