10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2011

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number 000-51200

Yongye International, Inc.

(Exact name of registrant as specified in its charter)

Nevada	20-8051010
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization	Identification No.)

6th Floor, Suite 608, Xue Yuan International Tower,

No. 1 Zhichun Road, Haidian District Beijing, PRC

(Address of principal executive offices)

(Former name, former address and former fiscal year, if changed since last report)

+86 10 8232 8866

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     x     No    ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). * Yes ¨ ¨ No ¨ *The registrant has not yet been phased into the interactive data requirements.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨  (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No x

As of May 6, 2011, there were 49,370,711 shares of common stock, par value $.001 per share, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4.	CONTROLS AND PROCEDURES	27
PART II. OTHER INFORMATION		28
ITEM 1.	LEGAL PROCEEDINGS	28
ITEM 1A.	RISK FACTORS	28
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4.	(REMOVED AND RESERVED)	28
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	29

ii

PART I.

Financial Information

ITEM 1. Financial Statements

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	Note	March 31, 2011		December 31, 2010
Current assets
Cash		$	44,553,149	$	41,913,469
Restricted cash			40,000		40,000
Accounts receivable, net of allowance for doubtful accounts	3		26,940,846		26,110,813
Inventories	4		75,457,724		65,878,047
Deposits to suppliers	5		12,642,327		10,906,295
Prepaid expenses			1,599,573		733,429
Other receivables			304,161		760,377
Deferred tax assets, net	15		226,958		158,675
Total Current Assets			161,764,738		146,501,105
Property, plant and equipment, net	6		21,977,275		21,547,152
Intangible asset, net	7		23,084,681		23,598,739
Land use right, net	8		4,228,310		4,218,006
Prepayment for mining project	9		34,420,207		34,151,063
Other assets	10		7,251,037		7,325,049
Goodwill			10,365,977		10,284,922
Total Assets		$	263,092,225	$	247,626,036
Current liabilities
Long-term loans and payables - current portion	11	$	474,460	$	457,880
Accounts payable			7,462,481		6,127,606
Income tax payable			7,169,781		6,137,119
Advance from customers			653,611		60,841
Accrued expenses			3,688,491		3,024,235
Other payables	12		1,942,706		5,310,517
Derivative liabilities - fair value of warrants	13		706,116		1,036,268
Total Current Liabilities			22,097,646		22,154,466
Long-term loans and payables	11		447,959		383,285
Total Liabilities			22,545,605		22,537,751
Equity
Common stock: par value $.001; 75,000,000 shares authorized; 48,187,044 shares issued and outstanding at March 31, 2011 and December 31, 2010			48,187		48,187
Additional paid-in capital			149,179,573		144,599,839
Retained earnings			72,309,799		63,943,371
Accumulated other comprehensive income			8,370,567		6,623,806
Total equity attributable to Yongye International, Inc.			229,908,126		215,215,203
Noncontrolling interest			10,638,494		9,873,082
Total Equity			240,546,620		225,088,285
Commitments	17
Total Liabilities and Equity		$	263,092,225	$	247,626,036

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

 YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

		For the Three Months Ended
	Note	March 31, 2011			March 31, 2010
Sales		$	50,221,211		$	24,934,716
Cost of sales			22,921,284			11,077,957
Gross profit			27,299,927			13,856,759
Selling expenses			7,681,320			6,288,003
Research and development expenses			1,052,980			100,565
General and administrative expenses			7,278,305			1,851,254
Income from operations			11,287,322			5,616,937
Other income/(expenses)
Interest expense			(18,111	)		(30,283	)
Interest income			10,304			22,825
Other income/(expense), net			75,059			(48,783	)
Change in fair value of derivative liabilities	13		330,152			12,534
Total other income/(expenses), net			397,404			(43,707	)
Earnings before income tax expense			11,684,726			5,573,230
Income tax expense	15		2,632,792			944,488
Net income			9,051,934			4,628,742
Less: Net income attributable to the noncontrolling interest			685,506			257,449
Net income attributable to Yongye International, Inc.		$	8,366,428		$	4,371,293
Earnings per share:
Basic	19	$	0.17		$	0.10
Diluted	19	$	0.16		$	0.10
Weighted average shares used in computation:
Basic	19		48,187,044			44,532,241
Diluted	19		49,118,714			44,696,427

The accompanying notes are an integral part of these unaudited consolidated financial statements. 

4

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2011

		Common Stock										Equity
										Accumulated		attributable to
		Shares of		Common		Additional				Other		Yongye
		Common		Stock		Paid-in		Retained		Comprehensive		International,		Noncontrolling		Total
	Note	Stock		Amount		Capital		Earnings		Income		Inc.		Interest		Equity
Balance as of January 1, 2011			48,187,044	$	48,187	$	144,599,839		63,943,371		6,623,806		215,215,203		9,873,082		225,088,285
Net income			-		-		-		8,366,428		-		8,366,428		685,506		9,051,934
Foreign currency exchange translation adjustment, net of nil income taxes			-		-		-		-		1,746,761		1,746,761		79,906		1,826,667
Comprehensive income													10,113,189		765,412		10,878,601
Stock compensation to management and independent directors	13		-		-		4,579,734		-		-		4,579,734		-		4,579,734
Balance as of March 31, 2011			48,187,044	$	48,187	$	149,179,573		72,309,799		8,370,567		229,908,126		10,638,494		240,546,620

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended
	March 31, 2011			March 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	9,051,934		$	4,628,742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,554,540			357,170
Change in fair value of derivative liabilities		(330,152	)		(12,534	)
Stock compensation expense		4,579,734			-
Deferred tax assets benefit		(66,826	)		-
Changes in operating assets and liabilities:
Accounts receivable		(622,328	)		(2,611,556	)
Inventories		(9,032,544	)		(4,134,389	)
Deposit to suppliers		(1,633,926	)		132,734
Prepaid expenses		(857,985	)		(230,217	)
Other receivables		460,782			60,371
Other assets		(110,491	)		(2,563,580	)
Accounts payable		1,282,613			3,688,858
Income tax payable		981,259			818,179
Advance from customers		590,464			2,149
Accrued expenses		662,972			415,120
Other payables		90,616			(38,885	)
Net Cash Provided by Operating Activities		6,600,662			512,162
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for intangible asset		(3,000,000	)		-
Prepayment for mining project		-			(20,019,368	)
Proceeds from sale of property, plant and equipment		-			92,629
Purchase of property, plant and equipment		(1,115,376	)		(1,068,030	)
Net Cash Used in Investing Activities		(4,115,376	)		(20,994,769	)

The accompanying notes are an integral part of these unaudited consolidated financial statements

6

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	For the the Three Months Ended
	March 31, 2011			March 31, 2010
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		-			400,280
Repayment of long-term loans and payables		(139,071	)		(81,665	)
Repayment of short term loans		-			(2,925,675	)
Proceeds from common stock and warrants issued and warrants exercised		-			8,550,000
Net Cash (Used in)/Provided by Financing Activities		(139,071	)		5,942,940
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH		293,465			10,652
NET INCREASE /(DECREASE) IN CASH		2,639,680			(14,529,015	)
Cash and cash equivalent at beginning of period		41,913,469			65,518,181
Cash and cash equivalent at end of period	$	44,553,149		$	50,989,166
Supplemental cash flow information:
Cash paid for income taxes		1,718,358			126,310
Cash paid for interest expense		18,111			34,962
Noncash investing and financing activities:

During the three months ended March 31, 2011 and March 31, 2010, the Company acquired certain other assets of $213,467 and $400,280 by assuming long-term loans.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011 AND 2010

NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS

Yongye International, Inc. (the “Company”) was incorporated in the State of Nevada on December 12, 2006. On April 17, 2008, the Company and the Company’s principal shareholder entered into a share exchange agreement (the “Exchange Agreement”) with Fullmax Pacific Limited (“Fullmax”), a privately held investment holding company organized on May 23, 2007 under the laws of the British Virgin Islands and all the shareholders of Fullmax (the “Fullmax Shareholders”). Pursuant to the terms of the Exchange Agreement, the Fullmax Shareholders transferred to the Company all of their shares in exchange for 11,444,755 shares of the Company’s common shares (the “Share Exchange”). As a result of the Share Exchange, Fullmax became a wholly-owned subsidiary of the Company and the Fullmax Shareholders received approximately 84.7% of the Company’s issued and outstanding common shares. Immediately prior to the date of the Share Exchange, the Company was a publicly listed shell entity with no operations and a nominal amount of cash and, Fullmax, through its wholly-owned subsidiary, Asia Standard Oil Limited (“ASO”) and indirect subsidiary, Yongye Nongfeng Biotechnology Co., Ltd. (“Yongye Nongfeng”), was engaged in the sale of fulvic acid based liquid and powder nutrient compounds. The Share Exchange was accounted for as a reverse recapitalization, equivalent to the issuance of stock by Fullmax for the net monetary assets of the Company accompanied by a recapitalization.

In November 2007, ASO entered into a Sino-Foreign cooperative joint venture contract with Inner Mongolia Yongye Biotechnology Co., Ltd. (“Inner Mongolia Yongye”) to form Yongye Nongfeng, pursuant to which, Inner Mongolia Yongye and ASO were to own 10% and 90% of the equity interests in Yongye Nongfeng, respectively. Inner Mongolia Yongye was formed on September 16, 2003 in the People’s Republic of China (the “PRC”). Mr. Zishen Wu, Chief Executive Officer, President and Chairman of the Company, owns a controlling equity interest in Inner Mongolia Yongye.

On January 4, 2008, the incorporation and establishment of Yongye Nongfeng was approved by the Inner Mongolia Department of Commerce and the Inner Mongolia Administration for Industry and Commerce. The scope of business of Yongye Nongfeng is the research and development, manufacturing, distribution and sale of fulvic acid based liquid and powder nutrient compounds used in the agriculture industry. The period of the cooperative joint venture is ten years and may be extended by a written application submitted to the relevant government authority for approval no less than six months prior to the expiration of the cooperative joint venture. Prior to the legal establishment of Yongye Nongfeng, both Fullmax and ASO were non-substantive holding companies with no assets and operations and were primarily designed and used as legal vehicles to facilitate foreign participation in the business conducted by Inner Mongolia Yongye.

In connection with the September Offering (See Note 13), the Company entered into agreements to acquire the productive assets of Shengmingsu manufacturing business from Inner Mongolia Yongye (the “Acquisition”). In October, 2009, the Company completed the Acquisition. The consideration paid for the Acquisition consisted of cash of $4.7 million and 4.5% equity interests in Yongye Nongfeng. After the Acquisition, Inner Mongolia Yongye and ASO became 5% and 95% equity interest owner of Yongye Nongfeng, respectively.

On July 20, 2010, Yongye Nongfeng set up a wholly-owned subsidiary, Inner Mongolia Yongye Fumin Biotechnology Co., Ltd. (“Yongye Fumin”), with registered capital of $14,731,880 (equivalent to RMB 100 million). Yongye Fumin is to be engaged in the manufacturing and sale of fulvic acid based liquid and powder nutrient compounds. Yongye Fumin was established to expand the production capacity for fulvic acid based liquid and powder nutrient compounds, and to produce humic acid using lignite coal (See Note 9). The construction of the production plant of Yongye Fumin, which is located in Wuchuan County, was completed in the fourth quarter of 2010.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The December 31, 2010 consolidated balance sheet was derived from the audited consolidated financial statements of the Company. The accompanying unaudited consolidated financial statements should be read in conjunction with the December 31, 2010 audited consolidated financial statements of the Company included in the Company’s annual report on Form 10-K for the year ended December 31, 2010.

8

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of March 31, 2011, and the results of operations and cash flows for the three months ended March 31, 2011 and 2010, have been made. 

The Company’s business is subject to seasonal variations; thus, the results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results for the full fiscal year ending December 31, 2011. Generally, the second and third quarters are peak sales periods, and first and fourth quarters are low sales periods for the Company.

All significant intercompany transactions and balances are eliminated on consolidation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (EITF Issue No. 08-1, “Revenue Arrangements with Multiple Deliverables”). ASU 2009-13 amends FASB ASC Subtopic 605-25 to eliminate the requirement that all undelivered elements have vendor specific objective evidence of selling price (“VSOE”) or third party evidence of selling price (“TPE”) before an entity can recognize the portion of an overall arrangement fee that is attributable to items that already have been delivered. In the absence of VSOE or TPE for one or more delivered or undelivered elements in a multiple-element arrangement, entities will be required to estimate the selling prices of those elements. The overall arrangement fee will be allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on the entity’s estimated selling price. Application of the “residual method” of allocating an overall arrangement fee between delivered and undelivered elements will no longer be permitted upon adoption of ASU 2009-13. Additionally, the new guidance will require entities to disclose more information about their multiple-element revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of ASU No. 2009-13 did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Update (“ASU”) No. 2010-13 was issued in April 2010, and clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. The adoption of ASU No. 2010-13 did not have a material impact on the Company’s consolidated financial statements.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable at March 31, 2011 and December 31, 2010 consisted of the following:

	March 31, 2011		December 31, 2010
Accounts receivable	$	26,940,846	$	26,110,813
Less: allowance for doubtful accounts		-		-
Total	$	26,940,846	$	26,110,813

No provision for allowance for doubtful accounts was recorded as of March 31, 2011 and December 31, 2010 as management believes no accounts are uncollectible as of March 31, 2011 and December 31, 2010. There were no write-off of accounts receivable for the three months ended March 31, 2011 and December 31, 2010.

The Company provides credit terms of up to six months to customers with well-established trading records.

9

NOTE 4 – INVENTORIES

Inventories at March 31, 2011 and December 31, 2010 consisted of the following:

	March 31, 2011		December 31, 2010
Finished goods	$	60,922,728	$	50,435,480
Work in progress		13,865,635		14,683,295
Raw materials		476,020		641,051
Consumables and packing supplies		193,341		118,221
Total	$	75,457,724	$	65,878,047

NOTE 5 – DEPOSITS TO SUPPLIERS

In order to secure stock supplies of raw materials, including sodium humate and potassium humate, and packing materials, the Company makes deposits to certain suppliers. Pursuant to the purchase agreements signed with these suppliers, as of March 31, 2011, the Company paid a certain amounts as deposits. The related raw materials are expected to be delivered to the Company before the end of June 2011. As of March 31, 2011 and December 31, 2010, the deposits to suppliers for raw materials amounted to $12,456,052 and $10,845,221, respectively, and deposits to different service providers of $186,275 and $61,074, respectively.

