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.
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.
CCM is dedicated to market research in
China
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
Tel: 86-20-37616606
Email: econtact@cnchemicals.com
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