CHINA – Two local agriculture technology firms Origin Agritech Ltd and Sichuan Cloudland Agricultural Science and Technology have agreed to form a joint venture aimed at expanding the production of NEC corn into Sichuan Province, China.

Sichuan Province has the largest production of pork and is home to four of the 10 largest hog farming companies in China and therefore a major consumer of corn as feed.

Nevertheless, Sichuan is only ranked eighth in corn production, which has resulted in a 10-million-tonne per annum deficit in corn for feedstock that must be sourced from other provinces. 

 According to Origin Agritech reliance on other provinces put Sichuan at a disadvantage position where it mostly ends up having the highest corn prices in the country.

The new joint venture is however expected to rapidly expand local production, enhancing access to the commodity for the feed industry and protecting the province from price uncertainties that characterize cross-border trades.

The regional government has expressed great interest in supporting the growth of Origin Agritech’s NEC corn due to its energy density and resource efficiency allowing more hogs to be fed per unit of corn.

“I am very excited to joint venture with Cloudland and Eos, a legendary investor in China,” said Dr. Gengchen Han, Origin Agritech’s chairman.

“This will allow us to quickly expand our production of corn into Sichuan Province next year and will have a positive impact on revenues and earnings, with little capital requirement due to the favorable government policies and local support of our Cloudland JV partner.”

In its latest update, the Foreign Agricultural Service of the United States Department of Agriculture forecasts that Chine will produce 270 MMT of corn in MY2022/23.

The forecast is 2.5 MMT lower than MY2021/22 and FAS has attributed this to lower planting area and yield. It is estimated that the planting area decreased by one percent in 2022 as grain grower subsidies for soybeans were nine times higher than that for corn – incentivizing farmers to plant more soybeans.

As production declines, FAS forecasts that China imports 18 MMT in MY2022/23, a 5MMT decline from 2021/11 figures which are estimated at 23 MMT.

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