(Yicai Global) Feb. 7 -- Chinese meat processor Zhejiang Huatong Meat Products is linking arms with two companies in Fuzhou to invest CNY7.6 billion (USD1.1 billion) to build a pig breeding cluster in the city in eastern Jiangxi province even though the price of pork has been sinking since the beginning of the year.

Fuzhou government-backed Fuzhou Farming Group and private firm Fuzhou City Lvyuan Industry are Huatong’s two partners in the deal, the Yiwu, eastern Zhejiang province company said today. The investment amount is a forecast, and will be divided between the three parties, it added, without specifying how it will be split.

CNY6.2 billion (USD913 million) will be used to build 20 hog farms that will breed two million hogs for slaughter each year, Huatong said, citing the agreement signed with the Fuzhou government.

Another CNY500 million (USD73.7 million) will go towards two feed processing plants with an output of one million tons a year, CNY800 million will be used to build a slaughter house with an annual capacity of two million pigs, while the remainder will be spent on other agricultural projects.

The move will help Huatong optimize its industrial landscape, accelerate development of its main business and improve management of the integrated pig industrial chain, the firm said. The deal is unlikely to affect the firm’s 2023 financial performance, it added.

The tie-up is valid for six years and will automatically expire should no progress be made during the validity period.

Huatong's share price [SHE:002840] closed down 2.1 percent at CNY18.98 (USD2.80) today.

Editor: Kim Taylor