Shandong Zhouyuan Seed and Nursery Co., Ltd. Plans to Sign Contract with Local Farmers to Cope with Increasing Demand

30/07/07 Shandong Zhouyuan Seed and Nursery Co., Ltd. which is incorporated in the State of Delaware, announced that its operating subsidiary company in China, Shandong Zhouyuan Seed and Nursery Co., Ltd., is planning to establish new relationships with local farmers to guarantee that the Company can buy back all the seeds from the crop in order to meet the increasing demand of hybrid seeds.

The Company plans to offer the original seeds to the contracted farmers, and the estimated total farming area will reach more than 8,000 acres this year. In accordance with the procedures set by the Company and the assistance provided in the form of new technology, the farmers will produce and then re- sell seeds to the Company in the mature season. SZSN also hopes that such a mode of operation can realize mutual benefits among farmers.

China is the second largest seed market in the world. The estimated annual average demand of seed is around 12.5 billion kilograms, and the trade volume is over 4.5 billion kilograms. Due to the promulgation and implementation of the new Seed Law from the WTO framework agreement and the influence of economic globalization, seed-producing companies in China have declined since 2002. However, in terms of market capacity, the total size of current domestic seeds in the market is around RMB 22 billion (USD 2.9 billion). Experts forecast that in 2010, the market scale of China will reach RMB 30 billion (USD 3.9 billion), showing the huge capacity and growth in this industry. Moreover the current level of profitability is still slightly higher than many traditional industries.

"According to the data collected by us, the area of corn seed farming and producing will reach to 4.9 million acres, and the final production will be up to 1.2 billion kilograms," said Mr. Wang Zhigang, President of SZSN. "Attracted by such high-potential market, we must adopt a new operation mode to cope with the increasing demand."