Muyuan Foodstuff Co., Ltd, located in Neixiang, Henan province, is one of the largest hog producers in China. Founded in 1992 by Mr. Qin Yinglin, Muyuan evolved from a backyard pig farm of 22 pigs, to a large scale, farrow-to-finish hog production company with an annual production capacity of around 500,000 hogs and breeders. Muyuan owns 1 Great Grand Parent (GGP) farm, 12 breeding and growing farms, and 2 feed mills with an annual production capacity of 400,000 tons. A few more breeder and growing farms are being planned or constructed. Mr. Qin Yinglin, aged 45, is the Chairman and General Manager of Muyuan and the Sponsor of the Project. Mr. Qin has more than 17 years of experience in pig farming industry and is well regarded in the Chinese pig farming industry. He is responsible for the overall business strategy and development of the Company. In 2002, Mr. Qin served as a member of the Henan People’s Congress. Mr. Qin graduated from Henan Agriculture University with a major in animal nutrition. Currently, Mr. Qin is a visiting professor of Henan Agriculture University. He received numerous provincial and national honors and awards. Ms. Qian Yin, aged 44 , the wife of Mr. Qin and the co-founder. She is a seasoned veterinarian with extensive experience in immunization and disease control. A graduate of Zhengzhou Animal Breeding Professional Institute, she is the general manager of Neixiang Muyuan Industrial Co., Ltd.

Total estimated Project cost: $ 51.3 million, which will be funded by IFC equity investment $10 million, domestic bank loan $15 million, Internal Cash generation $ 26.3 million (Muyuan has already spent $6.3million in the project).

9.59 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	9.59

* These investment figures are indicative

The project will be implemented by Muyuan Foodstuff Co., Ltd in Neixiang County, Henan Province, China. Under the proposed project, four hog farms with an annual production capacity of 500,000 will constructed and put into operations.

Corporate Development: The proposed investment will support the continued expansion of a small, private pig farming company in a frontier region to become a competitive, quality conscious national player - which will ultimately be publicly owned. The Project will benefit, as highlighted below, one of the poorest areas in Henan province (Neixiang County) which has a GDP per capita of $1150, only half the average GDP of the province. Employment: The Company will provide stable employment opportunities for around 1000 staff, including 300 female employees. The Project will create 300 new jobs, of which 100 would be for female employees. Farmers Reached: Currently, about 24,000 rural households supply raw materials directly and indirectly, through aggregators/traders, to the Company. The additional capacity will allow the Company to expand this reach further by either increased sourcing from its existing supply base and/or expanding the supply base. SMEs reached: Muyuan sells its breeder pigs to about 1,200 rural pig farms, which in turn grow the piglets to produce commercial hogs for sale. In addition, the Company uses over 100 small, rural contractors for its raw material sourcing and logistic services.

Without IFC's investment, the Company would need to resort to a higher level of short-term borrowing in order to implement the Project, which would adversely impact its liquidity position and increase the financial risk. Alternatively, the Company would implement the Project over a longer period of time (relying on internal cash generation over time), thereby preventing the Company from capturing growth under presently favorable market conditions.

The potential adverse environmental and social impacts associated with development if selected project sites are relatively few in number, site-specific and can be readily addressed through mitigation measures. It is therefore concluded that this is a Social and Environmental Category B project. The key environmental and social issues have been identified as: (i) the implementation of the newly-developed environmental and social management system; (ii) current gaps in compliance relating to the implementation of whole-farm environmental and social impact assessments and relevant permitting; and, (iii) the development of an appropriate standardized E&S monitoring framework applicable to all farms. The Sponsor addresses specific concerns with regard to waste management through construction and operation of biogas facilities.