Beijing biotech firm bets on GM corn in race to become Monsanto in China

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BEIJING, Dec.6 (Reuters) – As China prepares to open its $ 120 billion corn market to genetically modified (GM) seeds, little-known company Dabeinong Biotechnology hopes to reap the rewards of early biotech investments and ‘a law that keeps foreign companies on the sidelines.

The long-awaited commercialization of GM maize to the world’s second-largest producer is expected to significantly increase yields, thereby reducing the need for imports. According to industry experts, it could also spur the hoped-for reform of a chaotic and surplus seed sector, creating a new multibillion-dollar market that could eventually open up to global seed giants.

New regulations drafted last month for the first time define the steps needed in China for the approval of corn varieties incorporating GM traits, paving the way for the market to open as early as next year.

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Beijing has made it clear that it will stand up for local seed technology leaders, and Dabeinong is the larger of the two local companies with insect-resistant and herbicide-resistant corn already approved as safe by the Agriculture Ministry.

“During the first two years, because we are the first to market and believe that our technology is better, we will have two-thirds of the shares,” chief executive Liu Shi told Reuters.

By the third year, even with more competition, it could generate around 1 billion yuan ($ 155 million) in royalties, he estimated. The company will rely on seed breeders using its characteristics to generate income.

ME-TOO PRODUCTS

Dabeinong Biotechnology was founded in 2011 as a unit of the large animal feed producer, Beijing Dabeinong Technology Group Co. Ltd. (002385.SZ).

The parent company made headlines in the United States after a senior executive was among several accused of stealing corn seeds from fields in Iowa and Illinois. The executive, the brother-in-law of group founder Shao Genhuo, was jailed for three years in 2016.

Dabeinong strictly follows the law and tries to rebuild its image, said Liu, who joined the company earlier this year. He previously worked at Monsanto, now part of the German company Bayer (BAYGn.DE), in the 1990s when the pioneer GM was trying to gain acceptance for its first products.

Dabeinong, which employs 160 people, hopes to emulate the success of the US seed giant, but mostly wants to help farmers, Liu said.

For now, Dabeinong’s maize traits use genes that have been discovered and marketed by other companies, but are not patented. The biotech company is working on its own genes, although these have yet to be approved.

She may have to act quickly before her “me too” products lose value, said an executive at a multinational seed company who declined to give her name.

To secure its first-mover advantage, Dabeinong is recruiting more sales staff, and in September invited seed companies to visit trial plots in Inner Mongolia and Henan Province planted with corn containing its Fengmai brand characteristics.

It has signed licensing agreements with nearly 200 seed companies.

COMING COMPETITION

Initial demand is likely to be strong.

China harvested 261 million tonnes of maize in 2020/21 from some 41 million hectares, largely to feed its huge herds of pigs and chickens. Each hectare, however, produced on average only about 60% more corn than the largest producer, the United States.

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About 70% of the corn seeds sold in northeast China’s granary are already illegally genetically modified seeds, an October article in the state-backed China Seed Industry newspaper said, highlighting its popularity with farmers.

But Dabeinong won’t be alone for long.

Although global seed giants like US Corteva Inc (CTVA.N) and Bayer cannot enter the Chinese GMO market, Syngenta, the world’s third largest seed producer owned by Chinese Sinochem Holdings, hopes to become the leader. market, according to the prospectus of its upcoming IPO.

Syngenta is a major player in GM grains, but since it was only purchased in 2017, it continues to catch up in China in the long-drawn-out process to obtain biosafety certificates for its GM traits from regulators.

Hangzhou Ruifeng Biotechnology, a small company founded by University Professor Shen Zhicheng, has an insect-resistant and herbicide-tolerant trait approved as safe by Beijing. The company is also using new genes.

Yuan Longping High-tech Agriculture Co Ltd (000998.SZ), backed by state conglomerate CITIC, is also developing GM traits.

Meanwhile, the exact timing of GM corn is still uncertain.

Under the new rules, seed varieties that incorporate GM traits must undergo a one-year production trial, and it is not clear whether Beijing will accept the data already collected by Dabeinong.

“We have two plans, a more aggressive one for commercial seed production in 2022 and another for 2023,” Liu said. “We are waiting for the message from the government.”

($ 1 = 6.3733 yuan Chinese renminbi)

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Reporting by Dominique Patton; edited by Richard Pullin

Our standards: Thomson Reuters Trust Principles.


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