Jan 28, 2013
Xiwang Sugar Holdings is a leading corn processor, producing corn and high value-added starch sugar products in China. The company is the country’s largest producer of crystalline glucose, a starch sugar product, with an annual production capacity of 800,000 tons. As of 2011, Xiwang had an annual corn processing capacity of 1.5 million tons and procured corn from 400,000 small farmers.
Established in 1986 as a cooperative enterprise, Xiwang Sugar Holdings Company Limited (Xiwang) has grown to become a leading corn processor, producing corn and high value-added starch sugar products in China. The company is the country’s largest producer of crystalline glucose, a starch sugar product, with an annual production capacity of 800,000 tons. As of 2011, Xiwang had an annual corn processing capacity of 1.5 million tons and procured corn from 400,000 small farmers. Xiwang was reorganized into a limited liability company in 2001. In 2005, after further restructuring, the company was listed on the Main Board of the Hong Kong Stock Exchange. Xiwang is headquartered in Zouping County of Shandong Province and employs over 3,200 persons.
Xiwang produces various corn products such as starch, germ, and gluten (both meal and feed). The company is vertically integrated, producing corn starch which it uses in turn to produce high value-added starch
sugar products. This eliminates the need to procure corn starch from outside parties. Further, it enables Xiwang to reduce costs, improve overall production efficiency, and ensure a stable supply of this key ingredient for its starch sugar products. Companies in industries as diverse as food and beverage; chemicals; pharmaceuticals; fermentation; paper and textile; animal feed; and construction purchase Xiwang’s products. The vast majority of Xiwang’s industrial customers are in China, but the company also exports to customers in South East Asia and Europe.
Since corn starch is essential for production of its high value-added starch sugar products, Xiwang places a strong emphasis on maintaining a stable supply of corn. Its factory is strategically located in a major corn-producing area of Shandong Province, the second largest corn-growing province in China. This gives the company a natural logistical advantage in sourcing corn from small farmers in Shandong Province and other provinces in northeast China.
Small farmers who supply to Xiwang have an average farm size of 0.5 hectares. They grow natural, non-genetically modified (non-GMO) corn from May until October. During the rest of the year these farmers grow
wheat, which enables them to diversify production and earn additional income. As of 2011, Xiwang’s small farmer suppliers were estimated to have average annual net incomes of US $1,320. Xiwang procures over one million tons of corn annually at market prices from 400,000 small farmers via two procurement methods. First, about 50% of its total annual corn volume is procured directly from small farmers who deliver their output to Xiwang’s factory given their proximity. Although Xiwang is not the sole agro-processor of corn in the region, these small farmers choose to supply to the company since it can purchase large quantities of corn. Xiwang is able to do so since it maintains storage facilities to better manage price and supply fluctuations. At any given time, Xiwang maintains sufficient corn volumes to meet several months of production. Xiwang’s ability to procure large quantities of corn gives farmers security since they can immediately sell their entire harvest.
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