The National Development Plan 2012-2020 for Modern Crop Seed Industry (hereinafter referred as Seed Industry Plan 2012-2020), promulgated by the State Council, aims at encouraging seed enterprises to gradually take the place of the higher education and other scientific institutes in the dominance of breeding seeds. Only in this way can Chinese seed industry develop much better in future, according to Seed China News 1303 issued by CCM in March.
Seed breeding research of commercialization is different with the one dominated by research institutes in that the former is market-oriented and aims at the company development by generating new varieties suitable for mechanized operations with a high & stable yield, a good quality, a wide adaptability and stress tolerance, while the latter is generally targeted at a variety approval, paper publication and professional title application. To a great degree, they isolated from each other in terms of target, strategy, plan, resource, information, etc., which has led to an overall low-level research quality and waste of resources. Indeed, it's the market dynamics and the profit that predominate the course of commercialization seed research.
Chinese seed industry is somewhat deformed in the former planned economic system, with no connection in variety breeding, seed production and technology promotion. Over 90% of germplasm resources and breeders are concentrated in higher education and other scientific institutes. The same percentage of the research funds is invested into applied technology research. Seed companies only concern about the market but R&D, the reverse is true for scientific research institutes.
Since the new century, large seed companies started to set up research institutes and smaller ones founded research departments. Retired experts from agricultural research units were hired as consultants of seed companies, recruiting graduate and undergraduate students to undertake breeding work. Seed companies attempted to rapidly become the main body of scientific and technological innovation, relying on their own resources. However, some major limiting factors including heavy R&D costs, inadequate funds, insufficient germplasm resources and talents, etc., have not changed the high uncertainty in variety breeding.
Domestic seed companies already feel enormously constrained with only 2% of revenue put into R&D, compared with foreign counterparts' proportion of 15% to 20%. Puzzled by the heavy R&D investment and unpredictable achievements, business owners in seed industry have to change their development strategy and find other shortcuts.
There are usually three shortcuts taken by domestic seed companies.
The first is purchasing variety rights. Eager to make money, owners of seed companies spare no expense to acquire variety rights from scientific research units or breeders. For example, Origin Agritech Limited bought Lin'ao1, Beijing Doneed Seeds Co., Ltd. bought Zhengdan958, Anhui Longping High-tech Seeds Co., Ltd. bought Ludan981, Hefei Fengle Seed Co., Ltd. bought Xundan18, etc. Relying on purchasing variety rights, seed companies are able to rapidly enter seed market and make huge profits, accordingly reducing the pressure in R&D and also the risks of failure. A quite number of seed companies just pursue short-term benefits and almost completely stop their own R&D. Meanwhile, seed companies' thirsty for varieties has boosted the price of varieties. As is reported, national approved corn variety Jingke968 is sold at the price of USD3.18 million (RMB20 million), Zhongdan909 at USD3.34 million (RMB21 million), Jixiang1 at USD4.43 million (RMB27.80 million). Seed companies have been competing with each other to bid for the operating rights of excellent varieties, with the aim to make multiple profits as soon as possible. (All the varieties mentioned above are corn varieties, noted by Editor)
The second is farming out breeding R&D. Some seed companies expect to continuously obtain new varieties through the long-term cooperation with research institutes rather than bidding for varieties from the latter. The common practice of seed companies is initiatively sighing an agreement with research institutes. Under the agreement, seed companies shall annually pay a certain amount of R&D funding to research institutes, usually between USD0.16 million (RMB1 million) to USD0.32 million (RMB2 million), and in return, the varieties bred by research institutes will give the priority to seed companies for operating. Generally speaking, research institutes only transfer the operating rights of varieties to seed companies but keep the property of varieties. For example, Shanxi Tunyu Seed Industry Co., Ltd. carried out the breeding cooperation with Shandong Academy of Agricultural Sciences, Hefei Fengle Seed Co., Ltd. with Rice Research Institute, Fujian Academy of Agricultural Sciences, Grand Agriseeds Co., Ltd. with China National Rice Research Institute, etc. However, some seed companies tend to hesitate on the long-term investment in breeding as there are no time limits for research institutes to breed new varieties.
The third is acquiring intermediate breeding materials from breeders. Many seed companies pay close attention to the newly developed varieties of research institutes or individual breeders. When finding some interested breeding materials or hybrid combinations, seed companies seize the opportunity to buy out them. After secretly sighing transfer agreement with research institutes or individual breeders, seed companies obtain the property of breeding materials or hybrid combinations and the transferors receive a considerable compensation. As is reported, seed companies have bred increasing varieties in recent ten years and they have become the main force of breeding innovation. However, the reports are only the appearance. Most varieties held by seed companies are actually the finished or semi-finished products purchased from research institutes or individual breeders!
To survive under intense competition, domestic seed companies are willing to obtain reliable varieties with a comparatively low capital investment. Seed companies' purchasing varieties is equivalent to an investment in fixed assets. Since the production cost and price of seeds is basically stable, seed companies are able to achieve profitability from variety investment after reaching the breakeven point.
After the Suggestions for Accelerating Development of Modern Crop Seed Industry was released by the State Council, the campaigns like "cooperation of enterprise and research institute" and "strategic alliance" have been widespread, with an atmosphere of planned economy led by officials. For example, the Ministry of Agriculture supported the cooperation of 8 enterprises and 1 research institute, while the Ministry of Science and Technology led the "strategic alliance" of 33 research institutes and seed companies. The similar campaigns also put on in many provinces or regions. However, all those grandstand actions are only an expedient measure responding the new policies of Chinese industry, not touching the structural reform and improving the weak R&D capacity of seed companies. How far can Chinese-style commercial breeding will go? Let us wait and see.
Table Contents of Seed China News 1303:
Hubei Jingchu obtains the exclusive operating rights for the corn hybrid Huayu11
Winall Hi-tech's subsidiary's corn production suffered from a frost damage
Another agrochemical company, Jiangsu Huifeng, enters the seed industry
China's first law for agricultural insurance becomes effective
Exclusive interview with Luo Haiping on domestic pepper breeding
Chinese scientists map out the D genome of wheat
Quo of tropical cucumber seed market in China
China's soybean imports still climb in 2012
Alfalfa grass import saw an obvious increase in Jan.
Longshikui3, an improved open-pollinated edible sunflower variety
Seed China News, a monthly publication issued by CCM at the end of every month, mainly covers a diversity of topics, including market dynamic, company dynamic, crops, seed market, etc. With the latest news in seed industry and in-depth analysis on government direction and market competition, Seed China News can provide you with valid information which would help you make rational decisions in investment, production, marketing, etc.
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