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at March 31, 2011 and December 31, 2010 consisted of the following:

	March 31, 2011		December 31, 2010
Buildings	$	13,685,020	$	13,168,830
Machinery and equipment		6,663,624		6,567,721
Office equipment and furniture		468,888		484,468
Vehicles		2,126,706		2,110,077
Software		19,296		19,146
Leasehold improvements		875,213		754,085
Construction in progress		87,645		-
		23,926,392		23,104,327
Less: Accumulated depreciation and amortization		1,949,117		1,557,175
Property, plant and equipment, net	$	21,977,275	$	21,547,152

Depreciation and amortization expense related to property, plant and equipment for the three months ended March 31, 2011 and 2010 was $379,670 and $165,813, respectively. 

As of March 31, 2011 and December 31, 2010, vehicles with initial carrying amount of $1,257,407 were pledged as security for the long-term banks loans of $241,960 and $315,426, respectively, provided by the banks for the purchase of the vehicles (See Note 11).

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NOTE 7 – INTANGIBLE ASSET

Intangible asset at March 31, 2011 and December 31, 2010 consisted of the following:

	March 31, 2011
	Weighted
	average	Gross					Net
	amortization	carrying		Accumulated			carrying
	period	amount		amortization			amount
Amortizing intangible assets:
Customer List	9 years	$	25,101,689		(2,091,807	)		23,009,882
Patent	10 years		110,814		(36,015	)		74,799
Total		$	25,212,503		(2,127,822	)		23,084,681

	December 31, 2010
	Weighted
	average	Gross					Net
	amortization	carrying		Accumulated			carrying
	period	amount		amortization			amount
Amortizing intangible assets:
Customer List	9 years	$	24,905,410		(1,383,634	)		23,521,776
Patent	10 years		109,947		(32,984	)		76,963
Total		$	25,015,357		(1,416,618	)		23,598,739

Amortization expense for the three months ended March 31, 2011 and 2010 was $697,880 and $2,659, respectively. The estimated annual amortization expense for intangible asset in each of the next five years is $2,800,158.

On July 1, 2010, Yongye Nongfeng entered into an agreement with its provincial level distributor in Hebei Province, the PRC (“Seller”) to purchase the customer list, including the customer relationships, from Seller (“Customer List”). The acquisition of the Customer List allows Yongye Nongfeng to sell its products to sub-provincial level or regional distributors in Hebei Province directly. The consideration of the Customer List was 3,600,000 shares of common stock of the Company which was issued in July 2010 and $3 million cash. The $3 million cash consideration was paid in March 2011. The Customer List is amortized over a period of 9 years on a straight line basis. A straight-line method of amortization has been adopted as the pattern in which the economic benefits of the Customer List are used up cannot be reliably determined.

NOTE 8 – LAND USE RIGHT

As of March 31, 2011 and December 31, 2010, land use right represented:

	March 31, 2011		December 31, 2010
Land use right	$	4,365,940	$	4,331,801
Less: Accumulated amortization		137,630		113,795
Total	$	4,228,310	$	4,218,006

NOTE 9 - PREPAYMENT FOR MINING PROJECT

On March 1, 2010, Yongye Nongfeng entered into an agreement with its major humic acid supplier, Wuchuan Shuntong Humic Acid Company Ltd. (“Vendor”), to acquire the permit for the rights to explore, develop and produce lignite coal resources (the “Mineral Right”) in a certain area of Wuchuan County. The cash consideration of the permit is approximately RMB 240 million or USD $35 million. The permit allows Yongye Nongfeng to complete all necessary administrative procedures and obtaining government approvals to acquire the Mineral Right. This includes the preparation of and obtaining government approvals of the Conservation Assessment Reports, Environment Report, Safety Assessment Report, Geologic Report, Exploration License and Geologic Exploration Report. Pursuant to the agreement, Vendor is to assist Yongye Nongfeng in completing all necessary administrative procedures and obtaining government approvals.

11

As of March 31, 2011, the Company has not obtained the government approvals of the Geologic Report, Exploration License and Geologic Exploration Report. The Company believes the cost to be incurred in completing the remaining administrative procedures and government approvals are not significant, and it will obtain the Mineral Right in the year ending December 31, 2011. The Company believes the acquisition of the Mineral Right will allow it to secure a long term supply of humic acid, which is a major raw material used in the manufacture of fulvic acid based liquid and powder nutrient compounds, and which is sourced from lignite coals. 

NOTE 10 – OTHER ASSETS

The Company has entered into agreements with certain distributors, including sub-distributors  pursuant to which the Company provided the distributor a free vehicle in exchange for the distributor agreeing to comply with certain sale conditions during the term of the agreement of five years.  The sales conditions included (1) meeting the annual sales target set by the Company; (2) not selling the products at a price lower than the price stipulated by the Company; and (3) selling the products only in Company’s approved territories.  To the extent the distributor fails any one of these conditions during the term of the agreement, the Company has the right to have the vehicles return back to the Company.

The cost of these vehicles has been recorded as “Other asset” which is expensed over a five-year period.

NOTE 11 – LONG-TERM LOANS AND PAYABLES

As of March 31, 2011 and December 31, 2010, the long-term loans consisted of the following:

	March 31, 2011		December 31, 2010
Vehicle loans-employees	$	241,960	$	315,426
Vehicle loans-distributors		680,459		525,739
Total	$	922,419	$	841,165

As of March 31, 2011 and December 31, 2010, vehicle-employees loans of $241,960 and $315,426, respectively, were secured by twenty-five vehicles with initial carrying amount of $1,257,407. The vehicle loans are payable in monthly installments over three to five years. Interest rates on the loans range from 5.40% to 14.54% annually, and are subject to the change of the base interest rate prescribed by People’s Bank of China. The vehicle loans were obtained by individual employees of the Company after the Company made the initial down payment of the purchase price of the vehicles. The Company and the individual employees entered into trust agreements that stipulate that (i) the vehicles are legally registered under the individuals’ name, (ii) the Company has the rights of official use, (iii) the Company has the rights to the legal title of the vehicles at all times which entitles the Company to change the registered owner to the Company or appropriated third party at any time, (iv) the Company assumes the risk of loss, damage, penalty and other obligations related to the operation and ownership of the vehicle to the extent that these were not caused by the individuals’ improper use of the vehicle, (v) the individuals have no right to sell, lease, lend or pledge the vehicles to any other person or entity, and (vi) the Company is obligated to repay the loans in full, and assumes the related repairs, maintenance, insurance and taxes. Consequently, the Company has recognized the cost of the vehicles as assets and the loans as liabilities in its consolidated balance sheet.

Vehicle loans-distributors represented loans that were initially obtained by the distributors from banks and financial institutions. The Company and the distributors entered into agreements, pursuant to which the Company would assume the full repayment of the loans on behalf of these distributors in exchange for the distributors agreeing to comply with certain sales conditions (See Note 10). The loans have two or three years terms and are payable in monthly installments. Interest rates on the loans range from 5.40% to 15.49% annually, subject to the change of the base interest rate prescribed by People’s Bank of China.

The aggregate maturities of the long-term loans and payables for each of the five years subsequent to March 31, 2011 are: $474,460, $323,413, $110,750, $13,796, and $0, respectively.

NOTE 12- OTHER PAYABLES

Other payable as of March 31, 2011 mainly represented payables of $1,417,142 for the construction of the production plant in Yongye Fumin. Other payables as of December 31, 2010 mainly represented cash consideration payable of approximate $3 million for the acquisition of Customer List (See Note 7), and payables of $1,852,473 for the construction of the production plant in Yongye Fumin.

NOTE 13- CAPITAL STOCK

Capital stock

Concurrent with the Share Exchange, the Company entered into a securities purchase agreement on April 17, 2008 with certain investors (the “April Investors”) for the sale in a private placement of an aggregate of 6,495,619 shares of the Company’s common stock, par value $0.001 per share (the “April Investor Shares”) and 1,623,905 warrants (See below) for aggregate gross proceeds equal to $10,000,651 (the “April Offering”).

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On September 5, 2008, the Company entered into a securities purchase agreement with certain investors (the “September Investors”), for the sale in a private placement of an aggregate of 6,073,006 shares of the Company’s common stock, par value $0.001 per share (the “September Investor Shares”) and 1,518,253 warrants (See below) for aggregate gross proceeds equal to approximately $9,350,000 (the “September Offering”).

On May 8, 2009, the Company entered into a securities purchase agreement with certain investors (the “May Investors”), for the sale in a private placement of an aggregate of 5,834,083 shares of the Company’s common stock, par value $0.001 per share (the “May Shares”) for aggregate gross proceeds equal to $8,984,595 (the “May Offering”).

On December 17, 2009, the Company entered into an underwriting agreement with Roth Capital Partners, LLC (“Roth”) and Oppenheimer and Company Inc. (the “Underwriters”), pursuant to which the Company agreed to issue and sell 8,000,000 shares of common stock (the “Firm Stock”), par value $0.001 per share, to the Underwriters at a price per share of $7.50 (the ”December Offering”). The sale of the Firm Stock was priced on December 17, 2009 and closed on December 22, 2009. The aggregate proceeds from the offering were $60,000,000. Underwriting discounts and commissions and offering expenses were $3,692,000 and were recorded as a reduction of additional paid-in capital.

The Company also granted the Underwriters an option to purchase up to an additional 1,200,000 shares to cover over-allotments, if any, at the same price as the Firm Stock. On December 31, 2009 the Underwriters agreed to purchase the over-allotment for gross proceeds of $9,000,000, which after net of commissions and discounts of $450,000 was received on January 4, 2010.

In connection with the acquisition of Customer List (See note 7), the Company issued 3,600,000 shares of common stock of the Company in July 2010 to the Seller as part of the consideration.

In October 2010, the Company granted 1,183,667 restricted shares to management and independent directors of the Company in accordance with Yongye International, Inc. 2010 Omnibus Securities and Incentive Plan, as an incentive to such individuals to promote the success of the Company’s business. The restricted shares are scheduled to vest in April 2011. Management was granted 1,137,000 shares on October 8, 2010, and the independent directors were granted 46,667 shares on October 15, 2010 (see below). As of March 31, 2011, the shares have not yet vested.

Warrants

Concurrent with the April Investor Shares, the Company issued 1,623,905 warrants to purchase 1,623,905 shares of the Company’s common stock (the “April Warrants”) to the April Investors as an inducement to the April Offering. The warrants issued have a five-year exercise period with an initial exercise price of $1.848. In addition, 649,562 warrants were issued to Roth as the placement agent with terms and exercise price identical to the warrants issued to the April Investors.

Concurrent with the September Investor Shares, the Company issued 1,518,253 warrants to purchase 1,518,253 shares of the Company’s common stock (the “September Warrants”) to the September Investors as an inducement to the September Offering. The warrants issued have a five-year exercise period with an initial exercise price of $1.848. In addition, 607,301 warrants were issued to Roth as the placement agent with terms and exercise price identical to the warrants issued to the September Investors.

On September 12, 2008, Roth executed an irrevocable cashless exercise of its warrants and was issued 686,878 shares of common stock of the Company. In exchange for the issuance of 354,987 shares, Roth surrendered 649,562 warrants received in the April Offering; and in exchange for the issuance of 331,891 shares, Roth surrendered 607,301 warrants received in the September Offering.

Concurrent with the offering of the “May Shares”, the Company issued to Roth as the placement agent, 246,224 warrants (“May Warrants”).  The warrants have a five-year exercise period and an initial exercise price of $1.848. On November 9, 2009, Roth executed an irrevocable cashless exercise of all the “May Warrants”. The Company issued 198,247 shares of common stock of the Company in exchange for the surrender of all the May Warrants.

During the three months ended March 31, 2011, no “April Warrants” and “September Warrants” were exercised by April Investors and September Investors.

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According to the terms of these warrants, the Company could be required to pay cash to the warrant holders under certain events that are not within the control of the Company.  Specifically, upon the occurrence of certain “fundamental transactions” as defined, the warrant holders (but not the shareholders of the Company’s common stock) are entitled to receive cash equal to the value of the warrants to be determined based on an option pricing model and certain specified assumptions set forth in the warrant agreement.  In addition, the terms of the warrants include a “down-round” provision under which the exercise price could be affected by future equity offerings undertaken by the Company.  If the Company issues any common stock or common stock equivalents, as defined, at any time the warrants are outstanding, at an effective price less than the then warrant exercise price, the exercise price of warrants will be reduced to the effective price of newly issued common stock or common stock equivalents.  In the “May Offering”, the Company issued new common stock at a price of $1.54 per share and accordingly, the exercise price of the April Warrants and the September Warrants was reduced to $1.54 per share.  The exercise price of the May Warrants ($1.848) was not affected but is also subject to potential down-round adjustments in future periods. As of March 31, 2011 and December 31, 2010, there were 148,172 warrants outstanding, of which 48,714 and 99,458 warrants will expire if unexercised by April 2013 and September 2013, respectively.

The potential cash payments and the down-round provision preclude the classification of these warrants as equity. Accordingly, the warrants are accounted for as a liability and adjusted to fair value through earnings at each reporting date. The gain resulting from the decrease in fair value of warrants was $330,152 and $12,534 for the three months ended March 31, 2011 and 2010, respectively.

The estimated fair values of the warrants issued to April Investor and September Investor were determined at March 31, 2011 and December 31, 2010 using Binominal Option Pricing Model with Level 2 inputs. The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were measured at fair value on a recurring basis as of March 31, 2011 and December 31, 2010.

	Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Financial Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
March 31, 2011	Total		Level 1		Level 2		Level 3
Liabilities at fair value:
Derivative liabilities—warrants	$	706,116		-	$	706,116		-

	Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Financial Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2010	Total		Level 1		Level 2		Level 3
Liabilities at fair value:
Derivative liabilities—warrants	$	1,036,268		-	$	1,036,268		-

The fair values of the warrants are summarized as follows:

	April Warrants		September Warrants
Fair value of warrant per share (US$) at:
Date of issuance	$	1.07	$	2.08
December 31, 2010	$	6.97	$	7.00
March 31, 2011	$	4.74	$	4.78

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The fair values of the warrants outstanding as of March 31, 2011 and December 31, 2010 were determined based on the Binominal option pricing model, using the following key assumptions:

	March 31, 2011						December 31, 2010
	April Warrants			September Warrants			April Warrants			September Warrants
Expected volatility		70.9	%		68.6	%		67.5	%		67.0	%
Expected dividends yield		0	%		0	%		0	%		0	%
Time to maturity	2.1 years			2.4 years			2.3 years			2.7 years
Risk-free interest rate per annum		1.635	%		1.635	%		1.483	%		1.483	%
Fair value of underlying common shares (per share)	$	6.13		$	6.13		$	8.40		$	8.40

Stock-based compensation

Pursuant to the 2010 Omnibus Securities and Incentive Plan (the “Plan”), which was approved by the stockholders of the Company in the annual meeting held on June 11, 2010, the Company was authorized to issue up to 1,500,000 shares of the Company’s common stock in any calendar to the selected executives, key employees and directors. The purpose of the Plan is to provide incentives to such individuals to promote the success of the Company’s business.

