Replies to post #91745 on Biotech Values

[DewDiligence]

Bring it on! I’d like to know how China will be able to compete with
the likes of MON unless the plan is simply to steal the IP. Here’s
the full newswire you excerpted for archival purposes.

›China says has not allowed imported GMO grain seeds for planting

BEIJING, March 3 (Reuters) - China will accelerate development of its own genetically modified (GMO) crops, seeking to secure food security and international competitiveness, an official from the country's Ministry of Agriculture said.

The official from the Ministry's biosafety administration office also denied recent media reports that China had already approved imported GMO grain seeds for widespread planting. His remarks were published by state media on Wednesday.

"The Ministry of Agriculture has never approved any genetically-modified grain seeds for planting in the country, and there are no GMO grain crops being planted within the country," said the unnamed official.

The GMO cotton, soy, maize and rapeseed approved for import into China were "restricted to use as raw materials for processing," but not for planting, said the official.

But the official also described hopes that China will be a leading player in international competition to create and grow its own GMO crops that are resistant to pests and diseases.

"Accelerating technical research on GMO crops and their application and healthy development will provide a vigorous scientific support for the sustainable development of China's agriculture," said the official, in the interview that also appeared on the ministry's website.

Developing GMO strains was important for both international competitiveness and ensuring China's food security, said the official.

China approved the safety of the insect-resistant Bt strain of rice and phytase corn last November, opening the door to widespread planting of the GMO grain crops, within about three years.

A survey conducted by the Chinese Academy of Sciences (CAS) showed that Bt rice could cut pesticide use by as much as 80 percent and save labour costs for farmers, boosting net income by $72 per hectare.

More than 20 GMO crops have been approved for field trials, including wheat, soybean and rapeseed, according to the CAS report published last month.

China's largest feed mill, the New Hope Group, said the company was supporting GMO corn, which could help China produce enough grain to meet rising demand for animal protein.

"I think GMO technology is a good thing... It can resolve the problem of grain supply for food, for animal feed and industry on limited farmland," said its chairman, Liu Yonghao, on Tuesday.

"We have no choice, either we import large quantities of corn or grow GMO corn. I think the government will choose to grow GMO corn," said Liu.‹

[DewDiligence]

Monsanto, Sinochem Discuss Deeper Biotech Alliance

[The reason this is tricky: MON has been (rightfully, IMO) unwilling to unduly expose its IP to a JV, and China's rules prohibit biotech field trials by a foreign company. I'm still skeptical that China is willing to play fair, but a breakthrough to this impasse ought to be bullish for MON's share price. See #msg-61383009 and #msg-47775586 for related stories.]

http://online.wsj.com/article/SB10001424052702303678704576438151534829450.html

›JULY 11, 2011
By DENNIS K. BERMAN, GINA CHON and SCOTT KILMAN

Chemicals conglomerate Sinochem Corp. is in advanced discussions with Monsanto Co. to deepen their ties significantly, people familiar with the discussions said, an important sign of China's growing appetite for U.S. crops and biotechnology.

The two companies have been in talks for months, the people said. It was unclear what form an agreement might take, though arrangements could include a large joint venture, the sale of a minority stake or Sinochem assuming a larger role marketing Monsanto products in China.

Discussions have been difficult, the people said, because of economic and political sensitivities of moving the companies closer together. "You have to be very cautious and careful in these situations," one of the people familiar with the matter said. "It's all very sensitive."

A Sinochem spokesman said he wasn't aware of a deal involving Monsanto and declined further comment. Monsanto also declined to comment.

With a market value of $40 billion, Monsanto dominates crop biotechnology, a 15-year-old market the St. Louis company essentially created.

Monsanto has at least one of its patented genes in about 90% of all the soybeans grown in the U.S. and in about 80% of U.S. corn. Farmers pay a big premium for seeds containing such genes because they equip plants to, for example, tolerate exposure to Monsanto's popular Roundup herbicide or produce their own insecticides.

Beijing-based Sinochem has a similar role in China, where it is the nation's largest importer and distributor of fertilizer and a large seed producer. Begun as a state-owned enterprise in 1950, the government-owned company today has more than $50 billion in annual revenue with operations that include real estate and finance. But Sinochem's primary role is to help ensure food security in the world's most populous nation, which increasingly means expanding internationally to procure supply lines and technology to feed 1.34 billion.

Although China is the world's largest producer of wheat and rice, and the second-largest producer of corn, behind the U.S., the country isn't producing enough. That forces China to import more crops—a rare category in which the U.S. is a net exporter to China—to keep volatile food prices from stirring up discontent.

China's ability to grow more grain is limited. There isn't much arable land that isn't already under plow and the water table in some areas is falling amid heavy irrigation. The surest way for China greatly to increase its harvests is to raise field productivity—an area ripe for improvement. Chinese corn farmers produce an average of 85 bushels an acre compared with about 158 bushels for U.S. farmers [see table in #msg-60878732], according to the U.S. Agriculture Department.

A big differences between U.S. farmers and their Chinese counterparts is crop biotechnology. Outside of cotton and papaya, few of China's crops are genetically modified. In the U.S., where genetically modified seeds were introduced commercially in the mid-1990s, the vast majority of the corn, soybeans and cotton are bioengineered.

The Chinese government is doing extensive crop-biotechnology research, but the country remains far behind the U.S. in terms of commercialization partly because Beijing, leery of ceding control of its food supply to outsiders, has wanted to control the technology.

Monsanto has had a hybrid-corn-seed joint venture with Sinochem's China National Seed since 2001. But Monsanto, which agreed in 2008 to pump an additional $84 million into the venture, is a minority partner. A senior Monsanto executive complained last year that the Chinese government was continuing to ban foreign companies from investing in agricultural biotechnology in China.

Chinese companies have been eager to develop close ties to U.S. agricultural companies. China's Cofco Ltd. owns a 4.2% stake in U.S. pork processor Smithfield Foods Inc. DuPont Co.'s seed unit has corn-breeding joint ventures in China.

Sinochem has made no secret of its desire to strengthen its agricultural technology, saying in its 2010 annual report, "We are committed to developing ourselves into China's largest and the world's leading provider of agricultural inputs and services."

The Chinese government is concerned about food security because the expanding economy is creating more middle-class families who want to upgrade their diets by eating more meat and drinking more milk, which requires crops for feeding livestock. China imports nearly a quarter of the U.S. soybean crop, in part to fatten hogs and chickens craved by China's middle class.

Should Sinochem and Monsanto strike a new alliance, they will have to proceed carefully. Countries including Canada, the U.S. and Australia have grown more protective of their home industries, fearing the leakage of significant technology to foreign buyers, notably China. Chinese telecommunications company Huawei Technologies Co. dropped its offer for 3Leaf Systems Inc. this year after the U.S. Committee on Foreign Investment in the U.S. opposed the deal.

Protecting natural resources has been a particular concern for governments. A $5.5 billion deal for Canada's Ecana Corp. to sell a 50% stake in a natural-gas field to China's PetroChina Co. fell apart last month, partly because of politics, people familiar with the matter said.‹