7. Discontinued Operations

12 Months Ended

Dec. 31, 2012

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

7. DISCONTINUED OPERATIONS

Kedong Farm and Gannan Farm were formed in July 2007 to operate the Dairy Farms of the Company. On August 1, 2011, the Company entered into an Equity Purchase Agreement (as amended, the “Agreement”) with Haerbin City Ruixinda Investment Company Ltd. (“Ruixinda” or the “Purchaser”). Pursuant to the Agreement, the Company and Jinyan Ma (the noncontrolling interest holder of the Dairy Farms) agreed to sell to the Purchaser all of the equity interests of the Dairy Farms for an aggregate purchase price of RMB849 million (approximately $133.1 million), including RMB114.5 million (approximately $18.0 million) in cash and RMB734.5 million (approximately $115.1 million) in deferred payment. The Company has the right to call for raw milk at RMB122.4 million (approximately $19.2 million) each quarter in the following 18 months after September 30, 2011 to settle the deferred payment. If the value of the raw milk provided by the Dairy Farms each quarter is less than RMB122.4 million, the shortfall of the amount will be settled in cash. During 2011, the Company received a cash payment of $30.7 million from the Purchaser of Dairy Farms and raw milk valued at $4.99 million. During 2012, the Company received a cash payment of $10.2 million from the Purchaser of Dairy Farms and raw milk valued at $10.9 million. 

The Company entered into an asset mortgage agreement with the Dairy Farms, pursuant to which the Dairy Farms granted to the Company a primary security interest in certain properties and assets of the Dairy Farms to secure the obligations of the Dairy Farms under the Agreement.

On December 31, 2012, the Company entered into a supplemental agreement to rearrange the repayment schedule (See Note 13).

The following table presents the components of discontinued operations in relation to the Dairy Farms reported in the consolidated statements of income and comprehensive income:

	For the years ended December 31,
	2012		2011			2010
	US$		US$			US$
Sales from external customers		—		34,960,409			1,261,472
Intersegment sales		—		9,938,301			27,151,876
Income (loss) from operations		—		2,613,122			(6,499,869	)
Loss on sale of subsidiaries		—		(8,318,350	)		—
Net loss from discontinued operations		—		(5,705,228	)		(6,499,869	)