February 23, 2011 / 8:19 AM / in 7 years

UPDATE 1-China to breed large seed firms, up reservoir spending

* China to set up its own large seed companies

* Expansion by foreign seed firms in doubt

* GMO seeds not seen widely used in short-term (Updates with details, background, quotes; recasts)

By Niu Shuping and Tom Miles

BEIJING, Feb 23 (Reuters) - China will breed its own high-yield seeds and set up large seed companies to help ensure the country’s food security in coming decades.

The State Council, China’s cabinet, said in a statement that the world’s largest grain producer aims to breed new seeds using China’s own biotechnology and set up large seed-breeding bases by 2020.

Scientists said the move may work against the expansion plans of foreign companies such as DuPont DD.N that have taken a large share of China’s corn seed market.

“The country will focus development on hybrid rice and corn -- particularly corn, where Pioneer already has a large share of the market and domestic seed firms are failing to compete,” said one Chinese seed-breeding scientist.

“The government’s concerns are grain security and how to boost farmers’ incomes, while foreign companies will increase seed prices after they have occupied the market.”

DuPont, which owns Pioneer Hi-Bred, is one of the world’s largest agricultural seed companies and sees China as a particular opportunity for expansion. [ID:nLDE62G05Y]

A company spokesman in China contacted by Reuters declined to comment on its share of the corn seed market. Its “Xianyu” seeds are widely planted in the northeast and northern areas.

Many Chinese seed companies are small and inefficient and the domestic seed industry was hit with scandals in the 1990s when fake seeds were sold and farmers harvested nothing.

The State Council did not give any details but domestic seed companies, such as Yuan Longping High-tech Agriculture Co. Ltd (000998.SZ), set up by Yuan Longping, the “father” of China’s first hybrid rice strain, may get more support from Beijing.

    Scientists said genetically modified (GMO) seeds would not be a priority for Beijing for at least five years. Public debate over the safety of GMO food coupled with a long approval process meant China may not rush to use GMO seeds widely in the near term.

    “(Development of) non-GMO seeds will still play a key role in boosting grain production in the coming five years,” Huang Dafang, a researcher with the Biotechnology Research Institute of the Chinese Academy of Agricultural Sciences, told Reuters in December.

    “GMO technology is a long-term national strategy and not for this or the next five-year plan,” Huang said.

    China approved the use of genetically modified strains of rice and corn in late 2009, opening the door for commercial production as soon as next year.

    In the same meeting of the State Council on Tuesday, the government agreed to spend 62.5 billion yuan ($9.5 billion) by 2013 to reinforce 21,300 small and medium-sized reservoirs. Another 25,000 reservoirs would be repaired before 2015.

    The spending plan is part of the country’s efforts to combat increasingly frequent natural disasters such as floods and drought.

    A majority of the nation’s existing reservoirs have had many problems in recent decades that have severely affected flood-control efforts, the statement said.

    (Editing by Ken Wills)

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