China’s Syngenta bid

Building the path for future food supply

In the biggest overseas takeover attempt ever by a Chinese company, the $45 billion Beijing-based state-owned China National Chemical Corporation (ChemChina) has made an all-cash $43 billion bid for Switzerland-based seeds and pesticides company, Syngenta. The deal, if completed, will lead to a shake-up in the global agrochemicals market and prove to be a setback for St Louis, Missouri-based Monsanto that had set its sights on Syngenta in August last year. While the Monsanto deal did not happen, the Swiss are quite open to the Chinese company. China is looking to secure food supply to its large population apart from getting access to cutting-edge technology and global markets by acquiring Syngenta. Though it is a Chinese company that is looking to acquire Syngenta, it is perceived as an attempt by a government looking to address a future problem. By acquiring Syngenta, China gets access to one of the four dominant producers of genetically modified (GM) crops, with over 7,000 seed varieties. Syngenta also has a pipeline of fungicides, herbicides and crop protection tools. China knows all too well that providing food supply for 1.5 billion people can happen only using technology. Beijing is keen to boost farming productivity as it seeks to cut food imports. China’s problem is that while it accounts for 10% of the world’s arable land it has to feed 20% of the world’s population. The acquisition is also a clear indication that China is now willing to invest in GM crops for the future.

The Chinese means to solve a persistent problem is far more pragmatic than the Indian government which has recently sought price control on genetically-modified Bt-cotton seeds. That apart, no new GM crop has been approved for cultivation after Bt cotton in 2002. It is time India gets its act together. That apart, the country has not been a great place for R&D in any sense. According to the OECD, South Korea and Israel have been investing more in R&D as a share of GDP than other developed countries. While Korea spent 4.29% of its GDP on R&D, Israel (4.11%) and Japan (3.58%) followed suit. While China (2.05%) has passed the 2% goal it had set and is ahead of the EU (1.94%), India trails at 0.89%. It is time Indian companies start thinking in similar terms—after all, India, too, has to feed 1.2 billion people.