New Hope Liuhe Co., Ltd
2020Annual Report
2021-57
April 2021
Section 1 Important note, table of contents and definitions
The board of directors, board of supervisors, directors, supervisors and
senior executives of the company warrant that the contents of this annual report
are true, accurate and complete and free of any false recordings, misleading
statements or significant omissions and will be jointly and severally liable for the
legal consequences.
The company’s CEO Liu Chang, chief accountant Chen Xingyao and
person in charge of accounting organization (accountant in charge) Chen Jing
state that the financial report in the annual report is true, accurate and
complete.
All directors of the company attended the board meeting deliberating this
report.
I. Epidemic and natural disaster risks
The animal epidemic disease is the main risk faced in the development of
livestock industry. There are three kinds of risks arising out of the occurrence of
epidemic disease. First, the occurrence of epidemic disease is likely to result in
death of livestock, and leads directly to the reduction in yield and drop in prices.
Second, the occurrence and prevalence of epidemic disease on a large scale easily
influence the consumer psychology, lead to shrinking market demand, and also
affect the feed production and operation. Third, after the outbreak of some
infectious epidemic diseases endangering the public health and safety, the
government will take lockdown and other measures to contain the spread of
epidemic disease. These epidemic containment measures will seriously hinder
the transportation of feed, animal healthcare products and live livestock, and the
workers returning to work, and have a great impact on the production and
operation of breeding industry. In addition, the outbreak of infectious epidemic
diseases will force most catering enterprises to stop doing business, some
agricultural product markets to shut down, and consumers to reduce shopping
activities outdoors, resulting in reduced meat demand and consumption. For
example, the African Swine Fever (ASF) with an enormous impact on the entire
industry broke out in 2018. As the ASF is characterized by long latency and high
mortality after onset of the disease, and the effective and reliable vaccine has not
yet been developed successfully, coupled with the fact that it was also the
concentrated outbreak on a large scale in China for the first time, both the
large-scale breeding enterprises and small farmers lacked effective containment
measures at the onset of epidemic, thereby suffering losses to varying degrees. At
the end of 2020, the attenuated-strain ASF bounced back once again, especially
hitting Hebei, Shandong and Henan, where the pace of live pig production
capacity recovery was considerably affected.
The COVID-19 outbreak at the beginning of 2020 also posed daunting
challenges to the livestock and poultry breeding industry in China. The
anti-epidemic measures such as lockdown, delay in return to work, suspension of
live poultry trading, and shutdown of slaughter houses led to unavailability of
feed to farms and livestock farmers, newborn livestock nowhere to sell, inability
to slaughter livestock and poultry, and difficulties to conduct breeding
production activities normally. The COVID-19 would also force the new pig
farms of pig farming enterprises to be generally out of operation and render
farmers less motivated to restock live pigs, ultimately hindering the recovery
process of live pig production capacity.
In terms of the natural disaster risk, the feed and slaughter are closely
related to planting and livestock breeding industry, so the natural disasters such
as temperature anomalies, drought, flood, earthquake, hail, and snow disaster
will all adversely affect the industry operation and development. The natural
disasters occurring on the production bases of the company and surrounding
areas may cause substantial damages to production facilities or equipment, and
the natural disasters and extreme climate may also drive the prices of some feed
ingredients and meats up. For example, serious flood disasters broke out in
many places of South China in summer of 2016, adversely affecting the planting,
breeding, farm produce logistics, project implementation and meat prices along
the industry chain to varying degrees; in terms of planting, continuous
catastrophic floods hitting some areas will result in decreased output of feed
ingredients, thus impacting the feed ingredient prices, while at the same time
decreasing the quality of raw materials; in terms of breeding, flood might cause
pathogenic microorganisms buried in the land surrounding breeding farms to be
exposed in air and drinking water, and will result in spread of pathogenic
microorganisms and trigger epidemic diseases. In addition, several provinces
hardest hit by the floods are major aquatic breeding areas in China, where the
imp
查看PDF原文
