At the end of November, KERNEL's Xiantao production base Phase II was completed. As a leader in agricultural microbial products, KERNEL's developments have attracted significant industry attention.

Therefore, reporters from the National Agricultural Technology Center conducted an exclusive interview with KERNEL's Chairman Li Qing, exploring the current global microbial preparation industry development, KERNEL's strategic layout, the Xiantao production base Phase II situation, and the company's future development plans. Below is the full interview transcript.

The completion of Wuhan KERNEL Biotechnology Co., Ltd.'s (hereinafter referred to as "KERNEL") Xiantao production base Phase II is a crucial milestone in KERNEL's development history. It marks KERNEL's unprecedented determination and courage in exploring and practicing the deep integration of agricultural green high-quality development and biotechnology, committed to making more contributions to the biological preparation industry's development.

Reporter: First, could you introduce the global microbial preparation industry development trends and KERNEL's layout in this field?

Li Qing: Modern biological preparations have become a popular term, with global companies paying close attention. Representative companies like Syngenta, Bayer, Corteva, and BASF have all formulated microbial strategies, conducted mergers and acquisitions, and increased R&D efforts, hoping to achieve a 20% or even higher marketing share in the future. In the foreseeable future, the global microbial preparation industry will undoubtedly usher in a period of rapid development.

Simultaneously, our country is vigorously practicing the new development concept that "green waters and mountains are gold and silver mountains." For KERNEL, this undoubtedly brings important development opportunities. Over the past 25 years, KERNEL has consistently focused on microbial preparations, from discovering microbial strains to high-end manufacturing and promotion. We can say we are one of the most persistently focused companies in this industry. Through the joint efforts of two generations of scientists and colleagues, KERNEL has formed a systematic solution and is very willing to collaborate with large international enterprises, government departments, and research institutions at various levels to jointly explore the microbial preparation market.

Reporter: First, could you introduce the global microbial preparation industry development trends and KERNEL's layout in this field?

Li Qing: Modern biological preparations have become a popular term, with global companies paying close attention. Representative companies like Syngenta, Bayer, Corteva, and BASF have all formulated microbial strategies, conducted mergers and acquisitions, and increased R&D efforts, hoping to achieve a 20% or even higher marketing share in the future. In the foreseeable future, the global microbial preparation industry will undoubtedly usher in a period of rapid development.

Simultaneously, our country is vigorously practicing the new development concept that "green waters and mountains are gold and silver mountains." For KERNEL, this undoubtedly brings important development opportunities. Over the past 25 years, KERNEL has consistently focused on microbial preparations, from discovering microbial strains to high-end manufacturing and promotion. We can say we are one of the most persistently focused companies in this industry. Through the joint efforts of two generations of scientists and colleagues, KERNEL has formed a systematic solution and is very willing to collaborate with large international enterprises, government departments, and research institutions at various levels to jointly explore the microbial preparation market.

Reporter: What are the current characteristics of the domestic microbial preparation market, and what challenges does KERNEL face?

Li Qing: The domestic microbial preparation market currently has two main characteristics: First, everyone is very interested, with many participating enterprises believing in its promising future and willing to invest in development. Second, overall, people's understanding of microbial preparations is still at a preliminary stage, with product quality varying widely, which has caused some negative impacts on industry development. Generally, the development of the microbial preparation market depends on industry regulation, enterprises' own capacity improvement, and the ability to promote applications for end customers. This will be a long-term, systematic project, because microbes are invisible and intangible, and a specialized industrialization and promotion system must be established.

Specifically, microbial preparation enterprises must pass "three checkpoints" during development: First, the manufacturing checkpoint, because microbes require group action, and high-end manufacturing issues must be resolved with good quality control; second, the application checkpoint, as the saying goes, "different regions have different ecological conditions," and microbes must adapt to local soil, crops, and cultivation habits to take root and serve crops; third, the promotion checkpoint, which involves systematically transmitting good microbial technologies to farmers - this is not simply a matter of having good strains, as good strains are just the beginning of passing these "three checkpoints". From the current perspective, most enterprises find it very difficult to pass these "three checkpoints". In the past 25 years, KERNEL has continuously strived forward and is fortunate to proudly say that we are an enterprise that has passed these "three checkpoints".

Reporter: What specific achievements has KERNEL made after passing the "three checkpoints"? What role does it currently play in the domestic microbial preparation field?

Li Qing: If chemical pesticides are like Western medicine, microbial preparations are more like traditional Chinese medicine. Compared to Western medicine, microbial preparations require more emphasis on systemic theory to comprehensively solve crop issues. The "KERNEL Three-Pronged Approach" is both a solution and a concept, similar to the systemic theory in traditional Chinese medicine. It is dedicated to solving soil problems from three dimensions: stress resistance, plant protection, and nutrition. It also focuses on leveraging different microbial functions, centering on crops to ensure the "five health" - seed health, soil health, root health, stem and leaf health, and flower and fruit health. At every crucial stage and link of crop growth, it provides high-cost-performance and high-quality products to achieve crop yield increase and quality improvement.

In the microbial preparation industry, KERNEL's goal is to be a leader, not to boast about being a leader, but to contribute more to the industry's development. KERNEL hopes to do more pioneering work, bring more value to agricultural production, increase farmers' income, and achieve green agricultural development - this is KERNEL's original mission and target pursuit.

