Dim Sums: Agricultural Markets in China

Brazilian authorities approved a Chinese company's genetically modified soybean seed to be grown in Brazil. Chinese company DBN (Da Bei Nong) described this as a strategy to supply seeds for growing South American soybeans exported to China, thus capturing more value from the supply chain. DBN dreams of making money from seeds, but most of its income comes from selling animal feed and pigs in China. According to DBN, its genetically modified soybean variety that combines herbicide-tolerant and pest-resistant traits passed a safety evaluation by Brazil's National Biosafety Technical Committee. The two events DBN9004 and DBN8002 were approved for planting in Brazil in 2023 and 2024, respectively.  DBN said the company now has to gain approval of the variety in "importing countries"--that would include China--before the seeds can be planted commercially in Brazil. China requires that a new round of testing and evaluations be conducted before GMO varieties can be approve...

Worried that its fragmented seed industry is falling behind multinational companies, China is finishing up a 10-year plan to create national champion seed companies. A 2-year-old plan hatched by Xi Jinping to create a "Silicon Valley" for seeds--the so-called "silicon chips of agriculture"--has big ambitions, but it depends on funding from overextended State banks and the basic matter of acquiring farmland to grow the seeds. On March 1, the Ministry of Agriculture and Rural Affairs (MARA)  held a meeting to boost implementation of a 2023-2030 "South China Seed Silicon Valley Construction Plan." According to the Ministry, the project will build a sprawling complex of labs and testing/propagation farms in Hainan Province, a region where seed breeders have long focused their work due to the ability to grow crops year-round in the sub-tropical climate. The South China zone is planned to be a center for seed breeding innovation in China, a platform for interna...

A Chinese company is seeking Argentine approval for a genetically modified soybean strain that would be grown in South America and exported back to China. This appears to be a gambit to break down Chinese consumers' resistance to commercializing GM crops in China. By demonstrating that foreign scientists think GM seeds are safe, Chinese government and industry leaders hope consumers will give up their resistance to allowing GM food crops to be grown in China. According to Science and Technology Daily , Da Bei Nong (also known as DBN) Group, a feed, seed and crop protection company based in Beijing, has spent three years seeking Argentine approval to commercialize a GMO soybean variety that is resistant to both glyphosate and glufinosate--two common herbicides. DBN is working with Argentine company Bioceres to gain the approval and eventually develop marketing channels for the seed in Argentina. This has also been r eported by an international organization ISAAA . The Science an...

China's new "Aid + Market" initiative blurs the lines between foreign aid and commerce by using technical assistance projects as a platform to export hybrid rice seed. The program was announced in conjunction with a 500-billion yuan (?!) agreement signed last month between Longping High Tech Agriculture Co. and the Sanya Municipal research institute to set up a foreign market research and development center in Hainan Province. Longping is a seed company formed by two Hunan Province rice research institutes in 1999. It is named after its figurehead, Yuan Longping, known as "father of China's hybrid rice." The company has carried out Chinese rice demonstration projects in Southeast Asia, South Asia, and Africa for many years. According to 21st Century Business Herald , the new strategy is part of the One Belt One Road initiative which aims to build new trade routes from western China to Europe through Central and South Asia. Many of the Belt-R...

A flagship grain-trading company and a seed company will be among six state-owned companies to be created by consolidating hundreds of enterprises under the supervision of government bureaus and research institutes in China's Shandong Province . The Shandong plan appears to be part of China's initiative to strengthen its sprawling system of state-owned enterprises. The plan also dovetails with other initiatives to create competitive grain-trading companies, promote "indigenous innovation" in seeds and animal breeding, and to overhaul the grain reserve system. Luliang Grain Group ( 鲁粮集团 ) will be created by merging 19 enterprises now under the administration of the Shandong Province Grain Bureau. The company's business will encompass the whole supply chain, holding reserves, processing, and distribution. The seed group will be created by merging 78 enterprises under the provincial academy of agricultural sciences. The other four companies will consolidate enter...

Prices are soaring for a type of corn seed suited for planting in cold climates, an indicator that corn is continuing to displace soybeans in China's far-north agricultural fringe. A report from China's Grain and Oils News says that the price of Demeiya No. 1 corn seed has doubled from 675 yuan per bag to 1375 yuan in some areas of Heihe, a region of Heilongjiang Province that borders Russia. Each bag contains 50,000 seeds, said to be enough to plant 7.5 mu. Demeiya No. 2 and No. 3 seeds are sold by weight, and their price has risen from 18.5 yuan/500g to 22.5 yuan/500g. Demeiya is a variety of corn developed by German seed company KWS to grow in northern climates where the growing season is short. The seed was introduced in China as result of a link-up between KWS and Kenfeng Seed, a company linked to the State farm system in Heilongjiang Province which controls large tracts of land along the border with Russia. Demeiya seed was introduced in the earl...

