Archer Daniels (ADM) Expands in China's Animal Feed Market

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Archer Daniels Midland CompanyADM continues with expansion plans in China. This time the company is keen on enhancing footprint in the Animal Nutrition space, particularly marking its entry into the growing Chinese high value specialty aquafeed market.

As part of this effort, the company announced plans to build a new feed-premix facility in Xiangtan in the Hunan Province as well as the expansion of its Nanjing complex in the Jiangsu Province, which will now include the aquaculture feed production line.

Located in central China, the Xiangtan facility will be the company's fifth animal feed plant in the nation. The plant with a production capacity of 120,000 metric tons of animal and fish feeds annually will enable the company to efficiently cater to the growing animal feed demand in central China. The facility, which will employ nearly 120 persons, will be strategically positioned to meet the demand of customers in the Hunan, Hubei and Guangxi Provinces in central China.

The capacity expansion of the existing Nanjing facility in eastern China will enable the plant to produce 50,000 metric tons of extruded and pelleted feeds in the aquaculture season that extends for six months between April and September. This plant will add four aquafeed lines as part of the expansion. The company expects to complete the aforementioned projects by early 2019.

These projects will reinforce the company's position in the Chinese animal nutrition market. It already operates three such facilities in the country including the Dalian and Tianjin premix facilities in northern China and the Nanjing facility in the east. Further, the company is on track with the opening of a new plant in Zhangzhou, in southern China by summer of 2017.

The company's aforementioned expansions are in line with its strategy of enhancing presence in regions with growing demand in order to boost shareholder value. Currently, there happens to be a growing market for animal feed in China driven by population growth and higher disposable incomes.

Coming back to Archer Daniels, this Zacks Rank #3 (Hold) company has substantially outperformed the broader Consumer Staples sector in the last six months, mainly driven by focus and progress on such strategic initiatives. The company's shares have jumped 6.3% in the last six months, outshining the Zacks categorized Consumer Staples sector that grew just 1.7% in the same time frame.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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