24188 - Deqingyuan egg

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Summary of Proposed Investment

Project Number

24188

Company Name

Beijing DQY Agriculture Technology Co., Ltd.

Date SPI Disclosed

May 18, 2005

Country

China

Industry

Agribusiness and Forestry

Projected Board Date

Jun 23, 2005

Status

Completed

Sector

Poultry Farming

Department

Regional Industry - MAS Asia & Pac

Environmental Category

B - Limited

Previous Events

Approved : Nov 1, 2005
Signed : Nov 8, 2005
Invested : May 3, 2006

Project Description

Beijing Deqingyuan Agriculture Technology Co. Ltd (Deqingyuan or the company) is a company based in Beijing, China, that produces high quality eggs. It currently houses 500,000 layers and produces and sells 200,000 eggs per day. Its eggs received the “no harmful ingredients” certificate, the “organic food product” certificate, and the “safe agricultural food product” certificate from the government. It is the only egg product that was granted as a “national priority new product” by the Ministry of Technology, Ministry of Commerce, Ministry of Quality Inspection, and Ministry of Environment Protection.

The quality of the Deqingyuan eggs is well recognized by the market. The eggs sell at a price that is substantially higher than that of the non-brand, regular eggs and the sales grow rapidly. Deqingyuan’s strategy is to quickly increase its production capacity and market share. It plans to expand the capacity of the layer sheds to house an additional 800,000 birds, which will add production capacity by 500,000 eggs per day.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	2.82

Development Impact

The operational practice in the egg industry in China suffers from a variety of problems, including the lack of hygiene, lack of ventilation, high ammonia levels, poor nutrition, use of substandard well water, high stocking density, use of cheap substandard animal health products, and wide spread use of antibiotics. Most farms are located in close proximity to humans and posing environmental and health problems.

Following what was a Deqingyuan initiative, the government in 2003 introduced guidelines for the egg industry that address housing, animal health, management, feed and product quality issues. The Company has been instrumental in driving these standards and will become the model operation for the industry. The project will therefore have significant demonstration effects on the egg industry and is expected to help shape the regulatory framework in this area in China.

IFC will advise the company with its business growth strategy and risk management measures. Moreover, IFC will also be able to assist the company in relation to environmental performance including animal welfare. The proposed project will support the technologies that take into account animal welfare. The project will use cages that provide a space of 580 cm2 per layer, which exceeds the specifications of 550 cm2 that EU requires in all cages before 2012 and will provide a demonstration effect that is consistent with the efforts that IFC is making to enhance animal welfare in its agribusiness investments.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor. The following potential environment, health and safety impacts of the projects were analyzed:

- Siting and design of plant,
- Air emissions, and solid and liquid waste management,
- Feed supply and sources,
- Occupational health and safety (including fire and life safety issues),
- Company environmental management capacity.
Location of environmental documents In locally affected community
The ERS is disclosed at the company’s administrative office:

Agronomy Building, Room 518
Chinese Academy of Agricultural Science
Zhong Guang Cun South Street
Haidian District, Beijing 100081, China

Contacts

For Inquiries About the Project, Contact

Mr. Zhong Kaimin
Agronomy Building, Room 518
Chinese Academy of Agricultural Science
Zhong Guang Cun South Street
Haidian District, Beijing 100081, China
Telephone: (86 10) 6214-2691
Fax: (86 10) 6214 2681

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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