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China’s quest for self-sufficiency in semiconductors is widely discussed. But just as urgently, Beijing needs to address its growing imported food dependence as shortages loom. Approvals of seeds of genetically modified organisms (GMO) should boost production and suppliers.
Beijing has preliminarily approved 37 genetically modified corn seed and 14 soyabean seed varieties for planting. This marks a big change for a country long reluctant to allow local companies to grow GMO seeds commercially. Consumers have publicly opposed the technology.
But GMO seeds can increase much needed domestic yields. China is the world’s largest importer of soyabeans and corn, and should remain so for years as per capita consumption grows. Use of soyabean oil, for example, has more than quadrupled over the past two decades.
Both corn and soyabean are key ingredients in pig diets, and pork makes up nearly two-thirds of local meat consumption.
The approved list includes corn varieties developed by China National Seed Group, a unit of Syngenta Group, which was acquired by state-owned ChemChina in 2017, and soyabean varieties from local peer Beijing Dabeinong Technology Group.
Shares of the latter rose by the daily limit of 10 per cent on Wednesday. It now trades at 57 times forward earnings, a steep premium to local peers reflecting its growth potential.
China’s food consumption has already outpaced domestic supply due to factors including increased urbanisation. Also, global warming has affected farm output due to extreme weather. Rising geopolitical tensions with the US add urgency. The two largest US agricultural exports to China by value in 2022 were soyabeans at $18bn and corn at $5.3bn.
Early on, the market size of these modified seeds will probably start small. Yet the companies receiving early approvals will have a first-mover advantage over rivals. Moreover, a tightly regulated domestic market also ensures winners will not have to worry about global competitors.
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