Crop technology firm Syngenta helping China enhance food security with goal to grow after acquisition by ChemChina

Crop technology firm Syngenta aims to quadruple its market share in China in the next five years, according to its chief financial officer.

The Swiss-based multinational company was acquired by state-backed China National Chemical Corporation (ChemChina) 20 months ago for US$43 billion.

Syngenta aims to achieve its growth goal partly via partnerships with both Chinese and overseas peers to bring advanced overseas crops-growing technology to China – the world’s largest agricultural products importer – to enhance food supply security, said Mark Patrick, its CFO.

“We are looking to work with multiple partners in collaborative ways,” he told the South China Morning Post in an interview on Friday ahead of its results announcement. “Our expectation in the next few years is to see a substantial step-change in our China business, both in crop protection and in seeds.”

Since its acquisition by ChemChina was completed in June 2017, Syngenta has been working with large state-owned farms with combined plantations of more than 1,000 hectares on adoption of its technology.

“We have signed agreements with them that over the coming years we would be taking our technology to these organisations to drive the modernisation and step-change that President Xi Jinping is looking for,” Patrick said.

Sales to China increased 6 per cent to US$319 million, accounting for 2.4 per cent of global sales last year, the same as in 2017.

Crop protection products, such as herbicides, insecticides, fungicides and plant growth regulators, took up 77 per cent of total sales, with almost all of the rest from seeds.

Syngenta has around 5.5 per cent of China’s crop protection market, which it hopes to grow to up to 20 per cent in as few as five years, Patrick said.

On seeds, it aims to grow its share from less than 1 per cent to 15 per cent, with the help of partners.

Total annual sales of China’s crop protection and seeds are around US$12 billion, according to Patrick.

Syngenta is cooperating with Israel-based crop protection products maker Adama Agricultural Solutions, which was acquired by ChemChina in 2011.

It is also seeking to tap into the vast distribution network of Sinochem Agriculture, which has more than 2,100 distribution centres and 180 cooperative stores covering 95 per cent of China’s arable land.

ChemChina and fellow state-owned Sinochem Agriculture’s parent oil and gas-to-agriculture conglomerate Sinochem Group are close to executing a merger after two years of talks on how to proceed, Bloomberg reported.

Both are chaired by Frank Ning Gaoning, a veteran state enterprise leader experienced in managing the food businesses at China Resources Group and China National Cereals, Oils and Foodstuffs.

In addition to domestic partners, Patrick said Syngenta will also seek opportunities to help international peers bring their technology to China. They include Corteva Agriscience – the new entity of the merged agriculture businesses of US-based Dow Chemical and DuPont – as well as Bayer Monsanto, formed via a recent merger of the agri-science business of Germany’s Bayer and US seeds giant Monsanto.

Foreign seeds companies are not allowed to introduce new products in China unless they conduct research, breeding and cultivation work in China, via minority-owned joint venture with local partners.

“We are working towards receiving national treatments. We anticipate that, for example, Corteva, Bayer and others, will be looking to collaborate and partner with Syngenta to bring their technology into the Chinese market,” Patrick said.

Syngenta will act as a “catalyst” on efforts to consolidate China’s fragmented seeds industry where leader Shenzhen-listed Yuan Longping High-tech Agriculture has just a 3 per cent share in a market with 15,000 firms, he added.

Syngenta will also seek to develop genetically modified seeds for corn and soybeans that suit Chinese planting conditions, subject to government approval, Patrick said.

“The Chinese government is very carefully considering all the pros and cons of genetically modified (GM) crops technology,” he said. “It is something we can only help reinforce the benefits on yield and quality [but not force changes to happen].”

“China’s corn yield is over 40 per cent below that of North America … if GM is approved for adoption, you will immediately get a step-change.”

With only 7 per cent of the world’s arable land but 21 per cent of its population, improving crops yield is one of China’s national strategic goals.

This is especially relevant for soybeans. China’s biggest import source for soybeans is the US, and the ongoing trade war has reinforced the mainland’s desire for higher self-sufficiency, he added.