Chapter 196: Response of Large Seed Enterprises

The per-acre premium is not the insurance cost, but the average profit expected from seed production per acre.

In 2023, the highest per-mu premium in the Hexi region reached 4500 yuan per mu. Taking into account other expenses, the seed production cost per mu exceeded 5000 yuan.

But in 2005, the per-mu premium in the Hexi Corridor remained at 1200 yuan to 1500 yuan.

Generally speaking, the price that seed companies pay for corn from farmers is 2.5-4 times that of commercial corn.

如现在玉米价格每斤0.5元，收购价就是1.25-2元，国内的种子销售价与收购价的比例大约是5:1，国外玉米种子的定价比例是30:1。

Therefore, the price of corn seed companies in China is basically around 5-10 yuan per catty, and distributors then increase the price by 20%-30% or even higher.

All in all, large seed companies such as Jingcheng Denong and Denghai can make a profit of 50% on corn seeds, while small seed companies make a profit of 20%-30%.

Tianhe's profit margin this year is between 60% and 70%, but this takes into account all the costs Tianhe has paid this year.

The expansion of the seed production base from 2 acres to 10 acres is not a simple addition of numbers.

The supporting drying equipment, factory buildings, seed processing production lines, storage warehouses, seed distribution, etc. all require costs.

Tianhe's marketing network has also expanded from the initial A- and B-class markets in provinces such as Shandong and Hebei, and has now achieved full coverage of 15 A- and B-class provinces.

In the C-type random market, there are also local customers who choose to purchase goods in cash.

There are six or seven hundred county-level agents, tens of thousands of township agents, and hundreds of Denong agricultural supply supermarkets in Shandong Province.

Tianhe’s marketing staff are spread all over the country. Despite the high marketing costs, Tianhe’s profit margin still reaches 60 to 70 percent.

These are also the data released by Tianhe.

But the actual profit margin of Tianyu No. 1 is definitely more than ten or twenty times the profit.

Therefore, increasing the per-mu premium by 20% is just a scratch on Tianhe's surface.

Tianhe could have done even better if it had not been concerned about other large seed companies and the government's strong intervention after disrupting the market.

But even 20% is enough to make the little corn seeds scratch their heads.

……

Tianhe's field demonstration provided full-process technical services from land preparation and sowing - plant protection and management - harvest demonstration, which was the first time in the domestic market.

Last year, there were few demonstration sites and they only attracted the attention of a small number of companies.

But this year, Tianhe’s field demonstration sites have expanded to more than 600, all of which are large-scale growers with a certain degree of local fame.

In addition, Tianyu No. 1 was caught up in a GMO controversy some time ago, in which reporters described Tianhe’s marketing as having a snowball effect.

"Tianyu No. 1 seed salesmen appeared overnight. They went from village to village, visiting farmers' homes one after another to sell their seeds."

"Agent So-and-so in this town made over a million dollars a year."

Considering the popularity of Tianhe's field demonstration, some large growers who were waiting on the sidelines had doubts about the single-seed sowing method of Tianyu No. 1, but were also looking forward to its high yield.

He took the trouble to participate in the demonstration meeting covering the entire process from sowing to harvesting.

This instantly aroused the industry's vigilance.

There were many more people watching at Tianhe’s subsequent demonstration meetings.

In Xinjiang, Inner Mongolia, Shandong, Heilongjiang, Henan...

"The yield per mu is 3000 kilograms, 2000 kilograms, 2500 kilograms... these statistics constantly stimulate the farmers' eyes, and their red eyes are full of desire for wealth."

In Shandong Province, farmer scientist Li Denghai, wearing a straw hat and a short-sleeved shirt, attended Tianhe's harvest demonstration meeting like an ordinary farmer.

On the way back, Yu Long, who was accompanying him, looked at the chairman who remained silent for a long time and felt troubled.

After a long while, Li Denghai sighed: "Tianhe Seed Industry has taken the lead!"

"On-site meetings at the seedling stage, field meetings, harvest meetings, and complete technical tracking services are the innovations of Tianhe Company.

It not only made farmers recognize single seed sowing, but also provided them with knowledge and techniques on fertilization, pest control, and more importantly, allowed farmers to experience the yield-increasing effect of Tianyu No. 1 on site.”

Yu Long said: "Xianyu 335 is also following the promotion method of Tianyu No. 1 in Northeast China, and this year it can generally increase farmers' income by 200 yuan."

After thinking for a while, Li Denghai said, "From now on, all the varieties sold in Denghai will follow this model."

Yu Long hesitated, "The yield advantage of Tianyu No. 1 is too great, will it be a loss?"

Even though it was affected by rust, Tianyu No. 1 still achieved an ultra-high yield of 2000 kilograms per mu, almost achieving a reduction in output.

"What are you afraid of? The domestic market is so big that Tianyu No. 1 can't take it all."

"Okay, we've also got the hybrid breeding material of Tianyu No. 1 back. We can immediately start hybridization, testing, and analysis with the existing system breeding material."

Li Denghai nodded.

Tianyu No. 1 has such a huge advantage in production that the only formal way to deal with it is to improve the existing varieties.

