Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology company, today announced it has signed purchase agreements to sell two feedstock companies a total 50,000 metric tons of its nutritionally enhanced corn.
Origin Agritech's new, nutritionally enhanced corn reduces the need for expensive additives such as soybean meal for feedstock companies, and thus doubles their margins. As a result of this, Origin has gotten a lot of buzz in the industry and much inbound interest. Origin has been giving samples of the corn to potential feedstock customers so that they can validate the nutritional content of the corn. The corn has passed these tests and companies now are placing orders.
Since Origin's corn has such a positive impact for feedstock companies and since the company has no competition for this product, the company decided rather than just selling the seed, it would contract grow the corn to capture much higher share of the profitability of the finished product. The company is contract growing 50,000 metric tons of the corn in Xinjiang. The feedstock companies have agreed to buy the corn at market prices at the time of delivery, plus a mark-up to reward the company for the added value of the corn. Based on current market prices for corn, the sale price could be around 3,000 RMB per metric ton or 150 million RMB in total. The company is currently evaluating the impact of this purchase agreement on the company's financials and may soon update its guidance to reflect this new business.
"We are excited by the positive reception by customers to our new corn variety," said Dr. Gengchen Han, Origin Agritech's Chairman. "In these unprecedented times of disruption in food supply chains and food inflation, I am particularly happy that we are having a positive impact on food security for China. "
About Origin Agritech Limited
Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is a leading Chinese agricultural technology company. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. For further information, please visit the Company's website at: www.originagritech.com. The company also maintains a twitter account for updating investors on company and industry developments, which is @origin_agritech.
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SOURCE Origin Agritech Limited