Page 160 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
soy seeds business, which is dominated by the company Crops
formally known as Monsanto Inc. (Reuters, Chinese Firms
Invests). The sale of Monsanto to German pharmaceutical At the end of 2017, China’s grain farmers looked
company Bayer closed on June 7, 2018. Bayer announced back at a year of severe rice overcapacity, easing corn
its intent to discontinue the Monsanto name, with the overcapacity, and huge wheat reserves. In 2018, rice
combined company operating solely under the Bayer farmers faced fierce competition, while corn producers
brand. The combined company is expected to continue saw recovering prices and wheat farmers were weaned
to expand in the Chinese market as well. from minimum purchase price cut. China’s farmers
have produced almost the same amount of hybrid rice
Chinese firms have spent about US$100 billion over in 2017, as it was the case in 2016. While the yield per
the past decade purchasing over 300 foreign companies hectare went down slightly the area of farming has been
involved in agriculture, chemicals and food, and the increased, which balanced out the loss significantly. The
government backs many of these purchases. Experts planting area of conventional rice grew to more than 121
said the purchases are part of China’s plan to improve thousand hectares in 2017, strengthening the tendency
its ability to supply food to its population of nearly 1.4 that conventional rice seeds are to take over the market
billion. As Chinese living standards improve and citizens of hybrid rice in China. As opposed to the hybrid rice
demand more meat products, the country needs a seeds market situation in China, hybrid corn seeds have
growing supply of animal feed. The latest seed purchases witnessed a significant drop in 2017, leading to a release
show China wants to lock down the scientific know-how of the overcapacity of hybrid corn seeds in the 2018.
needed to improve its domestic crop yields. China is According to China’s Corps Market (CCM) research, the
contending with major agricultural challenges such as an planting area of hybrid corn decreased by more than
aging agricultural workforce, pollution, climate change, one quarter, basically returning the actual planting
high levels of soil depletion, and farms that suffer from area to the scale it was about 15 years ago. The output
low yields due to outdated farming practices. As CNN fell alongside the smaller planting area. The downsize
pointed out, all countries try to protect against food measurements are part of the corn planting structure
shortages, but the issue is particularly sensitive in China. reform promoted by the Chinese government to ease the
The country suffered severe food shortages in the late high pressure from the high inventories established in
1950s (Petroff ). It doesn’t want to repeat this history. previous years. The price of corn in China stopped falling
amid the reduced supply. China announced would cut its
Chinese farmers had more corn genetic technology minimum price for purchasing wheat in 2018, aiming to
access in 2018. Stine Seed Company has long kept ease the pressure on the huge reserves the country has
relations with China, and sealed their relationship built over the last decades (CCM).
through a collaborative agreement with Bejing W. Seed
in late 2017. Stine director of sales and marketing David A profound transformation in Chinese agriculture that
Thompson said, “We’ve been making end roads in the has been unfolding since the 1980s involves a shift away
Chinese market for about five years now. It’s an emerging from a preoccupation with producing enough grain for
market, from a retail perspective. The book is still being the country’s needs, towards boosting rural incomes
written on what that market potential is—but we know by encouraging farmers to grow more profitable crops
it’s high.” Since China is more willing to import soybeans and use the scarce, arable land more efficiently. China
and seeks self-sufficiency in corn, Stine will focus efforts currently grows enough staples to feed its 1.4 billion
on improving corn production first. Thompson claimed people. The rice crop of 2017 was a record; output of
his company tests and evaluates about 20,000 genetically grains has risen more than 40 percent since 2003. Cereal
unique hybrids every year. “Out of the 20,000, only two yields per hectare are higher than Canada’s. These
or three dozen ever see commercial production,” he said. accomplishments, however, have come at a cost. China
Like many genetic companies the idea is to create as uses twice as much fertilizer and pesticide per hectare
many options as possible, test them and keep only the as the world average, contributing to catastrophic levels
best performers. Thousands of hybrids potentially go of soil pollution. In northern China, wheat farmers use
wasted, so to stretch efforts further those seeds will be far more water than this bone-dry region can afford or
tested in the Chinese environment to see what can be replace. Huge food scares resulted from food quantity
used. In some cases, US and Chinese farmers could be taking priority over quality. Furthermore, the exodus
planting the same seed as some hybrids perform across a from the land has slowed, implying that the problem
broad number of environments (AgWeb). of underemployment is not going away. The farming