Reporter: We know that to achieve its goals, KERNEL has also developed four major development strategies. Could you introduce the implementation of these four strategies?

Li Qing: As development strategies for the new phase, KERNEL's four strategies include field strategy, core product strategy, internationalization strategy, and capitalization strategy. First, the true realm of microbial service to large-scale agriculture should be in large fields. Therefore, KERNEL proposed a field strategy and has been preparing for this for many years because large fields are more complex, requiring simplification while controlling costs. KERNEL's new-generation microbial preparations' standards include high activity, high content, high stability, and simplification. After years of experimental demonstrations, good results have been achieved. In terms of sales proportion, KERNEL hopes that the application ratio in large fields will increasingly grow.

KERNEL's core product strategy is to highlight core products. Among these, Bacillus mucilaginosus is a typical representative. KERNEL's crop-centered "Three-Pronged Approach" and implementation of crop "five healths" are inseparable from this core product. With over 20 years of R&D history, it has not only solved manufacturing and cost issues but also accumulated rich application experience. As KERNEL's landmark brand product, Bacillus mucilaginosus will play an increasingly important role in the future.

Regarding the internationalization strategy, the main hope is to provide KERNEL's crop-centered "Three-Pronged Approach" concept and knowledge of maintaining crop "five healths" to customers in Brazil and Belt and Road countries, rather than just providing raw materials. Currently, KERNEL's minority shareholder Mitsui has done considerable work. Besides the 20-plus countries already served, they are vigorously promoting efforts in Brazil, Peru, Mexico, Kenya, Vietnam, and other countries. KERNEL is full of confidence in this.

KERNEL's capitalization strategy hopes to leverage the capital advantages of its major shareholder, achieving a "1+1>2" effect by combining domestic and international resources. This predetermined strategy has begun implementation, and KERNEL's major shareholder, Yuanda Group, also attaches great importance to agriculture, has mature enterprise merger and acquisition experience, and hopes to support KERNEL in making such layouts.

Reporter: You just mentioned the field strategy, which particularly requires capacity support. Does the recently completed second phase of the Xiantao production base have a direct relationship with KERNEL's field strategy?

Li Qing: The KERNEL Xiantao production base is serving the company's 2030 development plan. It covers 200 acres and is planned to be constructed in three phases. The first phase started construction in 2019 and was completed in 2021. The second phase began in 2023, with a total investment of 500 million yuan, and has now been completed, doubling the production capacity. The third phase is hoped to be completed by 2030, achieving another capacity doubling.

As an important site for high-end microbial preparation manufacturing, the Xiantao production base has 7 fermentation tanks of 120 tons, all customized by KERNEL based on microbial characteristics. Its entire process and facilities reflect KERNEL's profound understanding of bacterial fermentation. After the second phase's completion, the Xiantao production base has become the factory with the largest bacterial fermentation capacity and most advanced facilities in China and even globally. It is believed to play a crucial role in high-end microbial preparation manufacturing, serving KERNEL's field strategy, and providing reliable guarantees for partners.

Reporter: Whether it's the core product strategy or field strategy, both need to be implemented through application and promotion. How has KERNEL specifically conducted market promotion in recent years? What support has been provided to distributors?

Li Qing: Promoting microbial preparation products is a continuous education process. First, it's about helping people understand it through experimental demonstrations to show results. To this end, KERNEL hosts over a thousand field promotion activities annually, showcasing practical application results. Secondly, KERNEL is constantly spreading the value of microbial preparations through various media channels. Third, to help people understand and use microbial preparations, KERNEL has established two training systems: one is the KERNEL Grand Lecture Hall, which has already held 5 sessions to provide learning opportunities for important partners; the other is the KERNEL Micro Language Hall, primarily serving retailers and large-scale farmers. These training systems aim to help people see, believe in, and innovatively apply microbial preparations to serve agriculture.

Regarding distributors, KERNEL has proposed the important concept of "growing together" in recent years, going beyond just a win-win situation. "Win-win" is more of a value exchange with a commercial flavor, while "growing together" is a concept based on microbial characteristics and KERNEL's corporate culture. Because for microbial preparations to be implemented, distributors must together become familiar with local crops and cultivation habits, exchange information, summarize experiences, and create value together. The relationship between KERNEL and distributors is not about mutual use, but about adhering to a long-term principle, jointly participating in this cause to serve agricultural green development.

Reporter: Finally, could you discuss KERNEL's long-term plans and expectations for related national policies?

Li Qing: KERNEL has the foundation and conditions to contribute more to the microbial preparation industry's development. KERNEL has become one of the industry's leading enterprises, based on the company's 25-year development and the long-term persistence of two generations of scientists. KERNEL has always focused on microbial discovery, manufacturing, and application, never straying from this path. In the future, it will continue to invest more and certainly contribute more to agricultural green development.

Regarding expectations for national policies, the first is to strengthen promotion and guidance. Currently, the concept that "green waters and mountains are mountains of gold and silver" has become a consensus, and KERNEL's development is very fast and has benefited from this. However, from an industry regulation perspective, how to ensure healthy industry development is crucial. KERNEL has suggested raising the registration threshold for microbial preparations, strengthening market supervision to avoid mixed quality, and ensuring farmers can buy high-quality products. Secondly, government departments at all levels should have confidence in microbial preparations, boldly apply them, promote more ground-level implementation, and provide broader support. Then, the future of microbial preparations will definitely develop faster and better.