In October 2010, the Company granted 1,183,667 restricted shares to management and independent directors of the Company in accordance with the Plan. The restricted shares are scheduled to vest in April 2011. Management was granted 1,137,000 shares on October 8, 2010, and the independent directors were granted 46,667 shares on October 15, 2010.

A summary of the status of the Company’s shares as of March 31, 2011, and changes during the three months ended March 31, 2011, is presented below:

			Weighted average
			grant-date
Restricted shares	Shares		fair value
Balance at January 1, 2011		1,183,667	$	9,261,239
Granted		-		-
Vested		-		-
Forfeited		-		-
Balance at March 31, 2011		1,183,667	$	9,261,239

At March 31, 2011, there was $370,866 of total unrecognized compensation cost related to unvested shares granted under the Plan. That cost is expected to be recognized over a weighted average period of approximately 1 month. The total stock-based compensation cost recognized in the statement of income for the three months ended March 31, 2011 was $4,579,734.

NOTE 14 – STATUTORY RESERVE

Yongye Nongfeng and Yongye Fumin are required to allocate at least 10% of its after tax profits as determined under generally accepted accounting principal in the PRC to a statutory surplus reserve until the reserve balance reaches 50% of its registered capital. For the three months ended March 31, 2011 and 2010, Yongye Nongfeng made appropriations to this statutory reserve of $1,391,060, and $514,899, respectively. The accumulated balance of the statutory reserve of Yongye Nongfeng as of March 31, 2011 and December 31, 2010 was $11,293,170 and $9,915,074, respectively. As Yongye Fumin incurred operating loss since its inception, no appropriation to statutory reserve was made.

In accordance with the PRC laws and regulations, Yongye Nongfeng is restricted in its ability to transfer a portion of its net assets to the Company in the form of dividends, which amounted to $10,728,512, representing the amount of accumulated balance of statutory reserve of Yongye Nongfeng attributable to the Company as of March 31, 2011.

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NOTE 15 – INCOME TAXES

Yongye Nongfeng, being a foreign investment enterprise located in the Western Region of the PRC, was entitled to a preferential income tax rate of 15% for the years ended December 31, 2009 and 2010. During the three months ended March 31, 2011, Yongye Nongfeng received a High-tech Enterprise Certificate which entitles it to a preferential tax rate of 15% for three years starting from January 1, 2010.

The Company’s effective income tax rate for the three months ended March 31, 2011 and 2010 were 22.53% and 16.95%, respectively. The effective income tax rate for the three months ended March 31, 2011 differs from the PRC statutory income tax rate of 25% primarily due to the effect of the abovementioned preferential tax treatment on Yongye Nongfeng’s High-tech Enterprise qualification which is partly offset by the effect of non-deductible expenses.

As of and for the three month ended March 31, 2011, there has been no change in unrecognized tax benefits since December 31, 2010. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months. No interest and penalties related to unrecognized tax benefits were recorded for the three month ended March 31, 2011 and 2010.

NOTE 16 – FAIR VALUE MEASUREMENTS

The fair values of the financial instruments as of March 31, 2011 and December 31, 2010 represent the estimated amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash, restricted cash, accounts receivable, other receivables, long-term loans and payables – current portion, accounts payable, accrued expenses and other payables: The carrying amounts approximate fair value because of the short maturity of these instruments.

Derivative liabilities: The method and assumptions used to estimate the fair value of derivative liabilities are set out in Note 13.

Long-term loans and payables: The fair value of the Company’s long-term loans is estimated by discounting future cash flows using current market interest rates offered to the Company and its subsidiaries for debts with substantially the same characteristics and maturities.

NOTE 17 – COMMITMENTS

The Company entered into an operating lease for an office space in Beijing, PRC for the period from January 1, 2011 to December 31, 2013. The lease expense for the Beijing office was $63,387 and $57,952 for the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, minimum lease payments for each of twelve months period ended March 31, 2012, 2013 and 2014 under non-cancellable operating lease agreement is $254,268, $254,268 and $190,881, respectively or an aggregated amount of $699,417. There is no minimum lease payment in the next fourth and fifth twelve months period.

NOTE 18 – RELATED PARTY TRANSACTIONS AND BALANCES

On January 4, 2011, the Company entered into an operating lease with Inner Mongolia Yongye for a research and development activity space in Beijing, PRC for the period from January 4, 2011 to December 31, 2011. The lease expense for the R&D space paid to Inner Mongolia Yongye was $39,410 for the three months ended March 31, 2011.

During the three months ended March 31, 2010, the Company disposed of and sold three vehicles with net book value of $135,191 and an apartment with net book value of $102,263 to Inner Mongolia Yongye. In addition, the long-term loans of $144,513 that were secured by these assets were assumed by Inner Mongolia Yongye. Upon disposal, no gain or loss was recorded and the Company received cash of $92,941.

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NOTE 19 - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted income per share for the periods indicated:

	For the Three Months Ended
	March 31, 2011			March 31, 2010
Numerator used in basic net income per share:
Net income attributable to Yongye International, Inc.	$	8,366,428		$	4,371,293
Change in fair value of derivative liabilities		(330,152	)		(12,534	)
Numerator used in diluted net income per share		8,036,276			4,358,759
Weighted average shares:
Basic		48,187,044			44,532,241
Effect of dilutive common share equivalents:
Warrants		116,565			164,186
Nonvested shares		815,105			-
Diluted		49,118,714			44,696,427
Net income per ordinary share-basic	$	0.17		$	0.10
Net income per ordinary share-diluted	$	0.16		$	0.10

NOTE 20 - CONCENTRATIONS AND CREDIT RISKS

At March 31, 2011 and December 31, 2010, the Company held cash in banks of approximately $44,413,993 and $41,593,469, respectively that is uninsured by the government authority. To limit exposure to credit risk relating to deposits, the Company primarily places cash deposits only with large financial institution in the PRC with acceptable credit rating.

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Five major customers accounted for 42% of the Company’s total revenue for the three months ended March 31, 2011. Five major customers accounted for 75% of the Company’s total revenue for the three months ended March 31, 2010. The Company’s total revenue to five major customers were $20,590,730 and $18,747,573 for the three months ended March 31, 2011 and 2010, respectively. In addition, all these major customers are distributors in the PRC agriculture industry.

For the three months ended March 31, 2011							For the three months ended March 31, 2010
Largest		Amount of		% Total			Largest		Amount of		% Total
Customers	Provinces	Sales		Sales			Customers	Provinces	Sales		Sales
Customer A	Shaanxi	$	6,633,499		13	%	Customer E	Guangdong; Jiangsu; Henan; Liaoning; Shanxi	$	5,209,290		21	%
Customer B	Shandong		4,341,341		9	%	Customer F	Hebei		4,398,671		18	%
Customer C	Liaoning; Heilongjiang; Jilin		3,397,733		7	%	Customer G	Hubei; Hunan		4,096,888		16	%
Customer D	Anhui		3,332,392		7	%	Customer B	Shandong		2,844,695		11	%
Customer E	Guangdong		2,885,765		6	%	Customer H	Inner Mongolia		2,198,029		9	%
Total		$	20,590,730		42	%	Total		$	18,747,573		75	%

Three major suppliers accounted for 91% ($27,772,275), of which one major supplier accounted for 40% ($12,254,615) of the Company’s inventory purchase for the three months ended March 31, 2011. Three major suppliers accounted for 88% ($15,563,940), of which one major supplier accounted for 79% ($13,975,816), of the Company’s inventory purchase for the three months ended March 31, 2010. If these suppliers terminate their supply relationship with the Company, the Company may be unable to purchase sufficient raw materials on acceptable terms which may adversely affect the Company’s results of operations.

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other things.

NOTE 21 – SUBSEQUENT EVENTS

In April 2011, Yongye Nongfeng obtained two short-term bank loans of RMB 52,500,000 (equivalent to $8,002,927) and RMB 47,500,000 (equivalent to $7,240,743) from China Everbright Bank. The loans bear fixed annual interest rate of 7.787% and 8.203%, respectively. These two short-term bank loans are guaranteed by the Company’s Chairman and are due on April 1, 2012 and April 18, 2012, respectively.

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ITEM 2. Management’s Discussion and Analysis of Operations and Financial Conditions.

The following discussion of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto. Except as otherwise indicated or as the context may otherwise require, all references to “we”, “the Company”, “us” and “our” refer to Yongye International, Inc. (formerly known as Yongye Biotechnology International, Inc.) and its consolidated subsidiaries. The following discussion contains forward-looking statements. The words or phrases “would be,” “will allow,” “expect to”, “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” or similar expressions are intended to identify forward-looking statements. Such statements include those concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether we are able to manage our planned growth efficiently and operate profitable operations, including whether our management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations; and (d) whether we are able to successfully fulfill our primary requirements for cash which are explained below under “Liquidity and Capital Resources”. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

Company Overview

In April 2008, we entered into a share exchange transaction (the “Share Exchange”) prior to which we were a public “shell” company with nominal assets.  Following the Share Exchange, we changed our name to Yongye International, Inc. and through our Cooperative Joint Venture subsidiary, Yongye Nongfeng Biotechnology Co. Ltd. (“Yongye Nongfeng”), are engaged in the research and development, manufacturing, distribution and sale of liquid and powder nutrient products for plants and animals respectively which are used in the agriculture industry. Our headquarters is in Beijing, China and additional administrative offices and our manufacturing unit are located in Hohhot, Inner Mongolia, China. Currently, we sell two lines of organic nutrient products, both based on our fulvic acid compound base: a plant nutrition liquid compound and animal nutrition powder which is a feed additive. Our products start with our proprietary fulvic acid base which is extracted from humic acid, and to which we add other natural substances to customize the base for use in our plant and animal product lines. Based on our internal data and research, we believe our proprietary technology for fulvic acid extraction creates some of the purest and most effective fulvic acid base on the market in China today. We believe that our fulvic acid has a very light weight molecular composition, which may improve the overall permeability of cell walls and allow more complete transport of nutrients across plant membranes, effectively strengthening the overall health of plants. We believe our proprietary process for extracting fulvic acid from humic acid and our patented process for mixing our plant nutrient and animal nutrient are key differentiators in the market. We believe this will help us ensure that we have a high quality product that we can control from procurement of raw materials to final production. We believe this also ensures our products provide reliable results from season to season.

Our products start with our fulvic acid base then, in addition, we add other natural substances to customize the base for use in our plant or animal lines of products. Our plant products are intended to add naturally occurring macro and micro nutrients such as nitrogen, phosphorus, potassium, boron and zinc. Our animal product adds natural herbs which we believe may help to reduce bacterial inflammation (mastitis) in cows. It also assists many animals to digest food more completely and thus we believe that our animal products may help animals who use them to be healthier.

In the first quarter of 2011, we sold approximately 4,353 tons of plant product, which represented 98% of revenue at $49.3 million. We also sold approximately 157 tons of our animal products. This represented 2% of revenue at $1.0 million.

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Recent Developments

In April 2011, Yongye Nongfeng obtained two short-term bank loans of RMB 52,500,000 (equivalent to $8,002,927) and of RMB 47,500,000 (equivalent to $7,240,743) from China Everbright Bank. The loans bear the fixed annual interest rate of 7.787% and 8.203%, respectively. These two short-term bank loans are guaranteed by the Company’s Chairman and are due on April 1, 2012 and April 18, 2012.

Factors affecting our operating results

Demand for our products

According to the Asian Development Bank statistics, well over 60% of the nation’s 1.3 billion total population is comprised of low-income, rural farmers. According to the 11th Five-Year NESDP (2006-2010), raising the level of rural income is a top economic and social goal for the country. Many government initiatives, including removal of certain agricultural and local product taxes, have been implemented to spur rural income development. The government expects annual rural income to grow between 5% and 10% through 2010 (Xinhua, October 12, 2008). Additionally, according to the National Population and Family Planning Commission, China's population will reach 1.5 billion by 2030. Therefore, the country has the challenge of producing approximately 100 million more tons of crops needed to feed the additional 200 million people. This put pressure on the agricultural system to increase production capacity.

According to the Proposal of the PRC government’s 12th Five-Year National Economic and Social Plan (2011-2015), the party shall adhere to agriculture, rural areas and farmers’ development and insist on supporting the countryside. Improving the agriculture comprehensive production capacity, quicken the construction of large-scale drought-high farmland, and development of high-yield, high-quality and high-efficiency agriculture shall be the party’s focus work in agriculture. Given our products’ ability to increase crop yield, improve quality and enhance drought-resistance, we expect accelerated utilization of fertilizers generally and this government policy will increase demand for our products.

One major tenet of the PRC government’s 11th Five-Year National Economic and Social Plan (the “NESDP”) (2006-2010) is the focus towards developing China’s western region. This is one of the top-five economic priorities of the nation. The goal is to increase rural income growth which will in turn increase demand for more food and agriculture products. Currently, a large proportion of our products are sold in this western region and this government focus will increase our opportunity to sell more plant and animal nutrients to farmers who have to keep up with the demand for higher quantity and higher quality of products.

Supply of Finished Goods

Before June 1, 2009, we purchased our finished goods from our main supplier, Inner Mongolia Yongye and then sold them through our distribution system. Upon obtaining the fertilizer license on June 1, 2009, we commenced the manufacturing of our product.

Seasonality

Our Shengmingsu products face seasonality in our sector. In general, the first and fourth quarters are typically our slowest quarters. 12% and 13% of our total sales for the year 2010 were from these quarters, respectively. The second and third quarters drove the bulk of our overall sales in 2010 with 42% and 33%, respectively, of the total 2010 year’s sales.

