The Development of Acer Truncatum Bunge Planting Base
On March 22, 2011, the Chinese Ministry of Health officially approved acer truncatum bunge seed oil, along with peony seed oil, as a new food resource (No. 9 Announcement issued in 2011). Subsequently, in December 2011, the Chinese National Development and Reform Commission, jointly with the Ministry of Industry and Information Technology, issued the Twelfth Five-year Development Plan of Food Industry, whereby "the nutrition and health food manufacturing industry" was listed for the first time in the national development plan as a focused developing area.
We initiated an investment plan (the "Plan") to take advantage of the national policy and began to develop and cultivate our own planting base for acer truncatum bunge in June 2013. As of March 31, 2018, we have completed our investment of approximately $58 million in the development of the acer truncatum bunge planting base. We expect to spend about $1,500,000 per year to maintain our planting base without further expansion.
The trees are expected to begin production from the fall of 2018 through 2022 and we have also completed the construction of the planting fields and related support facilities. We signed three separate lease agreements for a total of 5,880 mu (approximately 968.62 acres) of farmland for terms of either 30 years or 14 years, and has completed planting of 7,424,000 trees. We haves also developed cooperation relationships with local farmers by providing seeds and planting techniques, resulting in another 5,320 mu (approximately 876.40 acres) of acer truncatum bunge trees planted by local farmers.
Since July 2015, we have been purchasing acer truncatum pods from third party vendors, and have extracted the pods to produce the acer truncatum bunge seed oils. We sell the acer truncatum bunge seed oils products to customers through our distributors participating in the direct sales channel. Based on our current manufacturing technology, we expect that we will be able to extract about an average of 1pound of acer truncatum seed oil per 10 pounds of acer truncatum bunge seeds. Until our own planting base begins production, we will continue to purchase the acer truncatum bunge pods from third parties used to manipulate our acer truncatum bunge seed oil. The following chart reflects the projected schedule of maturation of our trees.
Ginkgo Planting Base
The development of Spring Pharmaceutical Co. Ltd. is closely related to its ginkgo base. High-quality raw materials come from high-quality planting base, and high-quality products come from high-quality raw materials. The cooperation between the Company and Nanjing Forestry University has improved the planting level of the base. According to the GAP standard, ginkgo leaf planting management for health care products and ginkgo leaf planting management for medicine will further improve the construction quality of the base, speed up the research and development of new products and improve product quality. Nowadays ginkgo base has formed the industrialization pattern of "Enterprise – Planting Base - Peasant Household - Processing" . It will bring greater social and economic benefits to driving farmers to get rich, promoting enterprise development, improving ecological environment and promoting the development of related tourism and catering industries.