A US national security panel this week cleared a deal proposed by state-owned Chinese company ChemChina to acquire Syngenta, the Switzerland-based seed and biotechnology agribusiness. At US$43 billion (287 billion yuan), it will be the largest foreign acquisition ever by a Chinese firm.
The deal also requires approval by antitrust authorities in Europe and the United States, but having cleared the Committee on Foreign Investment in the United States (CFIUS), chaired by the US Secretary of the Treasury and attended by representatives of 16 US departments and agencies, including the Department of Agriculture, it is likely to be given the go-ahead by the end of the year.
Environmentalists have long decried the concentration of power in the global food system. This deal, along with other pending and possible acquisitions, may leave just three companies with more than 75 per cent of the global market in seeds. So it is little wonder that politicians and civil society groups have reacted with concern at the prospect of further consolidation.
In the United States – which accounts for more than one quarter of Syngenta’s sales – Republican Iowa senator Chuck Grassley raised concerns about the effect of the deal, explaining that the food and agricultural sectors are part of the nation’s critical infrastructure. “I remain troubled about the long-term effects of continued consolidation in the seed industry and what that will mean for farmers who have fewer companies to buy seed from,” he told WNAX radio.
Two US organisations – the National Farmers Union and Food and Water Watch – had also urged CFIUS to reject the deal, citing national security risks, the transfer of critical technologies and negative impacts on farmers and consumers.
I remain troubled about the long-term effects of continued consolidation in the seed industry and what that will mean for farmers who have fewer companies to buy seed from.
Chuck Grassley, Republican senator, Iowa
Their letter argued that the deal “accelerates the international consolidation of the food and agribusiness industries to the detriment of American farmers, rural communities, and consumers,” and suggested it would transfer critical patented technologies (not only in seeds, but also high-tech agrichemicals) into Chinese ownership, as well as “the weaker safety and security culture of Chinese chemical companies”.
The move by ChemChina seems to suggest that in the medium to long-term, the Chinese government is likely to embrace the production of genetically modified (GM) food. China’s approach to genetically modified crops builds on decades of huge state investment in research and development and its more recent support of emerging agri-biotech firms.
The company’s chairman Ren Jianxin, who is known for his strong government links and his reputation for acquiring both domestic and foreign firms, claims that his experience of living in the countryside during the Cultural Revolution taught him “what farmers want and how they work the land”.
If “what farmers want” is genetically modified seeds, it seems that Beijing agrees with him. The 13th Five Year Plan for the first time promised to actively promote GM crops in the period from 2016 to 2020, while also stressing the need for stringent oversight.
Yet at the same time, the hesitation to approve genetically modified food production suggests the road to commercialisation is a rocky one. Sections of China’s middle class are increasingly looking towards more “natural” organically produced food, and recent food scares have not helped to boost public confidence.
A spokesperson from Greenpeace linked the delayed re-approval of permits for GM rice in 2014 to “public concern around safety issues”, and the identification of illegal GM maize in Liaoning earlier this year (again reported by Greenpeace) has further illustrated how difficult it is to effectively regulate the technology.
In China, an open letter, apparently signed by the former minister for the chemical industry as well as anti-GMO activists, pointed to negative impacts of agri-chemicals on Chinese farmers and consumers and called for the case to be opened to China’s National People’s Congress representatives, committee members of the Chinese People’s Political Consultative Conference, representatives of the democratic parties and consumers.