By Ma Lei, Li Hui, China National Chemical Information Center
China unveiled its No. 1 central document for 2023, outlining key tasks to comprehensively push forward major biological breeding projects. The document called for efforts to speed up the industrialization of corn and soybean biological breeding, orderly expand the pilot scope, and manage planting in a standardized manner. It signals that our country highly regards the industrial transformation brought about by biological breeding and attaches importance to shortening the time from research and development of genetically modified crops to commercialization.
Development history of genetically modified crops in China and across the globe
It is the 42nd year of biotechnology/genetically modified crops being put into practical application globally, the 28th year of commercializing biotechnology/genetically modified crops, and a start of the 4.0 era of "conventional breeding + modern biotechnology breeding + breeding with informatization" in the modern seed industry. By now, 71 countries and regions have approved the commercial application of 541 transformants from 32 crops. In the end of 2021, there were 2.955 billion mu of planting area of genetically modified crops in the world, accounting for 18.7% of the total crop planting area. The genetically modified seeds market valued US$21.732 billion, taking up 46% of the global commercial seed market.
The development process of genetically modified crops in China can be concluded into three major characteristics:
The commercialization and promotion of genetically modified crops in China are progressing slowly, with major staples not fully commercialized yet. By now, the Chinese government has approved safety certificates for a total of eight genetically modified crops, including storage-tolerant tomatoes, pest-resistant cotton, flower colored petunias, disease-resistant chili peppers, disease-resistant papayas, pest-resistant rice, pest/herbicide-resistant corn, and pest/herbicide-resistant soybeans. Only pest-resistant cotton and virus-resistant papaya have been commercially produced, while genetically modified staple foods have not been commercially produced. However, there are five genetically modified crops, including soybeans, corn, cotton, rapeseed, and sugar beet, that have been approved importing as raw materials for processing. Among them, genetically modified soybean import volume accounts for more than 83% of the national soybean demand.
The central government lends strong support for research and development of genetically modified crops, but it is cautious about commercialization and promotion. China is one of the first batches of countries that developed and planted genetically modified crops. For a long time, the government has attached great importance to the research and development of genetically modified technologies. With the support of the government’s "863 Plan", "973 Plan", as well as the establishment of major genetically modified specific projects approved by the State Council in 2008 worthy of more than RMB20 billion, China has achieved achievements in the research and development of cutting-edge biotechnology in breeding and the construction of a safety management system for genetically modified organisms. However, there are concerns over the safety of genetically modified crops due to a lack of knowledge of them. This, coupled with the fact that there is still a long way to go for domestic companies to catch up with international peers in terms of the genetically modified technologies, makes the government maintain a cautious attitude and strict regulation in the commercialization and promotion of genetically modified crops. As a result, the Ministry of Agriculture reinforces supervision over any illegal case of sales and planting of genetically modified crops.
As for the actual planting situation, illegal planting and sales of genetically modified seeds are still seen in some provinces and cities despite the restrictive policies. China is a country with relatively strict genetically modified regulation in the world, but it is still unable to thoroughly stop the illegal circulation of genetically modified rice and corn seeds for two reasons below. First, genetically modified products are really needed in the markets, especially in corn planting areas with severe pest infestation and drought; secondly, the sales of genetically modified seeds generate high earnings.
With the faster industrialization of genetically modified crops year 2023 will kickstart the era of commercialization in China
The top priority for Chinese agriculture is always to ensure food security for the population of 1.4 billion, especially the absolute safety of staple food. In the face of limited arable and lower quality land area, as well as insufficient resource and environmental carrying capacity, modifying varieties to increase per unit yield is an important way to stabilize and increase yield. Even in the globe, the competition for seeds, especially genetically modified seeds, is becoming increasingly intense. After more than 40 years of technological maturity and nearly 30 years of industrial development, the genetically modified breeding technologies and the industry have now been in a period of strategic opportunity, aiming to build a leading presence in the related technologies and grab economic growth sweet spot. Breaking through bottlenecks of traditional breeding in agricultural production and aggressively developing genetically modified technology have become important initiatives to ensure Chinese food security and enhance the competitiveness of seed enterprises.
1. To accelerate formulating supportive policies and protective regulations for the commercialization and promotion of genetically modified crops
The 2020 Central Economic Work Conference called for orderly promotion of the industrialization of biological breeding with a principle of respecting science and regulating the industry strictly. The Central Rural Work Conference highlighted the importance of accelerating the development and research, as well as the application of biological breeding under strict supervision and risk management.
The No. 1 central document in 2021 put forward accelerating the implementation of major scientific and technological projects of agricultural biological breeding. The No. 1 central document in 2022 put forward launching major projects of agricultural biological breeding. The No. 1 central document in 2023 put forward comprehensively carrying out major projects of biological breeding.
Fur revised regulations, including "Administrative Measures for Safety Evaluation of Agricultural Genetically Modified Organisms", "Approval Measures for Major Crop Varieties", " Administrative Measures for Production and Operation Licenses of Crop Seeds", and "Naming Regulations for Agricultural Plant Varieties", took effect on January 21, 2022. The newly revised Seed Law was effective on March 1. The Requirements for Registration of Test and Materials of Herbicides for Genetically Modified Herbicide-tolerant Crops was released and implemented on March 25. The National Genetically Modified Corn Variety Approval Standards and the National Genetically Modified Soybean Variety Approval Standards were released and implemented on June 8.