Agriculture Sector

Agriculture continues to be a heavily invested sector in China. Brand name investors continue to invest into China’s agriculture space because they have confidence in China’s long term outlook. The market volume for agriculture products is large, both for domestic sales and export. This is driven by the growing demand for higher quality food products domestically and international reliance on food products from China. Currently, China is the world’s biggest grower and consumer of grains and yet must boost crop yields by at least 1 percent a year to ensure the country has enough food to feed its 1.3 billion people, according to the former Minister of Agriculture, Sun Zhengcai (China Economic Net, July 21, 2008). Additional policy changes are expected to include protecting farmland and working to increase rural incomes to retain farming interest.

The goal is to maintain self-sufficiency in food production because no other country can feed the world’s biggest population, according to Sun Zhengcai. “Our strategy must be based on stable farmland, and seeking ways to improve yields,” Sun said in a speech to local officials, outlining the government’s near- and long-term agriculture policy and objectives. China, which harvested more summer crops, aims also to boost grain and oilseed output this year, Sun said. To ensure next year’s crops, officials must “stabilize” area planted in winter wheat and use idle land in the off season to grow rapeseed, Sun said.

This growth, however, does not come without challenges and China has faced many of these with regards to the continued concern over the quality of milk and eggs sold both domestically and internationally in the dairy industry. We believe that the government is making every effort to bring back consumer confidence in these domestically produced products and overall this will bring about an even stronger industry once planned new licensing and safety procedures have been put into place.

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New Land Reform Policy

Farmland in China is owned by the local government, but given to local farmers under 30 year use contracts. With the allure of higher incomes and better living conditions in the city, in some places, farmers have abandoned the land and no others farmers have stepped in to bring it back into production. This has created a shortage of productive agricultural land. The government has acknowledged this issue and recently enacted a new land use reform policy which liberalizes the exchange of land among the nation’s farmers. This creates a new model for China’s 730 million farmers with the idea being to create more stable farmland by shifting the country away from the single household farm plot model to the amalgamation of larger-scale operations which should be more productive due to technology and economies of scale. Farmers will be able to transfer their land-use rights to others through a new market system for rural land-use rights. Chinese authorities commented that, without modernizing agriculture, China cannot modernize; without stability and prosperity in rural areas, China cannot have stability and prosperity. These changes are enacted to “ensure national food security and the supply of major agricultural products, and promote increases in agricultural production, farm incomes and rural prosperity.” (China’s Ongoing Agriculture Modernization, USDA, April 2009).

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RESULTS OF OPERATIONS

	For the Three Months Ended
	March 31, 2011			March 31, 2010
Sales	$	50,221,211		$	24,934,716
Cost of sales		22,921,284			11,077,957
Gross profit		27,299,927			13,856,759
Selling expenses		7,681,320			6,288,003
Research and development expenses		1,052,980			100,565
General and administrative expenses		7,278,305			1,851,254
Income from operations		11,287,322			5,616,937
Other income/(expenses)
Interest expense		(18,111	)		(30,283	)
Interest income		10,304			22,825
Other income/(expenses), net		75,059			(48,783	)
Decrease in fair value of derivative liabilities		330,152			12,534
Total other income/(expenses), net		397,404			(43,707	)
Earnings before income tax expense		11,684,726			5,573,230
Income tax expense		2,632,792			944,488
Net income		9,051,934			4,628,742
Less: Net income attributable to the noncontrolling interest		685,506			257,449
Net income attributable to Yongye International, Inc.	$	8,366,428		$	4,371,293
Earnings per share:
Basic	$	0.17		$	0.10
Diluted	$	0.16		$	0.10
Weighted average shares used in computation:
Basic		48,187,044			44,532,241
Diluted		49,118,714			44,696,427

22

THREE MONTHS ENDED MARCH 31, 2011 COMPARED WITH THREE MONTHS ENDED

MARCH 31, 2010

Net Sales

Sales of $50,221,211 in the first quarter of 2011 was an increase of $25,286,495 from $24,934,716 in the same period of 2010, which was an overall increase of 101%.

This increase was driven by higher demand throughout our market area, including an increase in the number of branded stores developed by our distributors, and the growth of several new markets, which resulted in almost all of such growth being due to an increase in the quantity of product sold while our prices remained relatively stable.

Gross profit in the first quarter of 2011 increased by 97%, from $13,856,759 to $27,299,927, or $13,443,168, over the period ended March 31, 2010.

Gross margin decreased between the two periods from 55.6% to 54.4%, or an overall 1.2% decrease in margin. The decrease in gross margin was mainly due to higher amortization expenses relating to the vehicles provided to distributors.

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2011 was $22,921,284 which is 45.6% of revenues. This is an increase of $11,843,327 over the previous period of $11,077,957 and represents an 107% increase overall. As a percent of revenue, this represented an increase of 1.2% when compared with the corresponding period in 2010, which was 44.4%. The increase in cost of goods sold as a percentage of revenue for the first quarter of 2011 was mainly due to the amortization expenses relating to vehicle provided to distributors as discussed above.

Sales by Product Line

In the three months ended March 31, 2011, we sold approximately 4,353 tons of plant product, which represented 98% of our total revenue or $49,267,857. We also sold approximately 157 tons of our animal product. This represented 2% of our total revenue or $953,354. The revenue of our plant product increased to $49,267,857 from $22,470,151 or 119% in the three months ended March 31, 2011 as compared to the same period in 2010 and the revenue of our animal product decreased to $953,354 from $2,464,565 or 61%, in the three months ended March 31, 2011 compared to the same period in 2010.

Selling, General and Administrative Expenses

Selling expenses increased by $1,393,317 to $7,681,320 in the three months ended March 31, 2011 from $6,288,003 in the corresponding period in 2010. As a percentage of sales for the three months ended March 31, 2011, selling expenses decreased by 10% to 15% as compared to 25% of sales in the three months ended March 31, 2010. The increase in amount was due to an increase of $2,475,397 in advertising expenses mainly resulting from more promotional activities in the first quarter of 2011, as we entered into more geographic markets. In addition, there was a decrease in travelling and office expenses of $823,502 as a result of more efficient expenses management in this quarter.

General & administrative expenses increased by $5,427,051 to $7,278,305 in the three months ended March 31, 2011 from $1,851,254 in the corresponding period in 2010. As a percentage of sales for the three months ended March 31, 2011, general & administrative expenses increased by 7% to 14% as compared to 7% of sales in the three months ended March 31, 2010, mainly due to an increase of $4,579,734 in management compensation expenses resulted from the grant to management of restricted stocks in October 2010, as well as an increase in meeting expenses of $511,684.

23

Research and Development

We incurred $1,052,980 of research and development expenses in the three months ended March 31, 2011 as compared to $100,565 in the three months ended March 31, 2010. The Research and Development (“R&D”) expenses consist of expenses related to new products and conducting various field tests in the Company’s new sales territories, while we expanded our geographic coverage to several new provinces from the last half year of 2010. This increase in expenses is mainly the result of more field test areas for different product to both our plant and animal products in the three months ended March 31, 2011 compared to the same period in 2010.

Loss/gain on change in fair value of warrants

The warrants issued in our private financings in 2008 and 2009 are accounted for as derivative liabilities and measured at fair value at each reporting date. The decrease in fair value during the three months ended March 31, 2011 resulted in a gain of $330,152. The decrease in fair value of the warrants was primarily due to the decrease in our stock price from $8.40 per share at December 31, 2010 to $6.13 at March 31, 2011. The change in fair value of the warrants for the three months ended March 31, 2010 resulted in a gain of $12,534.

Income Tax

For the three months ended March 31, 2011, the Company’s income tax expense was $2,632,792 as compared to $944,488 for the three months ended March 31, 2010.  The Company’s effective income tax rates were 22.53% and 16.95% for the three months ended March 31, 2011 and 2010, respectively. The increase in the effective tax rate was primarily due to the effect of non-deductible expenses.

Yongye Nongfeng received the high-tech enterprise certificate dated November 29, 2010 as approved by the relevant government authorities of the Inner Mongolia Autonomous Region during 2011 which entitled it to a preferential income tax rate of 15% for the years from 2010 to 2012.  Yongye Nongfeng, being a foreign investment enterprise located in the Western Region of the PRC, was also entitled to the preferential income tax rate of 15% for 2010. 

Our Company’s PRC subsidiaries have cash balance of $41 million as of March 31, 2011 which is planned to be permanently reinvested in the PRC.  The distributions from our PRC subsidiaries are subject to the U.S. federal income tax at 34%, less any applicable foreign tax credits.  Due to our policy of indefinitely reinvesting our earnings in our PRC business, we have not provided for deferred tax liabilities on undistributed earnings of our PRC subsidiaries.

Net Income

Net income for the three months ended March 31, 2011 was $9,051,934 (representing a net profit margin of 18%) compared to $4,628,742 (representing a net profit margin of 19%) in the same period ended March 31, 2010. The slight fluctuation in our net profit margin is primarily due to the increase in management stock compensation expenses incurred in the three months ended March 31, 2011, while no such expenses in the corresponding period.

Liquidity and Capital Resources

The Company has historically financed its operations and capital expenditures principally through issuance of common shares and bank loans. As is customary in the industry, we provide credit terms to most of our distributors which typically exceed the terms that we receive from our suppliers. Currently, we typically provide up to six months credit terms to our key distributors and ask for all others to make cash payments upfront or upon delivery. Therefore, the Company’s liquidity needs have generally consisted of working capital necessary to finance receivables and raw material and finished goods inventory. We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated future cash needs for the coming growing season. We may, however, require additional cash resources due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. Therefore, there can be no assurance that such additional investment will be available to us, or if available, that it will be available on terms acceptable to us.

In April 2011, Yongye Nongfeng obtained two short-term bank loans of RMB 52,500,000 (equivalent to $8,002,927) and RMB 47,500,000 (equivalent to $7,240,743) from China Everbright Bank. The loans bear fixed annual interest at the rate of 7.787% and 8.203%, respectively. These two short-term bank loans are guaranteed by the Company’s Chairman and are due on April 1, 2012 and April 18, 2012, respectively.

In summary, our cash flows were:

Net cash provided by operating activities were $6,600,662 and $512,162 for the three months ended March 31, 2011 and 2010, respectively. These changes were mainly brought about by the increase of $25,286,495 in sales resulting in an increase of $6,111,496 in earnings before income tax expense.

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Net cash used in investing activities decreased by $16,879,393 or 80% to $4,115,376 in the period ended March 31, 2011 compared to $20,994,769 in the same period ended in 2010. The decrease was due to the prepayment of $20,019,368 for the acquisition of the right to develop certain lignite coal resources in Wuchuan area during the first quarter of 2010. Total consideration of the development right is approximately $35 million.

Net current assets at March 31, 2011 increased by $15,320,453 to $139,667,092 from $124,346,639 or 12% over December 31, 2010.

Summary consolidated balance sheet data:

	March 31, 2011		December 31, 2010		Changes in %
Cash and restricted cash	$	44,593,149	$	41,953,469		6	%
Accounts receivable, net of allowance for doubtful accounts		26,940,846		26,110,813		3	%
Inventories		75,457,724		65,878,047		15	%
Deposits to suppliers		12,642,327		10,906,295		16	%
Property, plant and equipment, net		21,977,275		21,547,152		2	%
Total assets		263,092,225		247,626,036		6	%
Long-term loans and payables – current portion		474,460		457,880		4	%
Accounts payable		7,462,481		6,127,606		22	%
Income tax payable		7,169,781		6,137,119		17	%
Accrued expenses		3,688,491		3,024,235		22	%
Other payables		1,942,706		5,310,517		-63	%
Total current liabilities		22,097,646		22,154,466		-0	%
Long-term loans and payables		447,959		383,285		17	%
Total equity attributable to Yongye International, Inc.		229,908,126		215,215,203		7	%
Total equity		240,546,620		225,088,285		7	%

The increases in inventories of $9,579,677 and deposits to suppliers of $1,736,032, were primarily due to the expansion our business.

Total current liabilities decreased slightly by $56,820 to $22,097,646 at March 31, 2011 from $22,154,466 at December 31, 2010, which was due to a decrease in other payables of $3,367,811, mostly as result of approximate $3 million cash consideration paid for the acquisition of Hebei customer list, which was offset by an increase in accounts payable of $1,334,875, income taxes payable of $1,032,662 and accrued expenses of $664,256, as a result of our business growth and an increase in our net income before income tax.

Total equity increased by $15,458,335 to $240,546,620 at March 31, 2011, compared to $225,088,285 at December 31, 2010. The increase in our total equity was mainly due to an increase in additional paid in capital of $4,579,734, as result of the 1,183,667 restricted shares granted to management and independent directors, and an increase in retained earnings of $8,366,428 for the net income attributable to Yongye International, Inc. during the period.

Days sales outstanding is defined as average accounts receivable for the period divided by net sales for the period times 90 and increased by 20 days to 47 days for the three months ended March 31, 2011 from 27 days for the same period in 2010, due to higher amount of account receivable as our business size increased substantially and key distributors were using our credit terms to drive additional sales in the first quarter of 2011.

25

Foreign Currency Translation and Transactions

The financial position and results of operations of the Company’s subsidiaries in the PRC are measured using the Renminbi as the functional currency, while the Company’s reporting currency is the US dollar. Assets and liabilities of the subsidiaries are translated at the prevailing exchange rate in effect at each period end. The income statement is translated at the average rate of exchange during the period. Translation adjustments are included in the cumulative translation adjustment account in the consolidated statements of stockholders’ equity and comprehensive income.

Impact of inflation

We are subject to commodity price risks arising from price fluctuations in the market prices of the raw materials. We have generally been able to pass on cost increases through price adjustments. However, the ability to pass on these increases depends on market conditions influenced by the overall economic conditions in China. We manage our price risks through productivity improvements and cost-containment measures. We do not believe that inflation risk is material to our business or our financial position, results of operations or cash flows at this time.

Off balance sheet arrangement

We do not have any significant off-balance sheet arrangements and accordingly, no such arrangements are likely to have a current or future effect on our financial position, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

All of the Company’s revenue, and majority of costs and expenses are denominated in RMB. Although the conversion of the RMB is highly regulated in China, the value of the RMB against the value of the U.S. dollar or any other currency nonetheless may fluctuate and be affected by, among other things, changes in China’s political and economic conditions. Under current policy, the value of the RMB is permitted to fluctuate within a narrow band against a basket of certain foreign currencies. China is currently under significant international pressures to liberalize this government currency policy, and if such liberalization were to occur, the value of the RMB could appreciate or depreciate against the U.S. dollar.