For more than a year, Chinese border officials have been rejecting shipments of corn containing any trace of unapproved genetically-modified strains. No GMO corn has been approved for planting inside China, but there are indications that production of unapproved GMO corn has quietly spread despite crackdowns over the past four years. If Chinese officials were really serious about keeping unapproved GMOs out of their food system, they would test domestic corn as well. Chinese corn prices are more than double the price in the United States, but the GMO issue is a barrier to imports from all the leading exporters--the United States, Brazil and Argentina. Consequently, Chinese traders are scouring the globe for other cheap feed ingredients. On November 18, 2014 AQSIQ, China's agency for inspection and quarantine, posted an online Q&A where Chinese trading companies peppered an AQSIQ official with dozens of questions about importing corn, sorghum, ...

The Chinese government is giving domestic seed companies tax breaks, engineering consolidations, and setting up a jerry-rigged system of supplying publicly-funded seed research to private companies to prop up its seed industry. The aim is to stem the dominance of multinational companies in China's seed market and preserve "seed sovereignty." The official China News Network reported on the seed industry strategy discussed by Ministry of Agriculture officials at a seed industry trade fair in Changsha, Hunan on September 16. In a series of documents issued since 2011, China's State Council has identified the seed industry as a "strategic foundational industry" essential to agricultural development and food security. The Government has issued supportive policies and is preparing a revision of the "seed law" which purportedly promises a "golden age" welcomed by the (Chinese) seed companies. While China has the second-largest number of see...

China's official strategy for addressing agricultural problems is to replace traditional peasant-style farming with an industrial-style model of standardized mass production. The transformation is taking place gradually, one link in the supply chain at a time. One key strategy is to standardize products by concentrating the supply of inputs like breeding stock and seedlings on large-scale factory-style operations, often with subsidies. An example is a 2-year-old campaign to promote concentrated seedling (集中育秧) farms as a strategy to promote double-cropping of rice. Dim sums blog reported on the initiation of this program in 2012  with a 100 million yuan fund supplemented by provincial funds. The program gives subsidies to centralized companies, cooperatives and large farms that grow large volumes of rice seedlings in greenhouses or plastic tunnels that are supplied to local farmers and transplanted--preferably with machines--in the early spring. This "early rice" is har...

China's leadership has adopted a cautious approach toward genetically modified foods. They want to keep one food on the accelerator by pushing more research, while keeping the other foot on the brake by slowing down commercial approvals. Any research results remain bottled up in laboratories as wariness of GMOS among consumers builds. This approach raises the question, "Who will persevere in research on things that may never be used?" China's contentious GMO debate popped up at a January 22 press conference where the top agricultural policy advisor, Chen Xiwen, expounded on various topics in the central communist party leadership's "Number 1 Document" on rural policy released earlier this week. The document contained no direct mention of genetic modification, but the section encouraging innovation in agricultural science and technology included a call to "strengthen molecular breeding" as a foundation for research and biotechnology. Chen e...

China's "seed industry crisis" is both a sign of weakness and a metaphor for the broader shortcomings of China's economic growth model. Seeds are the core of agricultural productivity and Chinese industry and government officials are grinding their teeth over the growing popularity of seeds sold by multinational companies. The dominance of foreign companies in one sector after another is portrayed as unfair competition, monopoly, plots against China, blah, blah, but at its core, the competitive position of Chinese companies reflects a systemic problem in the Chinese economy--the country has not figured out how to innovate and create. In March the Peoples Daily network posted an article, " Multinational Seed Companies Have Full Access; Native Seed Companies Face Enormous Challenge ," which appears to be part of a campaign to promote the Chinese seed industry (and part of the broader nationalistic campaign against foreign companies like Apple, foreign fast ...

One of factors contributing to China's big expansion of corn production is the availability of a new seed variety that extends the frontier of corn production further north into regions that are frozen most of the year. According to  Farmers' Daily , early-maturing corn varieties Demeiya Nos. 1, 2, and 3 imported from Germany have become very popular in recent years among state farms in China's northern latitudes along the northern border. The German company KWS has a joint venture with Kenfeng, a Chinese seed company that also has its roots in the state farm system of Heilongjiang, and Kenfeng markets the seed. According to Farmers Daily,  Demeiya is high-yielding, good quality, resistant to lodging, can be densely planted and dries quickly. The seed was introduced in China during 2007 and quickly gained popularity [perhaps helped along by Kenfeng's links to the state farm system?]  Farmers Daily reported that Demeiya accounted for 65% of corn seed ...

