Farmers sow a crop in Pingluo county, Ningxia Hui autonomous region. [China Daily]
The aggressive expansion tactics adopted by foreign seed companies in China have increased concerns over the nation's food safety especially at a time when agricultural yields have been falling.
Though the situation is far from alarming, domestic seed companies need to wake up to the threat and build necessary safeguards to retain their market share, agricultural economists said on Wednesday.
Worries surfaced after prices of some agricultural products spiraled in the past few months, and also amid concerns that the prevailing weather vagaries will impact yields over the next few months.
Though foreign seed companies have a presence in China, they are dominant only in the supply of non-staple seeds like tomato and pepper and hence not a major threat to food safety.
There are 35 foreign seed companies in China. Out of this five supply corn seeds, while the rest are involved with vegetable and flower seeds.
International seed companies have a limited market share in the staple seeds market especially in grains like wheat, corn and rice, said Xu Xiaoqing, a rural economic expert with the Development Research Center of the State Council.
Foreign corn seeds account for just 10 percent of the overall maize market in the nation, Hu Ruifa, a researcher at the Center for Chinese Agricultural Policy under the Chinese Academy of Sciences, told China Daily.
"Foreign seed companies are gaining ground, but that does not mean they are a threat to grain safety yet," said Hu.
Pioneer Hi-Bred International Inc is one of the foreign seed companies in the corn market. The US company has increased the area under Xianyu 335 corn seed cultivation to 40 million hectares this year.
The company's expansion has raised eyebrows as it is fast approaching the 60 million hectares under Zhengdan 958, the biggest domestic corn seed, said Hu.
China has a total corn sowing area of around 450 million hectares.
Corn prices are expected to continue their uptrend this year also, said experts. The average purchasing price of corn per kilogram has increased from 1.88 yuan (28 cents) in January to 2.12 yuan in July, said Ma Wenfeng, an analyst with Boabc Agriculture Network.
The situation is not that bad when it comes to other staples like wheat and rice where domestic companies still have a sizable lead over foreign players.
The nation's total grain harvest was around 500 million tons last year, with corn accounting for 155 million tons, according to government data.
But analysts said the scenario may not remain the same. Chinese companies will have to make significant technological advances and develop better marketing strategies if they have to stay ahead of the foreign companies, they said.
Lack of research and development (R&D) facilities is a major issue confronting domestic seed companies. "The technology used for domestic corn is 10 to 20 years behind the US companies," said Hu.
China has about 8,700 seed firms, and only 10 of them have independent R&D capabilities, he said.The industry should also increase the entry threshold for seed companies. At present, companies need registration funds of only 1-5 million yuan to enter the market, he said.
"The government should reduce the number of seed companies to around 100 by increasing the threshold for seed companies, while the smaller players can become suppliers for the big companies," Hu said.
