Future implications and consequences of the ChemChina-Syngenta deal

February 16, 2016

The purchase of Syngenta by ChemChina did not go unnoticed. Many commentators are trying to see all sorts of reasons and all sorts of consequences, mostly depending on whether there are pro or anti GMO (Genetically Modified Organisms). When it comes to China, the best approach in my opinion is to look at it in a very pragmatic manner, simply because the Chinese have been quite pragmatic over the years. Their approach of food and agriculture is the same as for all other economic activity. It is dictated by the need for the government to ensure social stability or at least prevent social unrest. They will do what is good for China, meaning what is good for the Chinese government. It is not aimed at pleasing any other country or the financial markets. They still follow the principle express by Deng Xiao Ping: “It does not matter whether the cat is black or white as long as it catches mice”.

In both Future Harvests and We Will Reap What We Sow, I was announcing such a move, simply because it makes sense when looking at the economic and demographic changes the world is going through. The purchase of Syngenta is a very good move for China because it kills several birds with the same stone.

The Chinese seed sector was –and still is- fragmented and far from effective. By bringing a heavy weight company like Syngenta in their market, they will establish a much stronger seeds and genetic business to meet the challenges of the future. Syngenta brings expertise that will help China speed up the learning curve and create a critical mass of production that will be able to meet some serious volumes. It will stimulate further consolidation in China and also stimulate innovation and progress for other Chinese seed producers, if they want to stay in business. I read many derogatory comments about China’s quality approach. It is amazing how many people are stuck in clichés from the past. China is improving in many areas and quality is one of them. There is a generation of entrepreneurs who are quite bright and competent leading businesses. It is quite clear to me that Syngenta is and will be a quality player in the future, under Chinese leadership. Those who think this deal is bad news for Syngenta’s employees will be disappointed. I believe the contrary. They will get many more challenges to tackle and their jobs will be more focused than they were before or would have been if it had been bought by a North American company.

The purchase of Syngenta sends a clear message that China wants to be in control of its seeds. By buying such production assets, China will not have to go on the market, or at least will be much less dependent, to buy seeds from outside. It will strengthen China’s bargaining position towards other seed suppliers. Thus, China will be in charge of strategic choices that are good for China’s agriculture instead of having to choose from suppliers who do not have China’s long-term food security at heart or who would try to impose their conditions to China.

Regarding the topic of GMO, the purchase of Syngenta certainly offers China access to the technology, but it is not the main reason for the purchase. What it does though, is to offer China the option of using genetic engineering technology if they consider it useful. If they choose to do so, they will approach the use of the technology as a resource that supports their food security goals only and they will develop the products they actually need, not the products other suppliers would want to sell them. Whether China will use GMO is up to China and nobody else. Trying to see the Syngenta purchase as a sign of China’s attitude towards GMO is in my opinion wishful thinking more than anything else. When it comes to seeds, they will not look at the cat’s color. They will focus on having one that catches mice.

Further towards the future, the Syngenta purchase will have other long-term effects, and outside of China, too. China will be a significant seed producer and supplier. With an organization like Syngenta, there is no reason why they should limit business to China. I expect to see China playing a much more important role in the seed market outside of its borders. In particular, I expect to see China eye the huge African seed market. China has been active for decades in Africa and contributes to many economic development projects. China does not interfere with African politics but focuses on how it can help Africa developing and playing a future role for China. Considering the potential of African agriculture and its significance for China’s future food security, the new Syngenta should be instrumental for future progress of agriculture in Africa. A side effect of such a strategy would reshuffle the cards of the world seed market and bring a new and different equilibrium. There is quite a bit of activity on the mergers’ side. Syngenta had been the object of interest from other potential buyers, especially Monsanto. DuPont and Dow already brought their agriculture activities’ together. BASF seems to be looking at reshaping its activities. Further consolidation and mergers will take place in the coming months and years. What will be the next big merger? I can think of two possible ones: BASF and Bayer or BASF and Monsanto. I also see the possibility of Monsanto not being considered a purchase candidate at all by anyone.

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Yields of corn and soybeans over 1970-2009

October 20, 2011

The debate about genetically modified crops is sometimes difficult to follow. Some claim they did not deliver on their promises. Others claim that yields are higher thanks to GMOs. Obviously, the answer is not obvious.

When in doubt, it is good to go to the basics and see what the stats show us. I have collected the yield data from the FAO over the period 1970 to 2009 and compiled them in graphs. For soybeans, I show yields for the US, Brazil and Argentina, as they are the main producers.

For corn, I show the same three countries, plus France and the Netherlands. The Netherlands are interesting because they have much higher yields than other countries (30% higher than the US and France). However, they are not a large producer, but Dutch farmers are quite highly technically skilled farmers. France is interesting because it is a major agricultural producer, and also a strong opponent to GMOs.

I also added trend lines to show any divergence between the countries. The Netherlands are shooting up on corn. France is slowly catching up on the US, while yields in these two countries have been very close all along. For soybeans, Brazil shows a stronger uptrend than the US and Argentina, while it seems to lag the others for corn.

What these graphs also show is how much potential there is. If the Netherlands can produce 13 tons/ha (without GMO technology, mind you), this means that the genetic potential is higher than that number.

Here are the graphs (click on them to have the larger version). Can you spot when GMOs were introduced?

