Georgofili World

Newsletter of the Georgofili Academy

Why does the chinese government want to purchase Syngenta?

The purchase of the Swiss seed giant Syngenta by the state company China National Chemical (ChemChina), an operation valued 43 billion dollars (39,8 billion euros), is not merely for business reasons. It is also related to China’s national strategy to feed 21% of the world’s population with only 9% of cultivable lands.  
That is why the Chinese Communist Party pushed Ren Jianxin, president of ChemChina, to purchase Syngenta with the objective of taking advantage of the Swiss company’s experience in the field of plant protection products and genetically modified organisms.
The offer was “unanimously” approved by Syngenta’s board of directors, with the company’s shares rising by 6.63% on the Zurich stock exchange.
With 1.4 billion mouths to feed, China needs a big boost to its agricultural production. For this reason Xi Jinping, Chinese president and general secretary of the Communist Party, has insisted on the need to use GMO crops to increase production, in addition to buying shares of agricultural companies with the aim of ensuring the food supply to an increasingly rich and increasingly numerous population.
“With the rise in food demand, food security becomes a political priority for the Chinese administration,” explains Nirgun Tiruchelvam, Religare Capital Markets research director. “This agreement seeks to guarantee food security for the people, so we are likely to see similar operations in the next years”, he adds.
Syngenta has one of the industry’s most important seed portfolios with 6,800 registered varieties. Together with Monsanto and DowDuPont – a company created in December by the merger of Dow Chemical and DuPont – Syngenta is a leader in the field of genetic and biotechnological research.
ChemChina’s proposed purchase would be the greatest international acquisition ever carried out by a Chinese business, with Syngenta’s price per share anticipated to be 480 Swiss Francs, in addition to allowing current shareholders to receive the ordinary dividend of 11 Swiss Francs in May 2016.
“China is interested in GMO development and in particular in modified seeds to allow a reduction in the use of chemical products and fertilizers”, explains Wei Ruan, an economist for Tokyo’s Norinchukin research institute. “Biotechnology will help spur agricultural production in China and to ensure that farmers can cope with the growing domestic demand”, he adds.
There is increasingly less cultivable land. Biotechnology and modified seeds will become a key tool for increasing agricultural production, the British bank HSBC explains in a report. Despite the fact that China is the world’s second largest producer of maize and is trying to improve its productivity thanks to fertilizers, it harvests 44% less than the United States.

From “Le Figaro” 3/02/2016, foreign press release Agrapress nr 1149