One of China’s flagship farm programs is a subsidy to encourage farmers to purchase improved seed strains. Officials and news media depict it as a glowing success that has encouraged backward farmers to buy commercial seed that raised yields and standardized products. However, the news media seldom report widespread complaints about the program from farmers, seed merchants and village officials. It seems that in many areas the seed subsidy was hijacked to become a honey pot for local agricultural officials and the seed companies historically associated with the agricultural bureaucracy. Some critics accuse the program of hindering the spread of quality seeds and even raising costs for farmers. The Ministry of Agriculture made adjustments to the program but problems seem to persist in some regions. An Investors News 《投资者报》 article, “ Fine Seed Subsidy Pulled into the Quagmire of Competing Interests ,” posted on an agricultural news site in February (although it seems to have be...

China is desperate to raise agricultural productivity. Multinational companies are eager to do business in China and can offer technology and improved breeds. Yet many in China fear that allowing multinationals free rein in the country will wipe out weak domestic seed companies. The Ministry of Agriculture recently released new draft regulations on licensing in the seed industry that are open for public comment until September 25. According to Farmer's Daily , the purpose of the new regulations is to raise the threshold for entering the seed industry, promoting development of stronger, integrated seed companies through mergers and acquisitions. The regulations raise capital requirements for companies engaged in rice and corn breeding six-fold and triples the capital requirements for seed-trading companies. Companies are required to have their own breeding personnel, fixed seed production areas, a complete after-sale service system and have their varieties validated. China has o...

China's Ministry of Agriculture is taking some heat for allowing unapproved genetically modified (GMO) varieties of corn and rice leak into the market. On June 30 the Ministry of Agriculture held a meeting to discuss management of GMOs. According an article posted on many web sites this week , the Ministry of Agriculture's oversight of GMOs was described as "relatively chaotic." At the meeting MOA officials repeatedly said, “No imported genetically modified grain seeds have ever been approved and no permits have been given for planting any GMO grains in the country.” However, the article says Chinese fields already have large areas planted in GMO’s, including corn “not approved for commercialization” and GMO rice. In 2010 testing began on three kinds of GMO corn seed: Denghai 3686 (named after a scientist Li Denghai), Zhongnongda 386 and Zhongnongda 4 (apparently named after Central China Agricultural University). In December 2010 the Ministry of Agriculture issued a ...

The National Development and Reform Commission and Ministry of Agriculture jointly released an emergency notice requiring agricultural and price monitoring departments to check up on seed prices and quality. The campaign is motivated by rising seed prices ahead of the spring planting period and abnormal weather events. The notice calls for setting up a seed market monitoring and reporting system. They are to make sure seed supply and demand are balanced in each region, watch the structure of seed varieties, marketing channels, and sale methods. The reports are supposed to be released to the public to guide farmers in "scientifically" choosing seeds. The emergency system will attempt to guide seed prices, adopting price controls when necessary, to prevent large increases in seed prices. Illegal speculators or hoarders will be severely punished.

Chinese agriculture departments and police are in the midst of a campaign to crack down on seed crooks: violators of intellectual property and those who manufacture or sell counterfeit or poor quality seed. The Ministry of Agriculture featured a rally held in a square in Wuwei City, Gansu Province . They announced that 30 metric tons of fake and poor quality corn seed was destroyed. This campaign was launched after the State Council announced a broader crackdown on intellectual property right violators and sellers of fake and poor quality goods. According to the article, fake seeds "flood the market", having serious effects on farmers' profits, causing confusion in the market, and seriously affecting the reputation of the communist party and the government. Since the campaign started, they have mobilized thousands of personnel to perform thousands of investigations and crackdowns. Forty producers of fake seeds have been shut down, 925,000 kg of fake seeds have been seized...

Problems with poor quality seeds are a big problem in Chinese agriculture. The seed market is often described as chaotic. In April, the Ministry of Agriculture released the results of its 2009 tests for seed quality . The Ministry chooses a sample of companies and seed varieties to test each year. At first glance, the compliance rate looks pretty good, but they admit that one-third of the companies selected failed to submit samples. So the results may be meaningless if companies that know their seeds have problems didn't submit to the tests. The Ministry tested 212 samples of hybrid corn and rice seeds from 139 companies nationwide: 118 corn samples and 94 rice seed samples. Samples were selected from commercial seed varieties sold by the companies. They were tested for moisture, variety purity, and germination rate. For corn seeds the compliance rate was 89.8%. Seventy of the 81 companies were completely in compliance. Results for rice seeds were better: only 2 samples failed. The...