Origin Agritech Limited (NASDAQ: SEED) (“Origin”) announced today that it has commenced operation of a new hybrid seed drying facility this fall harvest season. The facility is operating in the county of Linze, located in the Gansu Province in the Southwest region of China. This new facility, which was built by Origin strengthens our core production capacity in northwestern China while meeting all our capacity needs. The facility enhances our ability to control the quality of Origin’s hybrid seeds when moisture reduction is required for the seed stock.
The site of this new facility is also important from a strategic perspective, as it lies in Gansu, which yields the highest seed production levels of seed corn in all of China. The facility will allow the company to control the quality of the corn and maintain the highest standards. It will also prevent the loss of seed stock which did not dry in time using standard conventional measures as surrounding environmental temperatures vary.
Hybrid seed corn must be dried slowly, at low temperatures (approximately 38C); this is a critical step in maintaining seed quality. Quality factors affected are seed vigor and viability, mechanical purity, and seed appearance. Moisture is the most important factor in bringing harmful changes during seed storage. Operation requires higher amounts of management skill and allows for greater control in the product quality. Lower priced seed companies are unable to use these drying methods and are therefore subject to higher variation in the production quality and suffering loss of seed stock.
Liang Yuan, Origin’s Chief Executive Officer, commented, “We believe this state-of-the-art facility should support increasing demand and quality for our premium seed products throughout China. Our measured expansion for facilities that improve our product quality and minimize inventory risks should continue to be a driver of a more consistent growth plan for our company. This addition only adds to Origin’s vertically integrated infrastructure throughout all of mainland China.”