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Letter to Shareholders from the CEO and Chairman of the Board of Yongye Biotechnology, Inc.
Date:9/18/2008

at these growth trends will be sustained in the future. We expect to have more frequent communication with our shareholders, and hope to broaden the awareness of Yongye's accomplishments in the investment community.

Unleashing the Productivity of China's Agricultural Sector

While China's population is increasing, the amount of arable land available for farming is decreasing. China's farmland is currently being used at close to capacity levels to meet domestic demand. Increasing affluence and a rising concern about food quality and safety have led to greater demand for organic plant and animal nutrients. The need to use land efficiently has led to a need to improve productivity throughout the agricultural sector.

Yongye employs its proprietary technology to produce what we believe are the most effective fulvic acid-based plant and animal nutrient products available today. Our products deliver compelling returns by boosting productivity of farms and dairy cows, reducing the usage of other fertilizers and pesticides, improving the stability and quality of the soil. For dairies, we reduce the need for expensive antibiotics and health supplements. We have enjoyed an exceptionally strong demand from farmers once they try and experience the benefits of our products, and believe there is significant unmet demand for our products throughout China.

Scalable Distribution Model Drives Geographic Expansion

We believe that Yongye's scalable distribution model, which employs a sales network of branded stores that are owned and operated by independent, local entrepreneurs but utilize a consistent Yongye branding and promotional model, is another key cornerstone of our success. This year our goal was to significantly grow our branded store count and distribution footprint, and I am very pleased to report that the number of branded stores grew from 200 at the end of 2007 to 775 at the end of June 2008. Our management team is now deploying our streng
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SOURCE Yongye Biotechnology International, Inc.
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