160
soy seeds business, which is dominated by the company Crops
formally known as Monsanto Inc. (Reuters, Chinese Firms
Invests). The sale of Monsanto to German pharmaceutical At the end of 2017, China’s grain farmers looked
company Bayer closed on June 7, 2018. Bayer announced back at a year of severe rice overcapacity, easing corn
its intent to discontinue the Monsanto name, with the overcapacity, and huge wheat reserves. In 2018, rice
combined company operating solely under the Bayer farmers faced fierce competition, while corn producers
brand. The combined company is expected to continue saw recovering prices and wheat farmers were weaned
to expand in the Chinese market as well. from minimum purchase price cut. China’s farmers
have produced almost the same amount of hybrid rice
Chinese firms have spent about US$100 billion over in 2017, as it was the case in 2016. While the yield per
the past decade purchasing over 300 foreign companies hectare went down slightly the area of farming has been
involved in agriculture, chemicals and food, and the increased, which balanced out the loss significantly. The
government backs many of these purchases. Experts planting area of conventional rice grew to more than 121
said the purchases are part of China’s plan to improve thousand hectares in 2017, strengthening the tendency
its ability to supply food to its population of nearly 1.4 that conventional rice seeds are to take over the market
billion. As Chinese living standards improve and citizens of hybrid rice in China. As opposed to the hybrid rice
demand more meat products, the country needs a seeds market situation in China, hybrid corn seeds have
growing supply of animal feed. The latest seed purchases witnessed a significant drop in 2017, leading to a release
show China wants to lock down the scientific know-how of the overcapacity of hybrid corn seeds in the 2018.
needed to improve its domestic crop yields. China is According to China’s Corps Market (CCM) research, the
contending with major agricultural challenges such as an planting area of hybrid corn decreased by more than
aging agricultural workforce, pollution, climate change, one quarter, basically returning the actual planting
high levels of soil depletion, and farms that suffer from area to the scale it was about 15 years ago. The output
low yields due to outdated farming practices. As CNN fell alongside the smaller planting area. The downsize
pointed out, all countries try to protect against food measurements are part of the corn planting structure
shortages, but the issue is particularly sensitive in China. reform promoted by the Chinese government to ease the
The country suffered severe food shortages in the late high pressure from the high inventories established in
1950s (Petroff ). It doesn’t want to repeat this history. previous years. The price of corn in China stopped falling
amid the reduced supply. China announced would cut its
Chinese farmers had more corn genetic technology minimum price for purchasing wheat in 2018, aiming to
access in 2018. Stine Seed Company has long kept ease the pressure on the huge reserves the country has
relations with China, and sealed their relationship built over the last decades (CCM).
through a collaborative agreement with Bejing W. Seed
in late 2017. Stine director of sales and marketing David A profound transformation in Chinese agriculture that
Thompson said, “We’ve been making end roads in the has been unfolding since the 1980s involves a shift away
Chinese market for about five years now. It’s an emerging from a preoccupation with producing enough grain for
market, from a retail perspective. The book is still being the country’s needs, towards boosting rural incomes
written on what that market potential is—but we know by encouraging farmers to grow more profitable crops
it’s high.” Since China is more willing to import soybeans and use the scarce, arable land more efficiently. China
and seeks self-sufficiency in corn, Stine will focus efforts currently grows enough staples to feed its 1.4 billion
on improving corn production first. Thompson claimed people. The rice crop of 2017 was a record; output of
his company tests and evaluates about 20,000 genetically grains has risen more than 40 percent since 2003. Cereal
unique hybrids every year. “Out of the 20,000, only two yields per hectare are higher than Canada’s. These
or three dozen ever see commercial production,” he said. accomplishments, however, have come at a cost. China
Like many genetic companies the idea is to create as uses twice as much fertilizer and pesticide per hectare
many options as possible, test them and keep only the as the world average, contributing to catastrophic levels
best performers. Thousands of hybrids potentially go of soil pollution. In northern China, wheat farmers use
wasted, so to stretch efforts further those seeds will be far more water than this bone-dry region can afford or
tested in the Chinese environment to see what can be replace. Huge food scares resulted from food quantity
used. In some cases, US and Chinese farmers could be taking priority over quality. Furthermore, the exodus
planting the same seed as some hybrids perform across a from the land has slowed, implying that the problem
broad number of environments (AgWeb). of underemployment is not going away. The farming
160