Because substantially all of our earnings and cash assets are denominated in RMB, other than certain cash deposits we keep in a bank in Hong Kong and U.S., appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue in future that will be exchanged into U.S. dollars and earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency.

Interest Rate Risk

The Company has not been, nor does it anticipate being, exposed to material risks due to changes in interest rates. Our risk exposure to changes in interest rates relates primarily to the interest income generated by cash deposited in interest bearing savings accounts. The Company has not used, and does not expect to use in the future, any derivative financial instruments to hedge its interest risk exposure. However, our future interest income may fall short of its expectation due to changes in interest rates in the market.

Credit Risk

The Company is exposed to credit risk from its cash in bank and accounts receivable. The credit risk on cash in bank and fixed deposits is limited because the counterparties are recognized financial institutions. Accounts receivable are subjected to credit evaluations. An allowance would be made, if necessary, for estimated irrecoverable amounts by reference to past default experience, if any, and by reference to the current economic environment.

26

Inflation

Inflationary factors, such as increases in the cost of our products and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of sales revenue if the selling prices of our products do not increase with these increased costs.

Company’s Operations are Substantially in Foreign Countries

Substantially all of our operations are conducted in China and are subject to various political, economic, and other risks and uncertainties inherent in conducting business in China. Among other risks, the Company and its subsidiaries’ operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed by the Company under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and regulations and that such information is accumulated and communicated to our management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Our Principal Executive Officer and Principal Financial Officer evaluated, with the participation of other members of management, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

27

Although the management of our Company, including the Principal Executive Officer and the Principal  Financial Officer, believes that our disclosure controls and internal controls currently provide reasonable assurance that our desired control objectives have been met, management does not expect that our disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Controls over Financial Reporting

During the period covered by this quarterly report on Form 10-Q, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2010.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Description
10.1	Working Capital Loan Contract dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch.
10.2	Working Capital Loan Contract dated April 18, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch.
10.3	Maximum Amount Guarantee Contract dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch.
10.4	Comprehensive Credit Facility Agreement dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch.
31.1	Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer (Principal Financial and Accounting Officer)  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

29

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Yongye International, Inc.
	By:	/s/ Zishen Wu
		Name: Zishen Wu
May 9, 2011		Title: Chief Executive Officer and President (Principal Executive Officer)
	By:	/s/ Sam Yu
		Name: Sam Yu
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)

30

EX-10.1

Loan Number: HHHT(2011)LDZJ0010

Working Capital Loan Contract

(Summary Translation)

China Everbright Bank

1

Table of Contents

Article I	Generals	4
Article II	Purpose of the Loan	4
Article III	Currency, Amount, Term and Disbursement of the Loan	4
Article IV	Interest of the Loan and Calculation Method	4
Article V	Release and Use of the Loan	5
Article VI	Repayment of the Loan	6
Article VII	Guarantee	7
Article VIII	Assumption of Fees and Reimbursement	7
Article IX	The Borrower’s Representations, Warranties and Promises	7
Article X	Events of Breach	9
Article XI	Others	11
Article XII	Governing Law and Resolution of Dispute	12
Article XIII	Effectuation, Revision and Dissolution of the Contract	12
Article XIV	Attachments	12
Article XV	Supplemental Provisions	12

2

Borrower:	Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.
Address:	Yongye Industrial Park, Jinshan Boulevard,
	Jinshan Development Zone, Hohhot
Postal Code:	010050
Legal Representative:	WU Zishen
Authorized Agent:
Processing Person:
Telephone:
Fax:
Account Bank:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Account Number:	50120188000016391
Lender:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Address:	78 Xinhua Road East, Saihan District, Hohhot
Postal Code:	010020
Legal Representative:	ZHANG Ling
Authorized Agent:	HUANG Zhangren
Processing Person:	YUN Jiaqi
Telephone:	0471-4955854
Fax:	0471-4955894

3

Article I  Generals

Because of the need of business operations,  the Borrower applies to the Lending Bank for a loan, and the Lending Bank, upon review, agrees to issue a loan to the Borrower on the terms and conditions set forth in this contract.

Now, pursuant to the relevant law and the policies of the regulatory authorities of our country, the two parties, after reaching consensus through consultation, have reached the agreement on the following provisions, which are to be adhered to by both parties.

Article II  Purpose of the Loan

1.           The two parties agree that:

1.1         The loan amount hereunder is to be used as revolving liquid capital, for the specific purpose of ___________.

1.2         The Borrower shall not change the purpose of the loan specified herein without prior written consent from the Lending Bank.

Article III  Currency, Amount, Term and Disbursement of the Loan

2.           The currency of the loan hereunder is Renminbi and the amount is 52,500,000.00

3.           The term of the loan hereunder is from April 2, 2011 to April 1, 2012

4.           Upon complete satisfaction of the preconditions set forth in Section 11 below, the Lending Bank must disburse the loan amount in one sum in full and have it deposited into the Borrower's account established with the Lending Bank on April 2, 2011.

Article IV  Interest of the Loan and Calculation Method

5.           The Borrower must make interest payments on the loan amount to the Lending Bank in accordance with the provisions herein.  The interest rate of the loan hereunder is fixed annual rate of 7.878%.

6.           The two parties agree that, in the event that the People's Bank of China adjusts loan base rate or the calculation method thereof and the said loan base rate is applicable to the loan hereunder, the Lending Bank has the right to determine the contract's new loan interest rate on the basis of the said adjusted loan base rate or the calculation method.  The Lending Bank shall not be required to obtain prior consent from the Borrower before making such adjustment and shall have the right to assess interest according to the adjusted loan rate or calculation method.

4

7.           The interest on the loan hereunder is settled quarterly and the settlement date is the 20th of the last month of each quarter.

8.           The loan interest calculation hereunder is based on 360 days a year, starting on the date when the loan is disbursed.

9.           If the Borrower fails to repay the loan in accordance with the provisions herein, the Lending Bank shall have the right to charge past-due penalty rate; the past-due penalty rate is 50% of the loan interest rate specified in Section 5 herein in addition to the said loan interest rate starting from the past-due date, until the loan principal and interest are repaid in full.

If the Borrower uses the loan for any purpose other than that specified herein, the Lending Bank shall have the right to charge loan misappropriation penalty rate; misappropriation penalty rate is 100% of the loan interest rate specified in Section 5 herein in addition to the said loan interest rate starting from the date when the loan is misappropriated, until the loan principal and interest are repaid in full.

10.         If the Borrower fails to make interest payment on time, the Lending Bank shall have the right to assess compound interest at the penalty rate.

Article V  Release and Use of the Loan

11.         The Lending Bank shall have no obligation to provide the loan hereunder to the Borrower unless the following preconditions are satisfied:

11.1       The Borrower has provided all the documents requested by the Lending Bank;

11.2       The Borrower has filled all the forms and notes required for the withdrawal of the loan; such forms and notes are the component part of this contract and have the same legal effect;

11.3       The Borrower has obtained all the government permits, licenses and registrations in accordance with the relevant law and statutes;

11.4       If the loan hereunder is guaranteed, the Borrower has processed all the certification and registration of, and obtained the insurance on, the security properties provided as guarantee and such certification, registration and insurance remain effective and valid;

11.5       The Borrower has committed no acts of breach specified herein;

Upon satisfaction of the above preconditions, the Lending Bank will arrange the disbursement of the loan in accordance with Section 4 herein and have the loan amount deposited into the Borrower's bank account.

5

12.         The loan payment methods hereunder are entrusted payment by the Lending Bank and the payment by the Borrower at its own discretion.

13.         The Borrower agrees that the Lending Bank shall have the right to use the entrusted payment method in accordance with the relevant State law and policies of regulatory authorities if:

13.1       The loan relationship with the Borrower is new and the Borrower's credit is just average;

13.2       The recipient of the payment is very clear and the amount of single loan payment is large;

13.3       Other situations that the Lending Bank deems appropriate.

The Borrower agrees that the starting amount of single payment under the entrusted payment method is RMB 30,000,000.00.

14.         If the method of payment by the Borrower at its own discretion is used, the Borrower must submit loan fund payment plan to the Lending Bank for approval.

15.         During the course of paying the loan amount, if the Borrower experiences any of the following, the Lending Bank shall have the right to discuss with the Borrower to supplement the conditions for loan release and payment or change the loan payment method or even suspend the release and payment of the loan amount: (a) the credit situation of the Borrower deteriorates, (b) the Borrower’s profit-making ability is weak, and (c) there is abnormalities in the use of the loan funds.

The Lending Bank has the right to request that the Borrower provide records and documentation on the use of the loan funds.  If the Lending Bank finds that the Borrower fails to use the loan for the purpose specified or has other acts in violation of the provisions herein, the Lending Bank shall have the right to declare the loan due in advance and pursue the Borrower for the corresponding liability for breach, including but not limited to restricting or suspending the payment of the loan funds.

Article VI  Repayment of the Loan

16.         The Borrower must make interest payments in accordance with the provisions herein and repay the principal in full and in one lump sum on April 1, 2012.

17.         The Borrower must ensure that there is sufficient amount in the account set up with the Lending Bank on the interest settlement dates or on the loan principal repayment date to repay interest, loan principal and other fees and must authorize the Lending Bank to deduct automatically from that account on the said dates.

6

18.         The Borrower must repay the loan principal in full and on time to the Lending Bank.  If the Borrower fails to repay the loan principal or to make interest payment on time, the Lending Bank shall have the right to deduct the corresponding amounts, in the order of fees payable, loan interest and compound interest and loan principal, from any accounts set up with the Lending Bank or within the banking system of the Lending Bank’s branch organizations.

19.         If the Borrower desires to repay the loan ahead of the schedule, the Borrower must submit an application to the Lending Bank 30 business days in advance for approval.

20.         If the Borrower is unable to repay the loan hereunder on time and desires to extend the term of the loan, the Borrower must submit an application for extension in writing to the Lending Bank.  Upon the Lending Bank’s approval, the two parties must execute a loan extension contract as a supplement hereto.

Article  VII Guarantee

21.         The guarantee method for the loan hereunder is maximum natural person guarantee.  The guarantee is provided by WU Zishen and the guarantee is several liability guarantee (Guarantee Contract No. is HHHT(2011)ZGXRRBZ0010)

22.         The Lending Bank and the guarantor must enter into a guarantee contract and process necessary certification and registration of and insurance on the security property.

23.         If the term of the loan is extended, the Borrower and the guarantor must continue to bear responsibility to provide guarantee for the loan during the extended term.

Article VIII Assumption of Fees and Reimbursement

24.         The Borrower must bear all the fees paid by the Lending Bank in connection with this contract and the corresponding guarantee contract, including but not limited to fees for legal service, accounting service, audits, insurance, certification, appraisal and evaluation and registration.

25.         Upon request by the Lending Bank, the Borrower must immediately reimburse the Lending Bank in full for all the fees incurred by the Lending Bank in exercising its rights hereunder, including but not limited to litigation expenses, attorney fees, travel and lodging expenses and other fees.

Article IX The Borrower’s Representations, Warranties and Promises

26.         The Borrower is a valid and existing legal person entity incorporated in accordance with the PRC law, has the ability to conduct independent civil activities and has the full power, authorization and assets to bear civil responsibilities and conduct business activities.

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27.         The Borrower has the full power and authorization to execute this contract and conduct the transactions hereunder and has taken all actions necessary for the execution and performance of this contract.

28.         The Borrower has obtained all the government approval and third party consent required for the execution of this contract and the execution and performance of this contract will not violate any of the Borrower’s incorporation documents or any other contracts to which  the Borrower is a party.

29.         All the documents, material and certificates provided by the Borrower in connection with the execution of this contract and the transaction hereunder are authentic, complete, accurate and valid and the financial reports provided by the Borrower truthfully reflect the financial situation of the Borrower as of the time of the issuance of such reports.

30.         This contract is legally effective and is legally binding to the Borrower.

31.         The Borrower must set up an account with the Lending Bank according to the Lending Bank’s requirements to be used as the settlement account for the loan hereunder.

32.         The Borrower has completed or will complete all the required registration, filing and certification procedures to ensure the validity, effectiveness and enforceability of this contract.

33.         The Borrower has no pending litigation, arbitration or administrative proceedings that will have a substantively adverse effect on the Borrower’s ability to perform its obligations hereunder.

34.         The Borrower’s representations, warranties and promises must remain true and accurate before the full repayment of the loan principal and interest and the Borrower will provide any relevant documents at the Lending Bank’s request.

35.         The Borrower has committed no act of breach.

36.         The Borrower has carefully read, and fully understands and accepts, the contents herein and the execution and performance of this contract is voluntary; the Borrower acknowledges that the intents expressed herein are the Borrower’s true intents.

37.         The Borrower has provided truthful, complete and effective documents according to the Lending Bank’s request.

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38.         The Borrower promises to cooperate with the Lending Bank in the management of the loan payment, and in the management thereafter and the relevant examination.

39.         The Borrower must accept, and actively cooperate with, the Lending Bank’s investigation of, enquiries about and supervision on its production, operation and financial situation and has the obligation to provide, on the monthly basis, the balance sheet and profit/loss statement for the latest month or other documents that reflect the Borrower’s credit situation.

40.         During the effective period of the contract, the Borrower must notify the Lending Bank in writing 30 days in advance in the event of any changes in the name of the Borrower, its legal representative or its address.

41.         If, before the full repayment of the all the debt hereunder, the Borrower desires to engage in external investment or financing that will substantially increase its debts, or to undertake merger, spin-off, reduction of capital, transfer of equity, transfer of assets, filing for suspension of business for rectification, filing for dissolution or bankruptcy or any other actions sufficient to cause any changes to the creditor/debtor relationship hereunder or to affect the rights of the Lending Bank, the Borrower must notify the Lending Bank in writing 30 business days and obtain the Lending Bank’s written approval.  Otherwise, none of the transactions mentioned above can be conducted.

42.         The Borrower promises that, with the Lending Bank’s written approval, the Borrower will not assume, for any other enterprise legal person or individual, debt obligations, provide guarantee or establish pledges or liens on its assets that will affect the Borrower’s ability to repay the loan hereunder.

43.         If the Borrower experiences any other events, other than those mentioned above, that will adversely affect the Borrower’s ability to fulfill its repayment obligations, the Borrower must immediately notify the Lending Bank in writing.

44.         The Lending Bank has the right to demand that the Borrower set up a special account with the Lending Bank as the account for the return of the funds.