But it will take at least six or seven years.

In the past six or seven years, Tianhe Seed Industry has made a lot of money.

Li Denghai really envied Tianhe Seed Industry for being able to cultivate such good varieties.

"Who is the person from Tianhe Seed Industry participating in this year's Corn Seed Summit?"

"It seems to be Qu Yang."

"Guo Yang is not coming again?"

"Seems to be."

Li Denghai frowned. Although the breeder of Tianyu No. 1 was Tianhe Breeding Laboratory, its leader was still Guo Yang. He actually wanted to hear Guo Yang's views on the domestic corn industry.

There seem to be many varieties of corn in China, but if you trace their origins, there are actually only a few, and they are all constantly being improved, but there are actually very few real innovations.

Thinking of this, Li Denghai dialed a number.

……

"Whoever has 958 will definitely become rich this year."

As the largest operating company of Zhengdan 958, Beijing Denong Company has already spread its sales outlets across the country in the past two years.

Therefore, the pressure brought by Tianyu No. 1 is felt most deeply.

Especially in Henan Province, Tianhe organized a grand harvest festival in front of Denong, and the 5500-acre corn planting base was a scene of bumper harvest.

Even various shapes and stages were built using corn cobs.

It not only attracted a large number of farmers, but also brought in many local media and tourists. The scene of growers placing orders was even more crazy.

At Denong’s headquarters in Zhongguancun, Beijing, General Manager Zhang Lei looked at the data compiled from various places with an unhappy expression.

As a product manager, he always demonstrates his optimism and confidence in his products on various occasions.

A product manager is a leader, not someone who judges whether a product is good or bad based on what others say.

You must learn to brag with reasons and evidence. As the saying goes: I would rather believe the three legs of a toad than believe the mouth of a product manager.

But Tianyu No. 1 is popular whether in the Huanghuaihai area, the Northeast, or the other three major corn ecological areas.

Its overall performance completely surpasses Zhengdan 958.

As both are large national varieties, Zhang Lei discovered that the boasts he made about Zhengdan 958 in previous years were easily surpassed by Tianyu No. 1.

How can he brag about this?
Just as he was lost in thought, his son Zhang Yang walked in.

"dad."

Zhang Lei came back to his senses and asked, "How is the progress of technology procurement?"

"We have already purchased several small varieties with strong regional adaptability, but the large regional varieties will have to wait for the auction next month, so we came back early to prepare."

"Well, try harder. Things are different now than before."

Zhang Yang also understood his father's situation. Although the Zhang family was still a shareholder of Denong, the controlling shareholder had become Huaguan Technology, a listed company from Northeast China.

"Dad, when I was outside, I heard a lot of information about Tianyu No. 1. Now many manufacturers are in a state of panic."

Zhang Lei smiled with satisfaction, "DeNong now has more than 28 sales outlets in 5000 provinces, municipalities and autonomous regions across the country. Zhengdan 958 will be able to maintain its sales for another two to three years."

Zhang Yang was silent for a moment. Maintain? He could feel the pressure. His father's high-spirited and powerful appearance in the past two years seemed to be still vivid in his mind.

Zhang Lei said: "The most important thing now is to speed up research and development, improve varieties to address existing problems, conduct micro-iterations, or launch new varieties."

"After I finish the product procurement, Dad, please transfer me to the marketing department. I'll be the product manager."

Zhang Lei patted his son on the shoulder and said, "You are ambitious, but I want to ask you a question."

"Dad, tell me."

“If we predict that corn prices will continue to fall in the next five years, rust will become a normal disease in the Huanghuaihai region, and the country will also promote the large-scale development of standard farmland construction.

In this situation, what needs do the company's products need to meet? Which popular varieties should they be compared with? "

Zhang Yang frowned.

Zhang Lei said, "I can transfer you to the marketing department only after you figure it out."

"Go get off work. You've been back for two days, and I haven't seen you go to see Xu Xiaoxue. You can't let down your guard when chasing girls."

Looking at his son who was walking and thinking, Zhang Lei felt relieved while also thinking about countermeasures.

Even with Denon's management level, the product life cycle of Zhengdan 958 will start to decline from now on.

But the market demand for good seeds is always there.

Where is the demand?

In the face of change, good product managers will find that needs are everywhere, but they must learn to deduce.

We must not only solve the problems that arise in current production, but also look forward to problems that may arise in the future.

All of this requires a lot of field research.

Only in this way can seed companies survive in the fierce competition.

But the more I thought about it, the more I felt the horror of the field demonstration.

It seems that Tianhe has always been ahead of the industry.

……

Because of the sensitivity of the three rural issues and because they themselves are also beneficiaries of variety intellectual property protection.

Therefore, large seed companies such as Denghai and Denong generally do not cross the line of the law, and at most they will make improvements based on the varieties.

That is, there are a large number of imitation varieties in China.

On this point, compared with the various despicable practices of domestic dairy companies, the atmosphere of the leading domestic seed companies is obviously much better.

But for those illegal seed merchants operating without a license, or small seed companies operating outside the law.

The popular Tianyu No. 1 is a feast for all!
(End of this chapter)