(Bloomberg) -- Major Chinese hog producer Muyuan Foodstuff Co. is joining with state-backed poverty-relief funds to help restore the domestic pig herd after the ravages of African swine fever.

The company, based in Nanyang, Henan province, and SDIC Chuangyi Industrial Fund Management Co. will invest 3.5 billion yuan ($500 million) in a joint-venture to bolster pig breeding in rural areas, according to a statement Wednesday from the farming company, which will fund 2.5 billion yuan of the amount.

Muyuan last month sealed an even bigger agreement with Huaneng Guicheng Trust Corp. that will see a total of 21 billion yuan invested in breeding. Swine fever has cut the country’s hog herd by more than 40%, with smallholders seeing the worst impact, and driven up prices of the staple meat to record highs.

“The tie-ups will help Muyuan get on the fast track to expand not only its pig breeding business, but also in animal feed production,” said Lin Guofa, a senior analyst with Beijing-based consultant Bric Agriculture Group. The firm is already China’s No. 2 pig breeder after Wens Foodstuff Group, said Lin, and increasing its herd even further would bolster its weaker feed business.

China’s Investors Still Like Hogs Even as Swine Fever Abates

Muyuan also announced on Wednesday a smaller deal with another fund to invest in a pig farm in the northeastern province of Heilongjiang.

Pig numbers in China, the world’s top producer, have only just begun to recover from swine fever. Hog inventories rose 2% in November for the the first month-on-month gain in a year, according to the farm ministry.

To contact Bloomberg News staff for this story: Niu Shuping in Beijing at nshuping@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Jason Rogers

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