Article X Events of Breach

45.         Any of the following events constitutes an event of breach:

45.1       The Borrower fails to make interest payments or repay the loan principal in accordance with the provisions herein;

45.2       The Borrower fails to use the loan for the purpose specified herein;

45.3       The Borrower fails to pay loan funds according to the method specified;

45.4       The Borrower fails to reach the financial targets specified;

45.5       The Borrower commits any act of cross-breach;

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45.6       The Borrower provides false balance sheet, profit/loss statements or other financial reports or withholds material facts therein, or refuses to accept the Lending Bank’s supervision over and examination of the Borrower’s use of the loan and its production operation and financial activities;

45.7       The representations, warranties or promises made herein by the Borrower or the guarantor, or those made by the guarantor made in the relevant guarantee contract, prove to be false or misleading;

45.8       The Borrower or the guarantor violates other contract to which the Borrower or the guarantor is a party;

45.9       The Borrower’s or the guarantor’s operation or financial situation materially deteriorates;

45.10     The value of the pledged or mortgaged property in connection with the loan hereunder decreases or such property is damaged or lost;

45.11     The Borrower or the guarantor fails to make arrangement to repay its debts to the satisfaction of the Lending Bank at the time of its merger, spin-off or reorganization of share structure.

45.12     The Borrower or the guarantor files bankruptcy, is dissolved or shut down, or its business permit is revoked, cancelled or voided;

45.13     The Borrower fails to notify the Lending Bank promptly of any major revision of its charter, any changes in its operation activities, major revision of its accounting principles, or any material changes in the financial, economic or other situation of the Borrower or of its subsidiaries or parent;

45.14     The Borrower is involved in any litigation, arbitration or administrative proceeding that will adversely affect its ability to fulfill its obligations hereunder;

45.15     The Borrower’s assets is frozen, seized, withheld or put into receivership in accordance with the law and such that the Borrower’s performance of its obligations hereunder has been or will be materially affected;

45.16     The Borrower has violated any other provision herein and fails to take any remedial actions to the satisfaction of the Lending Bank;

45.17     Any other event or situation that will have a substantive adverse effect on the rights of the Lending Bank hereunder.

46.         The Lending Bank shall make determination as to whether any event of breach mentioned above has occurred and notify the Borrower.  Upon the occurrence of any of the events of breach, the Lending Bank shall have the right to take one or more of the measures below:

46.1       Suspend the disbursement of the loan amount hereunder;

46.2       Declare that the loan already released immediately due and demand that the Borrower repay the loan principal, interest and other fees immediately;

46.3       Demand that the Borrower provide additional pledge or lien or replace the guarantor;

46.4       Deduct directly any outstanding amount payable hereunder from the account established with the Lending Bank or any of the Lending Bank’s branches;

46.5       Declare the exercise of its rights under the guarantee contract for the loan;

46.6       Other measured deemed appropriate by the Lending Bank.

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Article XI  Others

47.         During the effective period of this contract, the Lending Bank shall have the right to examine the Borrower’s use of the loan and the Borrower must provide explanation and documents to the Lending Bank at the Lending Bank’s request.

48.         Both parties hereto must maintain confidentiality on the debts, financial, production and operation situation and other information obtained for the purpose of executing and performing this contract from the other party; however, the situation of any inquiry on the Borrower’s situation in accordance with the law is excepted.

49.         Without prior consent from the Lending Bank, the Borrower shall not transfer or dispose of all or part of its obligations hereunder.

50.         The Lending Bank may transfer the creditor’s right hereunder to any third party without the need to obtain prior consent from the Borrower, provided, however, that the Borrower is notified in writing at the time of such transfer.

51.         The Borrower must pay all the amount due hereunder in full and shall not make offsets, deductions or withholdings of any nature or use any debt owed by the Lending Bank to the Borrower to offset any debt obligations.

52.         Any grace period, favorable treatment or extension granted by the Lending Bank to the Borrower shall not affect, damage or restrict any other rights to which the Lending Bank is entitled in accordance with the provisions herein and with the law and statutes, nor shall they be considered a waiver by the Lending Bank of its rights and interests hereunder or affect the Lending Bank's responsibilities and obligations hereunder.

53.         If, at any time, any of the provisions herein becomes illegal, invalid or unenforceable in any aspect, the legality, validity or enforceability of other provisions herein shall not be affected or diminished.

54.         Any revisions of or supplement to this contract must be in writing and be signed by both parties.

55.         The titles and headings herein are inserted for reference only.

56.         All notices or requests regarding this contract must be sent in writing to the addresses or fax numbers listed on the first page of this contract.  One party must notify the other party promptly of any changes of addresses or fax numbers.

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57.         The documents sent by one party to the other shall be considered delivered  if sent by courier, three days after its being sent if by registered mail, and immediately if by fax.

Article XII  Governing Law and Resolution of Dispute

58.         This contract is governed by the Chinese law and must be interpreted accordingly.  Any dispute in connection with this contract must be settled through consultation; if consultation fails, the dispute should be submitted to legal proceedings at the local court where the Lending Bank resides.

Article XIII  Effectuation, Revision and Dissolution of the Contract

59.         This contract must be signed by the representatives of both parties before it can become effective.

60.         No party can revise or dissolve this contract without authorization, unless otherwise stipulated or by law.  Any revision or dissolution must be agreed to by both parties in a signed written agreement.

Article XIV  Attachments

61.         Other matters not covered herein may be provided in a written agreement to be attached hereto.

Article XV Supplemental Provisions

62          This contract has to two copies, with one to each, and both have the same legal effect.

63.         This contract is executed on April 2, 2011 in Hohhot.

64.         The parties hereto agree that this contract must be certified (optional provision; not applicable to this contract.)

Borrower:	/seal/ Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.
Legal Representative:	/s/ WU Zishen
Lender:	/seal/ China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Authorized Agent:	/s/ HUANG Zhangren

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EX-10.2

Loan Number: HHHT(2011)LDZJ0012

Working Capital Loan Contract

(Summary Translation)

China Everbright Bank

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Table of Contents

Article I	Generals	4
Article II	Purpose of the Loan	4
Article III	Currency, Amount, Term and Disbursement of the Loan	4
Article IV	Interest of the Loan and Calculation Method	4
Article V	Release and Use of the Loan	5
Article VI	Repayment of the Loan	6
Article VII	Guarantee	7
Article VIII	Assumption of Fees and Reimbursement	7
Article IX	The Borrower’s Representations, Warranties and Promises	7
Article X	Events of Breach	9
Article XI	Others	11
Article XII	Governing Law and Resolution of Dispute	12
Article XIII	Effectuation, Revision and Dissolution of the Contract	12
Article XIV	Attachments	12
Article XV	Supplemental Provisions	12

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Borrower:	Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.
Address:	Yongye Industrial Park, Jinshan Boulevard,
	Jinshan Development Zone, Hohhot
Postal Code:	010050
Legal Representative:	WU Zishen
Authorized Agent:
Processing Person:
Telephone:
Fax:
Account Bank:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Account Number:	50120188000016391
Lender:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Address:	78 Xinhua Road East, Saihan District, Hohhot
Postal Code:	010020
Legal Representative:	ZHANG Ling
Authorized Agent:	HUANG Zhangren
Processing Person:	YUN Jiaqi
Telephone:	0471-4955854
Fax:	0471-4955894

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Article I  Generals

Because of the need of business operations,  the Borrower applies to the Lending Bank for a loan, and the Lending Bank, upon review, agrees to issue a loan to the Borrower on the terms and conditions set forth in this contract.

Now, pursuant to the relevant law and the policies of the regulatory authorities of our country, the two parties, after reaching consensus through consultation, have reached the agreement on the following provisions, which are to be adhered to by both parties.

Article II  Purpose of the Loan

1.           The two parties agree that:

1.1         The loan amount hereunder is to be used as revolving liquid capital, for the specific purpose of purchasing production raw material.

1.2         The Borrower shall not change the purpose of the loan specified herein without prior written consent from the Lending Bank.

Article III  Currency, Amount, Term and Disbursement of the Loan

2.           The currency of the loan hereunder is Renminbi and the amount is 47,500,000.00

3.           The term of the loan hereunder is from April 18, 2011 to April 17, 2012

4.           Upon complete satisfaction of the preconditions set forth in Section 11 below, the Lending Bank must disburse the loan amount in one sum in full and have it deposited into the Borrower's account established with the Lending Bank on April 18, 2011.

Article IV  Interest of the Loan and Calculation Method

5.           The Borrower must make interest payments on the loan amount to the Lending Bank in accordance with the provisions herein.  The interest rate of the loan hereunder is fixed annual rate of 8.203%.

6.           The two parties agree that, in the event that the People's Bank of China adjusts loan base rate or the calculation method thereof and the said loan base rate is applicable to the loan hereunder, the Lending Bank has the right to determine the contract's new loan interest rate on the basis of the said adjusted loan base rate or the calculation method.  The Lending Bank shall not be required to obtain prior consent from the Borrower before making such adjustment and shall have the right to assess interest according to the adjusted loan rate or calculation method.

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7.           The interest on the loan hereunder is settled quarterly and the settlement date is the 20th of the last month of each quarter.

8.           The loan interest calculation hereunder is based on 360 days a year, starting on the date when the loan is disbursed.

9.           If the Borrower fails to repay the loan in accordance with the provisions herein, the Lending Bank shall have the right to charge past-due penalty rate; the past-due penalty rate is 50% of the loan interest rate specified in Section 5 herein in addition to the said loan interest rate starting from the past-due date, until the loan principal and interest are repaid in full.

If the Borrower uses the loan for any purpose other than that specified herein, the Lending Bank shall have the right to charge loan misappropriation penalty rate; misappropriation penalty rate is 100% of the loan interest rate specified in Section 5 herein in addition to the said loan interest rate starting from the date when the loan is misappropriated, until the loan principal and interest are repaid in full.

10.         If the Borrower fails to make interest payment on time, the Lending Bank shall have the right to assess compound interest at the penalty rate.

Article V  Release and Use of the Loan

11.         The Lending Bank shall have no obligation to provide the loan hereunder to the Borrower unless the following preconditions are satisfied:

11.1       The Borrower has provided all the documents requested by the Lending Bank;

11.2       The Borrower has filled all the forms and notes required for the withdrawal of the loan; such forms and notes are the component part of this contract and have the same legal effect;

11.3       The Borrower has obtained all the government permits, licenses and registrations in accordance with the relevant law and statutes;

11.4       If the loan hereunder is guaranteed, the Borrower has processed all the certification and registration of, and obtained the insurance on, the security properties provided as guarantee and such certification, registration and insurance remain effective and valid;

11.5       The Borrower has committed no acts of breach specified herein;

Upon satisfaction of the above preconditions, the Lending Bank will arrange the disbursement of the loan in accordance with Section 4 herein and have the loan amount deposited into the Borrower's bank account.

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12.         The loan payment methods hereunder are entrusted payment by the Lending Bank and the payment by the Borrower at its own discretion.

13.         The Borrower agrees that the Lending Bank shall have the right to use the entrusted payment method in accordance with the relevant State law and policies of regulatory authorities if:

13.1       The loan relationship with the Borrower is new and the Borrower's credit is just average;

13.2       The recipient of the payment is very clear and the amount of single loan payment is large;

13.3       Other situations that the Lending Bank deems appropriate.

The Borrower agrees that the starting amount of single payment under the entrusted payment method is RMB 30,000,000.00.

14.         If the method of payment by the Borrower at its own discretion is used, the Borrower must submit loan fund payment plan to the Lending Bank for approval.

15.         During the course of paying the loan amount, if the Borrower experiences any of the following, the Lending Bank shall have the right to discuss with the Borrower to supplement the conditions for loan release and payment or change the loan payment method or even suspend the release and payment of the loan amount: (a) the credit situation of the Borrower deteriorates, (b) the Borrower’s profit-making ability is weak, and (c) there is abnormalities in the use of the loan funds.

The Lending Bank has the right to request that the Borrower provide records and documentation on the use of the loan funds.  If the Lending Bank finds that the Borrower fails to use the loan for the purpose specified or has other acts in violation of the provisions herein, the Lending Bank shall have the right to declare the loan due in advance and pursue the Borrower for the corresponding liability for breach, including but not limited to restricting or suspending the payment of the loan funds.

Article VI  Repayment of the Loan

16.         The Borrower must make interest payments in accordance with the provisions herein and repay the principal in full and in one lump sum on April 17, 2012.

17.         The Borrower must ensure that there is sufficient amount in the account set up with the Lending Bank on the interest settlement dates or on the loan principal repayment date to repay interest, loan principal and other fees and must authorize the Lending Bank to deduct automatically from that account on the said dates.

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18.         The Borrower must repay the loan principal in full and on time to the Lending Bank.  If the Borrower fails to repay the loan principal or to make interest payment on time, the Lending Bank shall have the right to deduct the corresponding amounts, in the order of fees payable, loan interest and compound interest and loan principal, from any accounts set up with the Lending Bank or within the banking system of the Lending Bank’s branch organizations.

19.         If the Borrower desires to repay the loan ahead of the schedule, the Borrower must submit an application to the Lending Bank 30 business days in advance for approval.

20.         If the Borrower is unable to repay the loan hereunder on time and desires to extend the term of the loan, the Borrower must submit an application for extension in writing to the Lending Bank.  Upon the Lending Bank’s approval, the two parties must execute a loan extension contract as a supplement hereto.

Article  VII Guarantee

21.         The guarantee method for the loan hereunder is maximum natural person guarantee.  The guarantee is provided by WU Zishen and the guarantee is several liability guarantee (Guarantee Contract No. is HHHT(2011)ZGXRRBZ0010)

22.         The Lending Bank and the guarantor must enter into a guarantee contract and process necessary certification and registration of and insurance on the security property.

23.         If the term of the loan is extended, the Borrower and the guarantor must continue to bear responsibility to provide guarantee for the loan during the extended term.

Article VIII Assumption of Fees and Reimbursement

24.         The Borrower must bear all the fees paid by the Lending Bank in connection with this contract and the corresponding guarantee contract, including but not limited to fees for legal service, accounting service, audits, insurance, certification, appraisal and evaluation and registration.

25.         Upon request by the Lending Bank, the Borrower must immediately reimburse the Lending Bank in full for all the fees incurred by the Lending Bank in exercising its rights hereunder, including but not limited to litigation expenses, attorney fees, travel and lodging expenses and other fees.

