Bayer to partner with China's CITIC on agrochemicals-source

BEIJING/SHANGHAI Thu Dec 12, 2013 10:43pm EST

BEIJING/SHANGHAI Dec 13 (Reuters) - German healthcare and chemical conglomerate Bayer AG will launch a strategic partnership with China's CITIC Trust next week to market agrochemicals in China, a source close to the deal told Reuters.

The trust company, a unit of one of China's biggest financial conglomerates, in October launched the first trust plan based on rural land. The plan packaged land operating rights to 360 hectares in central China's Anhui province from multiple farmers and transferred them to a single large-scale agribusiness.

CITIC executives said at the time the plan would generate little profit but could serve as a model for innovative land reform policies. By enabling farmers to monetize their land-use rights, such plans can encourage them to complete the transition into urban residents, while increasing agricultural efficiency through consolidation and advanced cultivation methods.

China last month unveiled its boldest land reforms in decades, officially allowing rural collectively-owned land, a legacy of the planned economy, to be transferred, rented or pooled. Officials have called for caution however, telling local governments not to "rush into action".

The partnership with Bayer will simplify marketing channels for the German firm's sales of fertiliser, pesticides and other inputs, allowing it to sell to a single buyer rather than a dispersed group of farmers.

Beyond the partnership in agrochemicals, CITIC is also planning to create a agricultural products trust, pooling output from many farmers in order to maximize the income they receive from selling grain, vegetables, and other crops.

The partnership will be officially announced on Tuesday, the source said.

Bayer officials were not immediately available to comment. (Reporting by Shengnan Zhang and Gabriel Wildau; Editing by Michael Urquhart)

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