NEW YORK (ICIS news)--Humic acid fertilizer producer China Green Agriculture plans to boost sales by 40% in fiscal 2009 (ending June) to $31.6m (€22.8m), on the back of growing demand and a major capacity expansion, CEO Tao Li said on Friday.

“Demand for organic fertilizers such as those based on humic acid is rising rapidly in China,” said Li in an interview at ICIS Chemical Business’s office in New York City.

“Only 25% of fertilizers used in China are organic compared to 50% internationally. We estimate China will get to 50% within the next five to 10 years,” he said.

He projects net income in fiscal 2009 to rise 26% to $12m.

The Chinese government is encouraging the production of organic produce for export and domestic consumption, said Li, who is also vice chairman of the China Green Food Association of China’s agriculture ministry.

The Chinese government is providing subsidies to farmers that produce organic crops as well as tax breaks to companies that produce organic fertilizers, Li said.

Because of this policy, China Green Agriculture’s corporate tax rate is 15% compared with around 30% for typical corporations, said Ying Yang, the company’s chief financial officer.

The company is building a $15m, 40,000 tonne/year humic acid fertilizer production facility in Xian, Shaanxi province, which is scheduled to be completed in February 2009 and fully functioning by July 2009, Yang said.

China Green Agriculture already has a 10,000 tonne/year humic acid fertilizer plant at the same location and is in the process of expanding production at that facility to 15,000 tonnes/year by December 2008.

The company also aims to increase the number of regional distributors of its products in China to 540 from 480 by the end of fiscal 2009, she said.

($1 = €0.72)

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