Article IX The Borrower’s Representations, Warranties and Promises

26.         The Borrower is a valid and existing legal person entity incorporated in accordance with the PRC law, has the ability to conduct independent civil activities and has the full power, authorization and assets to bear civil responsibilities and conduct business activities.

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27.         The Borrower has the full power and authorization to execute this contract and conduct the transactions hereunder and has taken all actions necessary for the execution and performance of this contract.

28.         The Borrower has obtained all the government approval and third party consent required for the execution of this contract and the execution and performance of this contract will not violate any of the Borrower’s incorporation documents or any other contracts to which  the Borrower is a party.

29.         All the documents, material and certificates provided by the Borrower in connection with the execution of this contract and the transaction hereunder are authentic, complete, accurate and valid and the financial reports provided by the Borrower truthfully reflect the financial situation of the Borrower as of the time of the issuance of such reports.

30.         This contract is legally effective and is legally binding to the Borrower.

31.         The Borrower must set up an account with the Lending Bank according to the Lending Bank’s requirements to be used as the settlement account for the loan hereunder.

32.         The Borrower has completed or will complete all the required registration, filing and certification procedures to ensure the validity, effectiveness and enforceability of this contract.

33.         The Borrower has no pending litigation, arbitration or administrative proceedings that will have a substantively adverse effect on the Borrower’s ability to perform its obligations hereunder.

34.         The Borrower’s representations, warranties and promises must remain true and accurate before the full repayment of the loan principal and interest and the Borrower will provide any relevant documents at the Lending Bank’s request.

35.         The Borrower has committed no act of breach.

36.         The Borrower has carefully read, and fully understands and accepts, the contents herein and the execution and performance of this contract is voluntary; the Borrower acknowledges that the intents expressed herein are the Borrower’s true intents.

37.         The Borrower has provided truthful, complete and effective documents according to the Lending Bank’s request.

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38.         The Borrower promises to cooperate with the Lending Bank in the management of the loan payment, and in the management thereafter and the relevant examination.

39.         The Borrower must accept, and actively cooperate with, the Lending Bank’s investigation of, enquiries about and supervision on its production, operation and financial situation and has the obligation to provide, on the monthly basis, the balance sheet and profit/loss statement for the latest month or other documents that reflect the Borrower’s credit situation.

40.         During the effective period of the contract, the Borrower must notify the Lending Bank in writing 30 days in advance in the event of any changes in the name of the Borrower, its legal representative or its address.

41.         If, before the full repayment of the all the debt hereunder, the Borrower desires to engage in external investment or financing that will substantially increase its debts, or to undertake merger, spin-off, reduction of capital, transfer of equity, transfer of assets, filing for suspension of business for rectification, filing for dissolution or bankruptcy or any other actions sufficient to cause any changes to the creditor/debtor relationship hereunder or to affect the rights of the Lending Bank, the Borrower must notify the Lending Bank in writing 30 business days and obtain the Lending Bank’s written approval.  Otherwise, none of the transactions mentioned above can be conducted.

42.         The Borrower promises that, with the Lending Bank’s written approval, the Borrower will not assume, for any other enterprise legal person or individual, debt obligations, provide guarantee or establish pledges or liens on its assets that will affect the Borrower’s ability to repay the loan hereunder.

43.         If the Borrower experiences any other events, other than those mentioned above, that will adversely affect the Borrower’s ability to fulfill its repayment obligations, the Borrower must immediately notify the Lending Bank in writing.

44.         The Lending Bank has the right to demand that the Borrower set up a special account with the Lending Bank as the account for the return of the funds.

Article X Events of Breach

45.         Any of the following events constitutes an event of breach:

45.1       The Borrower fails to make interest payments or repay the loan principal in accordance with the provisions herein;

45.2       The Borrower fails to use the loan for the purpose specified herein;

45.3       The Borrower fails to pay loan funds according to the method specified;

45.4       The Borrower fails to reach the financial targets specified;

45.5       The Borrower commits any act of cross-breach;

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45.6       The Borrower provides false balance sheet, profit/loss statements or other financial reports or withholds material facts therein, or refuses to accept the Lending Bank’s supervision over and examination of the Borrower’s use of the loan and its production operation and financial activities;

45.7       The representations, warranties or promises made herein by the Borrower or the guarantor, or those made by the guarantor made in the relevant guarantee contract, prove to be false or misleading;

45.8       The Borrower or the guarantor violates other contract to which the Borrower or the guarantor is a party;

45.9       The Borrower’s or the guarantor’s operation or financial situation materially deteriorates;

45.10     The value of the pledged or mortgaged property in connection with the loan hereunder decreases or such property is damaged or lost;

45.11     The Borrower or the guarantor fails to make arrangement to repay its debts to the satisfaction of the Lending Bank at the time of its merger, spin-off or reorganization of share structure.

45.12     The Borrower or the guarantor files bankruptcy, is dissolved or shut down, or its business permit is revoked, cancelled or voided;

45.13     The Borrower fails to notify the Lending Bank promptly of any major revision of its charter, any changes in its operation activities, major revision of its accounting principles, or any material changes in the financial, economic or other situation of the Borrower or of its subsidiaries or parent;

45.14     The Borrower is involved in any litigation, arbitration or administrative proceeding that will adversely affect its ability to fulfill its obligations hereunder;

45.15     The Borrower’s assets is frozen, seized, withheld or put into receivership in accordance with the law and such that the Borrower’s performance of its obligations hereunder has been or will be materially affected;

45.16     The Borrower has violated any other provision herein and fails to take any remedial actions to the satisfaction of the Lending Bank;

45.17     Any other event or situation that will have a substantive adverse effect on the rights of the Lending Bank hereunder.

46.         The Lending Bank shall make determination as to whether any event of breach mentioned above has occurred and notify the Borrower.  Upon the occurrence of any of the events of breach, the Lending Bank shall have the right to take one or more of the measures below:

46.1       Suspend the disbursement of the loan amount hereunder;

46.2       Declare that the loan already released immediately due and demand that the Borrower repay the loan principal, interest and other fees immediately;

46.3       Demand that the Borrower provide additional pledge or lien or replace the guarantor;

46.4       Deduct directly any outstanding amount payable hereunder from the account established with the Lending Bank or any of the Lending Bank’s branches;

46.5       Declare the exercise of its rights under the guarantee contract for the loan;

46.6       Other measured deemed appropriate by the Lending Bank.

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Article XI  Others

47.         During the effective period of this contract, the Lending Bank shall have the right to examine the Borrower’s use of the loan and the Borrower must provide explanation and documents to the Lending Bank at the Lending Bank’s request.

48.         Both parties hereto must maintain confidentiality on the debts, financial, production and operation situation and other information obtained for the purpose of executing and performing this contract from the other party; however, the situation of any inquiry on the Borrower’s situation in accordance with the law is excepted.

49.         Without prior consent from the Lending Bank, the Borrower shall not transfer or dispose of all or part of its obligations hereunder.

50.         The Lending Bank may transfer the creditor’s right hereunder to any third party without the need to obtain prior consent from the Borrower, provided, however, that the Borrower is notified in writing at the time of such transfer.

51.         The Borrower must pay all the amount due hereunder in full and shall not make offsets, deductions or withholdings of any nature or use any debt owed by the Lending Bank to the Borrower to offset any debt obligations.

52.         Any grace period, favorable treatment or extension granted by the Lending Bank to the Borrower shall not affect, damage or restrict any other rights to which the Lending Bank is entitled in accordance with the provisions herein and with the law and statutes, nor shall they be considered a waiver by the Lending Bank of its rights and interests hereunder or affect the Lending Bank's responsibilities and obligations hereunder.

53.         If, at any time, any of the provisions herein becomes illegal, invalid or unenforceable in any aspect, the legality, validity or enforceability of other provisions herein shall not be affected or diminished.

54.         Any revisions of or supplement to this contract must be in writing and be signed by both parties.

55.         The titles and headings herein are inserted for reference only.

56.         All notices or requests regarding this contract must be sent in writing to the addresses or fax numbers listed on the first page of this contract.  One party must notify the other party promptly of any changes of addresses or fax numbers.

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57.         The documents sent by one party to the other shall be considered delivered  if sent by courier, three days after its being sent if by registered mail, and immediately if by fax.

Article XII  Governing Law and Resolution of Dispute

58.         This contract is governed by the Chinese law and must be interpreted accordingly.  Any dispute in connection with this contract must be settled through consultation; if consultation fails, the dispute should be submitted to legal proceedings at the local court where the Lending Bank resides.

Article XIII  Effectuation, Revision and Dissolution of the Contract

59.         This contract must be signed by the representatives of both parties before it can become effective.

60.         No party can revise or dissolve this contract without authorization, unless otherwise stipulated or by law.  Any revision or dissolution must be agreed to by both parties in a signed written agreement.

Article XIV  Attachments

61.         Other matters not covered herein may be provided in a written agreement to be attached hereto.

Article XV Supplemental Provisions

62          This contract has to two copies, with one to each, and both have the same legal effect.

63.         This contract is executed on April 18, 2011 in Hohhot.

64.         The parties hereto agree that this contract must be certified (optional provision; not applicable to this contract.)

Borrower:	/seal/ Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.
Legal Representative:	/s/ WU Zishen
Lender:	/seal/ China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Authorized Agent:	/s/ HUANG Zhangren

12

EX-10.3

Number: HHHT(2011)ZGZRRBZ0010

Maximum Amount Guarantee Contract

(Natural Person as Guarantor)

(Brief Summary Translation)

China Everbright Bank

1

Table of Contents

Article I  Generals	4
Article II  Definitions	4
Article III  Master Debt Claim under the Guarantee	4
Article IV  Method of the Guarantee	4
Article V  Scope of the Guarantee	4
Article VI  Term of the Guarantee	5
Article VII  Documents That Must Be Provided by the Guarantor	5
Article VIII The Guarantor’s Representations and Warranties	5
Article IX The Guarantor’s Promises	6
Article X Nature and Effect of the Guarantee	6
Article XI Nature and Effect of the Guarantee	7
Article XII Others	7
Article XIII Governing Law and Resolution of Dispute	8
Article XIV  Effectuation, Revision and Dissolution of the Contract	8
Article XV  Attachments	8
Article XVI Supplementary Provisions	8

2

Maximum Amount Guarantee Contract

(Natural Person as Guarantor)

Guarantor:	WU Zishen
ID Card Number:	150102196803293010Address:
Address:
Current Address:
Postal Code:
Telephone:
Fax:
Entrusted Agent:
(Need to provide Power of Attorney signed by the Guarantor)
Address:
Current Address:
Postal Code:
Telephone:
Fax:
Credit Grantor:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Address:	78 Xinhua Road East, Saihan District, Hohhot
Postal Code:	010020
Legal Representative:	ZHANG Ling
Authorized Agent:
Processing Person:
Telephone:
Fax:

3

Article I  Generals

To ensure the performance of the Comprehensive Credit Facility Agreement ("Agreement"), dated April 2, 1011, entered into between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. ("Grantee") and the Credit Grantor ("Grantor"),

The Grantor agrees to accept the guarantee provided by the Guarantor  and the two parties have entered the guarantee contract as below.

Article II  Definitions

1.           The terms used herein shall have the following definition, unless otherwise indicated.

Master Contract: means the “Comprehensive Credit Facility Agreement” between the Grantor and the Grantee and each of the specific credit service contracts entered into pursuant to the “Comprehensive Credit Facility Agreement” for specific businesses.

Specific Credit Service Contract: means each of the specific credit service contracts entered into between the Grantor and the Grantee at the time when the Grantor provides foreign currency loan, trade financing, discount service, acceptance note, letter of credit, letter of guarantee, factoring service or guarantee (“Specific Credit Services”).

Article III  Master Debt Claim under the Guarantee

2.           The master debt claim under the guarantee by the Guarantor is the claim to all the debts derived from all specific credit service contracts and, the balance of the master debt claim under the guarantee is RMB 100,000,000.00.

Article IV  Method of the Guarantee

3.           The guarantee provided by the Guarantor hereunder is several-liability guarantee.

Article V  Scope of the Guarantee

4.           The scope of the guarantee hereunder includes: all outstanding debt principal payable under the Master Contract, interests, compound interests, processing fees, default damages, fees in connection with realizing debt claims (including but not limited to litigation, legal, certification and enforcement fees) and other fees payable (collectively, “Guaranteed Debts”).

4

5.           The Grantor’s documents evidencing guaranteed debts are conclusive and binding to the Guarantor, unless there are obvious errors therein.

Article VI  Term of the Guarantee

6.           The term of the guarantee for each of the specific credit service under the “Comprehensive Credit Facility Agreement” is calculated individually, each for a period of two years starting from the expiration of the period for the Grantee to perform its debt obligations.

Article VII  Documents That Must Be Provided by the Guarantor

7.           Before the Grantee can use any specific credit service under the Master Contract, the Grantor must have received the following documents provided by the Guarantor:

7.1         Duly executed original of this contract;

7.2         The Guarantor’s ID documents;

7.3         Certification of the Guarantor’s assets or other documents of credit evidence;

7.4         Other documents reasonably requested by the Grantor.

Article VIII The Guarantor’s Representations and Warranties

8.           The Guarantor hereby makes the following representations and warranties to the Grantor:

8.1         The Guarantor is a natural person with complete ability for civil activities and has the complete qualification and power to execute and perform this contract and to bear civil responsibilities.

8.2         The Guarantor has carefully read, fully understands and accepts the contents herein and the execution and performance of this contract is voluntary; the Guarantor acknowledges that the intents expressed herein are his true intents.

8.3         All the documents, material and certificates provided by the Guarantor to the Grantor are authentic, complete, accurate and valid, and all copies of documents provided are consistent with the originals thereof.

8.4         The execution and performance of this contract will not violate any applicable law or any other contracts to which the Guarantor is a party.

8.5         The Guarantor has completed all the certification, registration and filing necessary to ensure the legality, validity and enforceability of this contract.

8.6         This contract is legal and effective, and binging to the Guarantor.

5

8.7         The Guarantor has no pending litigation, arbitration or administrative proceedings that will have a substantively adverse effect on his ability to perform his obligations hereunder.

8.8         The Guarantor has not committed any act of breach.

9.           The Guarantor’s representations and warranties shall continue to be true and accurate, and the Guarantor promises to provide any other documents as requested by the Grantor.

Article IX The Guarantor’s Promises

10.         The Guarantor promises to abide by the following before the repayment of all the guaranteed debts:

10.1       Notify the Grantor immediately upon the occurrence of any breach, involvement in any litigation, arbitration, or administrative proceedings involving the Guarantor or his assets, material decrease of the Guarantor’s income, loss of economic sources and change of resident address or communication method.

