Tyson Xinchang Foods

Printable pdf version: Profile – Tyson Xinchang Foods 2012.

China Agribusiness Profiles: Shandong Tyson Xinchang Foods                             山东泰森新昌食品有限公司                                                                                                Prepared by Mindi Schneider                                                                                          November 2012

Company History

Shandong Xinchang Foods was established in 1998 as a state-owned enterprise under the grain bureau. In 2001, it changed to a shareholding company, divested completely from the bureau, and all workers became stockholders. Then in 2009, Tyson Foods, the leading chicken producer and one of the most powerful agribusiness firms in the world, established a joint venture with the company, taking a 60% share in Xinchang’s existing assets, and acquiring a new poultry-processing complex in Shandong. In 2010, Shandong Tyson Xinchang Foods Rizhao Branch, the newly acquired complex, was the largest poultry processor in China in terms of output, with 937,500 metric tons. The Changyi Branch, Xinchang’s original base of operations, was number two.

Tyson China Holding Limited, a subsidiary of Tyson International Holding Company, has eight operations in China, six of which are associated with Xinchang:

Changyi Tyson Xinchang Foods Co., Ltd. China (1995)
Changyi Tyson Xinchang Poultry Co., Ltd. China (2005)
Changyi Tyson Xinsheng Foods Co., Ltd. China (2000)
Rizhao Tyson Xinchang Poultry Company, Ltd. China (2009)
Shandong Tyson Xinchang Foods Company, Ltd. China (2009)
Shandong Tyson Yuansheng Duck Co., Ltd. China (2004)
Shandong Tyson Shengde Foods Co., Ltd. China (2002)
Weifang Tyson Xinchang Feed Co., Ltd. China (1998)

Before the joint venture with Tyson, Xinchang slaughtered and processed fried chicken and frozen poultry for foodservice and wholesale markets out of the Changyi plant, and had two additional plants for processing microwavable foods such as tv dinners. They processed 200,000 chickens and produced 60 tons of precooked food every day[i].

Company Vitals

In 2011, Xinchang had assets worth 700 million RMB, and over 7,000 employees. Processing capacities were as follows:

  • Processed foods (chicken and duck): 22,000 tons
  • Frozen convenience foods: 6,000 tons
  • Fruit and vegetable food products: 6,000 tons
  • Livestock feed: 40,000 tons.

Xinchang currently exports food products to Japan, South Korea, Malaysia, and Hong Kong.

Xinchang and Contract Farming

Xinchang executives stated that in 2007, 40% of the company’s chicken meat supply came from 10,000 contract farmers located near the plant in Changyi. The company provided baby chickens and ducks to farmers two days after hatching, in addition to feed, basic equipment, vaccines, medicines, and management advice. Farmers raised poultry to slaughter-age, and sold them back to the company at a guaranteed minimum price (protective price, or 保护价), paid upon delivery.

Forrest Zhang and John Donaldson (2008) at the Singapore Management University study contract farming in China today. Their work highlights some of the tensions that have emerged in relation to the current “company and farm” model of agricultural development (公司+农户). For instance, Mr. Zhao, a farmer who contracted with Xinchang Foods, said  that he raised 8,600 ducks a year for the company, and made about 1,500 RMB per month doing so. While he was happy to have the opportunity to earn this kind of income, Mr. Zhao said that the company used its size and market position to hold down the purchase price they offered to farmers.

The Xinchang Foods website is currently defunct, perhaps in relation to its merger with Tyson Foods. It is unknown how many farmers the company is currently contracting with, and future plans for the “company and  farm” model are unclear.

[i] Zhang, Q. Forrest & Donaldson, John A. (2008). The Rise of Agrarian Capitalism with Chinese Characteristics: Agricultural Modernization, Agribusiness and Collective Land Rights. The China Journal, 60, 25-47.

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