Yuhe leases feedmill to Purina

The facility measures around 21,500 square metres and Purina will pay a total
of $2.2 million over the life of the lease. The capacity of the factory’s
initial phase will be 90,000 metric tonnes per year. Construction of the factory
and installation of the equipment will be completed in June
2009.

According to the agreement, Shandong Nongbiao Purina will invest
approximately $1.5 million for the acquisition and installation of feed
production equipment which will be used in the facility. In addition, after the
facilities are operational, Shandong Nongbiao Purina will serve as Yuhe’s
exclusive supplier for feed.

Strict hygiene
Feed produced at
the facility will meet all of the most stringent safety and health standards
which have been implemented by the Chinese government. The Company’s own feed
production will be gradually phased out. “We are very pleased to forge this
agreement with Shandong Nongbiao Purina, a fast growing feed manufacturer with a
strong reputation in China and abroad,” commented Mr. Gao, chairman and CEO of
Yuhe International, Inc.

“Before discontinuing our current feed
production to transition to Purina as our sole feed supplier, we will perform a
series of independent tests on Purina’s feed in order to insure that it complies
with the most rigorous standards set forth by the Chinese government. “We
are particularly excited with this arrangement as it will allow us to focus
exclusively on the production of high quality day old
broilers.”

Strong market share
Founded in 1996, Yuhe is the second
largest day-old broiler chick supplier in China. The Company’s main operations
involve incubation. With headquarters in Weifang, Shandong provinceYuhe has two
operational subsidiaries, Weifang Yuhe Poultry Co. Ltd. and Weifang Taihong Feed
Co. Ltd. which largely supplies the Company’s internal demand for chicken feed.

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