10.2       Will not transfer, sell, divide or dispose of any major assets before the repayment of all the guaranteed debts, unless approved by the Grantor.

10.3       Will not raise any claim or rights demand regarding any debts repaid by him on behalf of the Grantee before the repayment of all the guaranteed debts.

10.4       If the Grantee fails to repay any of the guaranteed debts due, the Guarantor must unconditionally repay such amount on behalf of the Grantee within 7 business days of receiving the Grantor’s notice.

10.5       If the Guarantor fails to repay any amount hereunder at the Grantor’s request on time, the Grantor shall have the right to deduct directly any amount payable hereunder from the account established with the Grantor or any of the Grantor’s branches without the need to obtain the Guarantor’s consent.

10.6       Upon the Grantor’s request, the Guarantor must immediately pay the Grantor all the fees arising from the exercise by the Grantor of its rights hereunder (including legal, arbitration and enforcement fees as well as all actual costs) and compensate the Grantor for other resulting losses.

Article X Nature and Effect of the Guarantee

11.         The guarantee established by this contract is independent of any other guarantees obtained by the Grantee.  The Grantor’s exercise of its rights hereunder is not predicated on the exercise of any other guarantees, nor does it required any remedial measures against the Grantee or any other parties.

6

Article XI Nature and Effect of the Guarantee

12.         Any of the following events constitutes an event of breach:

12.1       Any breach under the Master Contract;

12.2       The representations, warranties or promises made herein by Guarantor prove to be false or misleading;

12.3       Any part of the Master Contract cannot, for any reason, continue to be fully valid and effective, or is, for any reason, terminated or restricted;

12.4       Occurrence of major litigation, arbitration or administrative proceedings involving the Guarantor or his assets;

12.5       The Guarantor violates any of his obligations hereunder or the occurrence of any event that adverse affects the Grantor’s rights hereunder.

13.         Upon the occurrence of any of the events of breach mentioned above, the Grantor has the right to take one or more of the following measures:

13.1       Remedial measures to which the Grantor is entitled hereunder and under the Master Contract;

13.2       Demand that the Guarantor assume his responsibility for guarantee;

13.3       Exercise of other rights to which the Grantor is entitled.

Article XII Others

14.         Without prior consent from the Grantor, the Guarantor shall not transfer all or part of his obligations hereunder.

15.         Any grace period, favorable treatment or extension granted by the Grantor  to the Guarantor shall not affect, damage or restrict any other rights to which the Grantor is entitled in accordance with the provisions herein and with the law and statutes, nor shall they be considered a waiver by the Grantor of its rights and interests hereunder or affect the Grantor 's responsibilities and obligations hereunder.

16.         If, at any time, any of the provisions herein becomes illegal, invalid or unenforceable in any aspect, the legality, validity or enforceability of other provisions herein shall not be affected or diminished.

17.         Under this contract, the Guarantor must repay the guaranteed debts in full and must not make any request for any offsets.

18.         All notices or requests regarding this contract must be sent in writing to the addresses or fax numbers listed on the first page of this contract.  One party must notify the other party promptly of any changes of addresses or fax numbers.

The documents sent by one party to the other shall be considered to have been delivered if sent by courier, three days after its being sent if by registered mail, and immediately if by fax.  However, any document sent by the Guarantor can be considered to have been delivered only when the Grantor has actually received it.

7

Article XIII Governing Law and Resolution of Dispute

19.         This contract is governed by the PRC law (excluding laws in Hong Kong, Macau and Taiwan) and must be interpreted accordingly.

20.         Any dispute in connection with this contract must be settled through consultation; if consultation fails, the dispute should be submitted to legal proceedings at the local court where the Grantor resides.

Article XIV  Effectuation, Revision and Dissolution of the Contract

21.         This contract must be signed by the representatives of both parties before it can become effective.

22.         No party can revise or dissolve this contract without authorization.  Any revision or dissolution must be agreed to by both parties in a signed written agreement.

Article XV  Attachments

23.         Other matters not covered herein may be provided in a written agreement to be attached hereto.  Such attachment is an inseparable part hereof and has the same legal effect.

24.         The attachment (none)

Article XVI Supplementary Provisions

25.         This contract has to two copies, with one to each, and both have the same legal effect.

26.         This contract is executed on April 2, 2011 in Hohhot.

27.         The parties hereto agree that this contract must be certified (optional provision; not applicable to this contract.)

The Guarantor:/s/ WU Zishen

The Grantor:    /seal/ China Everbright Bank Holdings. Co., Ltd., Hohhot Branch

Authorized Agent:      /s/ HUANG Zhangren

8

EX-10.4

Loan Number: HHHT(2011)ZHSX0015

Comprehensive Credit Facility Agreement

(Brief Summary Translation)

China Everbright Bank

1

Table of Contents

Article I  Definition and Explanation	3
Article II  Maximum Credit Amount and Specific Credit Amount	4
Article III  Term of the Credit Facility	4
Article IV  Use of Maximum Credit Amount and Specific Credit Amount	4
Article V  Fees and Interest Rate	5
Article VI Adjustments to Maximum Credit Amount and Specific Credit Amount	5
Article VII  Guarantee	5
Article VIII  Party B’s Commitments	6
Article IX  Party A’s Commitments	6
Article X  Effectuation of the Agreement	7
Article XI  Resolution of Dispute	7
Article XII  Complete Agreement	7
Article XIII  Supplementary Provisions	7

2

Comprehensive Credit Facility Agreement

Grantee:	Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.
Address:	Yongye Industrial Park, Jinshan Boulevard,
	Jinshan Development Zone, Hohhot
Legal Representative:	WU Zishen
Telephone:
Fax:
Grantor:	China Everbright Bank Holdings. Co., Ltd., Hohhot Branch
Address:	78 Xinhua Road East, Saihan District, Hohhot
Telephone:	0471-4955854
Fax:	0471-4955894

Pursuant to the provisions of PRC Commercial Banking Law, Commercial Bank Credit Granting and Management Interim Policies and other relevant statutes, the Grantee ("Party A") and the Grantor ("Party B") have entered into this Agreement as below.

Article I  Definition and Explanation

1.           The terms used herein shall have the following definition, unless otherwise indicated.

Comprehensive Credit: Conditional commitment by Party B to Party A to provide credit support of one or more kinds.

Specific Business: Specific business determined by Party B, for which Party B provides loan, bank acceptance note and trade financing.

Specific Credit Amount: Maximum amount of debt principal, as determined within the maximum credit amount granted, generated from each of specific businesses for which Party A has applied to Party B for use in accordance with the provisions herein during the effective period of the comprehensive credit facility.

 Credit Amount Used: The sum of the balance of outstanding loan principal for one specific business during the effective period of the comprehensive credit facility provided herein.

Specific Business Contract: Corresponding contract or agreement entered into between Party A and Party B regarding one specific business and the specific credit amount.

3

Article II  Maximum Credit Amount and Specific Credit Amount

2.           The maximum credit amount granted hereunder by Party B to Party A is RMB 100,000,000.00 (including that in foreign currency converted to RMB).

3.           Within the maximum credit amount mentioned above, the specific credit amount for each specific business is:

General loan: specific credit amount RMB 100,000,000.00

The parties hereto agree that, within the maximum credit amount, the amount can be adjusted or changed according to specific business types and be crossed used in between.

Article III  Term of the Credit Facility

4.           The effective term for use of the maximum credit amount is: April 2, 2011 to April 1, 2012.

The term of the specific business is to be provided in the specific business contract; however, the beginning date for use of the specific credit amount must not be later than the above end date of the maximum credit amount.

Article IV  Use of Maximum Credit Amount and Specific Credit Amount

5.           Party A may apply to Party B in one time or separately for use of each specific credit amount within the limit of maximum credit amount and its effective period; Party B will confirm the name of Party A's specific business, amount approved and the term based on Party A's credit and Party B's lending policies.

6.           Provisions on the revolving use: Party A may use the specific credit amount on a revolving basis within the limit of maximum credit amount and its effective period.

7.           Party A and Party B must execute an specific business contract; if any discrepancies exist, the specific business contract shall prevail.

4

Article V  Fees and Interest Rate

8.           The interest rate, conversion rate, fee rate and other fees charged by Party B will be specified in the specific business contract.

Article VI   Adjustments to Maximum Credit Amount and Specific Credit Amount

9.           Upon the occurrence of the following, Party B has the right to adjust the maximum credit amount and specific credit amount and the term thereof and to terminate the comprehensive facility.

9.1         Major changes of the State’s currency policy;

9.2         Potential material financial risk in Party A’s region;

9.3         Material changes in Party A’s business sector;

9.4         Operation difficulty or risk experienced or will be experienced by Party A;

9.5         Party A’s undertaking spin-off, merger, or being terminated;

9.6         Party A’s failure to use the funds from the facility for the stated purposes;

9.7         Transfer of assets, flight of capital or avoidance of debts by Party A;

9.8         Party A’s breach of provisions herein;

9.9         Shortage of funds or major operation difficulty experienced by Party A’s guarantor;

9.10       Damage to or loss of the security property mortgaged by the guarantor;

9.11       Other events or situations that, in Party B’s view, affects or will affect Party B’s repayment ability;

9.12       The balance in Party A’s account set up with Party B is below ____% of the sum of the credit amounts used on the settlement date;

9.13       Failure by Party A to perform any obligations provided in an specific business contract.

10.         After the signing of this agreement, Party A may apply in writing to Party B for adjustment to each of the specific credit amounts.

Article VII  Guarantee

11.         The Maximum Amount Contract has been entered into between WU Zishen, the Guarantor and Party B (contract No. HHHT(2011)ZGZRRBZ0010).

12.         If Party B deems it necessary, Party B still has the right to demand Party A to provide additional guarantee when the two parties are discussing specific business applications and Party A must not refuse.

5

Article VIII  Party B’s Commitments

13.         When Party A applies for the use of specific credit amount in accordance with the provisions herein, Party B must promptly review the application and notify Party A of the review result.

14.         Party B shall not arbitrarily make adjustments to maximum credit amount and specific credit amount which are adverse to Party A, unless otherwise stipulated.

Article IX  Party A’s Commitments

15.         Repay the debts on time in accordance with specific business contracts and pay all the fees on schedule.

16.         The use of the specific credit amount must comply with the law and the provisions herein and those in specific business contracts and must accept Party B’s supervision.

17.         Provide to Party B truthful financial reports, bank accounts balance situation and other relevant operation documents during the term of the facility.

18.         The balance in Party A’s account set up with Party B must not be below ____% of the sum of the credit amounts used on the settlement date.

19.         Provide advance notice to Party B if Party A provides guarantee to any third party and such guarantee must not affect Party A’s repayment ability during term of the facility.

20.         The obligation to notify Party B upon the occurrence of the following during the term of the facility:

20.1       Within 15 days starting from the date of any change of legal representative, business address, increase/decrease of registered capital, major changes in equity and investment.

20.2       Immediately upon the occurrence of any involvement in major litigation, arbitration or other legal proceedings or administrative sanctions, or material changes in Party B’s operation or financial situations that will impact the realization of Party B’s creditor’s right.

20.3       Within 2 months upon the occurrence of any major corporate event such as M/A, spin-off or capital reorganization, any form of contract operation, lease that will change the business operation right, business or operation method restructuring, filing for dissolution, bankruptcy or ceasing business, and repay all the outstanding debts or make arrangements for repayments.

21.         If Party A violates any provisions herein or those in specific business contracts, Party B shall have the right to recall all the funds under the maximum credit amount in advance and terminate this agreement and specific business contracts.

6

Party A shall be responsible to compensate Party B for all the resulting losses.

Article X  Effectuation of the Agreement

22.         This agreement becomes effective on the day of its execution by both parties.

Article XI  Resolution of Dispute

23.         Any dispute in connection with this contract must be settled through consultation; if consultation fails, both parties may submit the dispute to legal proceedings at the local court where the Party B resides.

Article XII  Complete Agreement

24.         Each of the specific business contracts entered into in accordance with this agreement is the component part hereof and, together, they form the complete agreement.

25.         Party A’s failure to perform its obligation under any specific business contract constitutes a breach of this agreement and Party B may terminate this contract and recall all the outstanding debts in advance.

26.         Upon Party B’s approval, Party A may grant all or some of the amount of the facility hereunder to other units and execute relevant specific business contract in the name of such units.  Specifics must be based on “Credit Facility Use Authorization” issued by Party A and acknowledged by Party B.

27.         Such “Credit Facility Use Authorization” need not specify the amount of the specific credit amount mentioned in Section 3 herein.

28.         Such “Credit Facility Use Authorization” must specify whether the grantee units have any transfer right.

29.         Other matters not covered herein may be provided in supplemental agreement hereto.

Article XIII  Supplementary Provisions

30.         This contract has to three copies, and all have the same legal effect.

31.         This contract is executed on April 2, 2011 in Hohhot.

7

32.         The parties hereto agree that this contract must be certified (optional provision; not applicable to this contract.)

33.         If, at any time, any of the provisions herein becomes illegal, invalid or unenforceable in any aspect, the legality, validity or enforceability of other provisions herein shall not be affected or diminished.

34.         In the event of bank acceptance note service (not applicable).

35.         Other provisions (none).

Party A:                        /seal/ Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.

Legal Representative:  /s/ WU Zishen

Party B:                        /seal/ China Everbright Bank Holdings. Co., Ltd., Hohhot Branch

Legal Representative:  /s/ HUANG Zhangren

8

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13A-14(A)/15D-14(A)

of the Securities Exchange Act of 1934

I, Zishen Wu, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2011 of Yongye International, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 9, 2011	By:	/s/ Zishen Wu
		Zishen Wu
		President and CEO (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13A-14(A)/15D-14(A)

of the Securities Exchange Act of 1934

I, Sam Yu, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2011 of Yongye International, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 9, 2011	By:	/s/ Sam Yu
		Sam Yu
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 AND EXCHANGE ACT RULES 13a-14(b) AND 15d-14(b)

(Section 906 of the Sarbanes-Oxley Act of 2002)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Yongye International, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 of the Company fully complies, in all material respects, with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 9, 2011	By:	/s/ Zishen Wu
		Zishen Wu
		President and CEO
Dated: May 9, 2011	By:	/s/ Sam Yu
		Sam Yu
		Chief Financial Officer