2. Approval for key steps of market access of genetically modified crop seeds
At present, China's genetically modified sector is mainly focused on three aspects – attaching importance to independent innovation, remaining cautious about promoting, and highlighting safety. There are two key steps in the commercialization of genetically modified seeds for staple crops in China. One step is to obtain genetically modified safety certificates. The other is to have the approval of genetically modified varieties. Only enterprises with corresponding seed production and operation licenses are allowed to sell seeds by the two steps. After more than a decade of controversy, technological development, and conservative promotion, the commercialization of genetically modified crops has made a substantial progress. For now, in the list of genetically modified approval information from the Ministry of Agriculture and Rural Affairs, a total of 16 genetically modified corn projects and five genetically modified soybean projects have obtained genetically modified organism safety certificates.
Prospect for commercialization of genetically modified crops in China
The commercialization of genetically modified crops will revolutionise the development direction and industrial pattern of China's seed industry, and it will become the core driving force for the upgrading and development of China's seed industry.
1. Commercialization of genetically modified crops will change the seed market
The commercialization of genetically modified crops will expand the domestic seed market value. Taking cues from the business model of genetically modified corn and soybean seeds in the United States, and drawing lessons from the promotion (illegal channels) of China's genetically modified pest-resistant cotton and genetically modified corn in Northeast market, it is estimated that the penetration rate of genetically modified corn and soybean seeds will reach 90% and 70% in the coming five-six years, if the free market is brought into full play. Taking 650 million mu of corn planting area as an example, the increase of market value generated by the rising prices of high-tech genetically modified corn seeds is expected to exceed RMB10 billion in the future.
The commercialization of genetically modified crops will accelerate lifting the concentration ratio of the seed market. Relevant companies are required to be strong enough to afford the huge investments in early research and development of genetically modified technologies, which heightens the industry threshold. A large number of small and medium-sized enterprises may find it difficult to meet such requirements and are forced to make a retreat or transition from the market. It is expected that the number of seed enterprises will rapidly decrease in the coming five years, and the market will fall into some major enterprises, with the market share of the top five enterprises to be over 40%.
The commercialization of genetically modified crops will further purify the seed market environment. The commercialization of genetically modified crops will improve the legislation and law enforcement of the intellectual property protection system. The infringement identification of genetically modified crop seeds is simpler and more precise than that of traditional crop seeds, but the market regulation and penalties are stricter, and the risks and costs of infringement and counterfeiting are higher. These will effectively purify the seed industry market environment.
The promotion of genetically modified crops will transform the seed business modes. The industry will shift from a traditional seed management mode to an integrated operation mode of "properties + seeds + agrochemicals + services". With property R&D companies and agrochemical enterprises becoming new close participants in the industry, the business mode will be more complex, which will impose great challenges to seed companies in terms of their comprehensive capabilities.
2. How will genetically modified corn and soybean companies do to ride over the early stage of commercialization
The genetically modified technology and business mode have been mature across the globe, and the commercialization and promotion of genetically modified corn and soybean in China will be irresistible. In the context, there are some considerations for the new market:
The development pace of the genetically modified crops market will be faster after a slow open-up, and it is necessary to balance production, sales, and inventory. Adhering to cautious attitude toward promotion, attaching importance to safety, and abiding by the three-step practice of policy pilot trial – medium-sized trial – big-sized trial, the commercialization process of genetically modified crops will be achieved in the future. According to the No. 1 central document in 2023 that put forward accelerating the industrialization of biological breeding, further expanding the pilot scope of the industrialization of genetically modified corn and soybean, and reinforcing legal supervision, year 2023 will be in the transition stage from pilot trial to medium-sized trial, and the promotion initials are likely to be carried out in the designated cities and counties. The legal area will not be too large, and there will be still uncertainties such as social acceptance and public opinions before making a comprehensive promotion, so it is necessary to accurately plan and balance the propagation, preparation, sales, and inventory of seed and relevant items.
It is understood that companies are trying to make a head start and establish a product brand image by capturing users’ first impression, but the competition is also fierce. Taking advantage of the planting habit of farmers - they do not easily change their land, and comprehensively utilizing supporting advantages such as price, products, and services, companies should regard products as core, prices as an effective means and services as guarantee, so as to be one of the first movers to seize the market share and establish a good image of new products among farmers. At the same time, they should reach out for various resources, such as building up cooperation with upstream and research and development unities, midstream and regional market-oriented and resource-oriented seed enterprises, downstream and farm forces, and agricultural product processing enterprises, and eventually make a layout for property, product, and market development.
Companies will continuously purify the variety market and severely crack down on infringed packaging seed. The first-generation genetically modified crop products of various seed enterprises in China were mostly upgraded from traditional varieties that had been originally sold through backcross breeding, while the original leading products are all facing illegal acts of infringement and packaging. If the crackdown is not effective, there will be a vicious cycle driven by high profits. Therefore, continuous purification of the market is as important as the commercialization and promotion of new products.
Independent innovation will still be the strongest competitiveness of enterprises in the new market structure. At present, the first generation of pest and herbicide-resistant products in China are mainly modified based on foreign gene patent. Thus, in the future, the key competition in this market, just like traditional seed industries, will fall into innovation capabilities. Among the same genetically modified products, continuously developing competitive and updated products will enable companies to be market leaders and compete with international peers.
