Origin Agritech Limited, a Chinese agricultural technology company, has announced a deal with Shihezi City in Xinjiang to cultivate 200,000 mu of farmland for growing NEC corn. The deal will be financed by the JV’s minority partner, a regional farming and feedstock company, which will also construct a grain processing facility. The JV has already planted 30,000 mu for this season and plans to expand planting to the whole 200,000 mu for the 2024 season. The deal is expected to add $8 million to Origin Agritech’s revenue in 2023, increasing to $55 million in 2024. Origin Agritech’s NEC corn has a superior nutritional yield and has received positive feedback from feedstock companies.
Origin Agritech Limited, a Chinese agricultural technology company, announced that its majority-owned joint venture had signed a deal with Shihezi City in Xinjiang to cultivate 200,000 mu (roughly 33,000 acres) of farmland for growing NEC corn. The minority partner in the JV is a regional farming and feedstock company, which will finance the contract growing of NEC corn and the construction of a grain processing facility that will dry and silo the corn. The JV has planted 30,000 mu for this season and plans to expand planting to the whole 200,000 mu for the 2024 season.
The Shehezi government officials cited the superior nutritional yield of Origin’s NEC corn as a reason for wanting to work with Origin. According to Origin Agritech’s Chairman Gangchen Han, “Every feedstock company we have sent samples of NEC corn to has independently verified the superior nutritional content and is very interested in buying it from us. Now it is just about logistics and execution of expansion of production with deals like this one.”
The deal is expected to add $8 million to Origin Agritech’s revenue in 2023, increasing to $55 million in 2024 as the growing area is expanding to 200,000 mu. Since Origin is not responsible for any of the capital costs of the project, the company will not need to raise capital to fund this growth.
Origin Agritech’s phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China’s Ministry of Agriculture. The company has established a robust biotechnology seed pipeline, including products with glyphosate tolerance and pest resistance (Bt) traits. The NEC corn, with its superior nutritional yield, has the potential to help ensure food security for Xinjiang.
In 2022, extreme COVID lockdowns in the regions where Origin was looking to expand NEC production forced the company to postpone its expansion. This new deal shows that growth was delayed but did not disappear. With logistics and execution of production expansion deals like this one, Origin Agritech has a bright future ahead in the agricultural industry.
Image provided by Hasan Ma’ruf
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