The annual yield variations for corn and soybeans for the countries mentioned are as follows:

Average yield variation per year (ton/ha) Average yield variation per year (%)
1970-’95 1996-’09 1970-’95 1996-’09
Corn
Argentina 0.90 1.41 3.9% 3.5%
Brazil 0.46 0.96 3.2% 3.6%
USA 0.83 1.41 1.8% 1.8%
France 1.21 0.61 2.4% 0.7%
Netherlands 1.57 3.43 3.8% 4.3%
Soybeans
Argentina 0.34 0.31 3.3% 1.5%
Brazil 0.37 0.38 3.2% 1.7%
USA 0.25 0.19 1.4% 0.7%

Keep in mind that yields vary depending on production conditions, and that the numbers for the years 1970, 1995, 1996 and 2009 can influence the annual yield variations to some extent. I took the averages of the three years at the beginning and the three years at the end of both periods to eliminate the incidental “abnormal” data. It gives an idea of the comparative performance between the two periods.

These are just stats. I will leave to everyone what conclusions they may want to draw from the numbers and the charts.

Copyright 2011 – The Happy Future Group Ltd.


Helping farmers produce better

November 26, 2010

Meeting food demand depends for a large part on the ability of farmers to produce adequate quantities of the food products of the right quality. To achieve such an objective, farmers depend on their business partners. To feed an increasing world population, helping farmers succeed is not an option; it is a necessity.

There is no argument against producing better. A market-driven and more efficient production reduces the amount of waste, and it increases the amount of food available for consumers. It reduces the impact on the environment and it actually reduces the cost of production. However, it is important to realize that actions to produce better often are investments, as the effect is not always immediate.

From a value chain point of view, efficient production starts with high-quality ingredients. If the world wants farmers to produce higher volumes, they must have access to good genetics. Seeds that have the potential to deliver high yields, or farm animals that can produce and grow fast, while using feed and water efficiently, are an absolute necessity. Genetics and agriculture must also take genetic diversity and sustainability into account, but with poor genetics, farmers will not be able to meet food demand, and they will not be financially viable for the long-term. Vision and proper strategy are the elements to deal with this dilemma.

Farming inputs, such fertilizers, pesticides, herbicides and animal feed, must help plants, and farm animals, to express as much of their genetic potential as possible. Suppliers can play a very important role in helping farmers use the proper products in the right amounts, in the right place, and at the right time. The same principle applies for food processors and distributors. It is their role to help farmers deliver what the market needs when it needs it. They must encourage this by rewarding financially the farmers who do things right. This is in the interest of all the parties involved. Farmers make more money with their products. Processors get products that are more efficient to process, thus saving on costs. Distributors gain market share because they offer the right product to their customers, thus increasing customer satisfaction, appeal and loyalty. The advantage of doing things right is that it becomes more difficult for business partners to switch to a competitor. By being the best partner in business, the need for complicated contractual and legal agreements becomes a little less relevant. It is about loyalty and mutual security.

To achieve this kind of ideal situation requires a lot of effort, commitment and communication. Market needs must be translated in clear product specifications. The knowledge on how to be able to meet the required standards needs the proper channels to be transferred to farmers. Access to information has become much easier with the development of communication tools such as Internet and cell phones. Smart phones are helping further, and now farmers, anywhere in the world, have much faster access to market and technical information than by the past. This helps them make faster and better decisions. However, better technologies and better communication tools are not enough. Extension services are crucial. In my book, Future Harvests, several examples show how positive this is for food production. One is the policy of the Ugandan government that resulted in a boom in rice production, making the country a net exporter of rice. The second example is about the extension services of a food corporation, McCain Foods, in India, that helped farmers produce a better quality of potatoes, meeting market requirements, and earning substantially more this way. Another illustration of the positive effect of knowledge transfer is about the farming leader in Burkina Faso who helped increase food production with simple techniques, and stopped the exodus of population. Proper education and on-going training is part of the food production of the future. The human factor in knowledge transfer is as important as ever. Only people can know what the specific situation of a farmer is. Knowing the farmer is the best way to help them set up plans and strategies to improve their technical and financial performance. A farmer being independent business owners, their main concern is to generate enough revenue to stay in business, and to offer a decent standard of living and a secure future for their families. Helping them in these objectives is the way to get their attention and loyalty. Extension services need to offer the most effective solutions by taking into account the level of skills of the farmers, as well as their financial situation. Some farmers can afford and use high-tech solutions easily. Others may have money, but lack the skills to use certain techniques or technologies. Others may be technically savvy, but may lack the money. Extension service people are the ones who can help farmers make the best choices. They also must assist farmers to get the proper financing if this is the limiting factor, for as long as the money would used to deliver the proper return.

As Cicero stated, “The sinews of war are… endless money”. This tends to be overlooked by many who talk about increasing food production. If farmers do not have access to enough money to be able to produce the food the world needs, they simply will not. Developing agriculture requires serious investments, either from individuals or from governments. Asian and Arab countries know this and this is why they spent massive amounts of money in African and Asian countries, and even in Brazil and Argentina. If farmers cannot buy the basics to produce efficiently, they will have poor harvests. If farmers cannot be profitable, they will stop farming. This is important to realize that being a farmer must be attractive financially, too, if we want to motivate the next generation to be in agriculture. Money is important, but just for food production, more is not necessarily better. To get good results, we must ensure to have the right amount of money at the right time at the right place for the right purpose. The money must be aimed at producing for the market. Financing agriculture is about meeting food demand, not to produce blindly. Just like there is a need for efficient market-driven precision agriculture, the future of agriculture financing must evolve to efficient food-market-driven precision financing.

Copyright 2010 – The Happy Future Group Consulting Ltd.


Science taken hostage (cont’d) – The genetically engineered vines

August 27, 2010

Another example of what I had presented in my previous post about the “killer canola” is the case of the genetically engineered vines in France.

Last week, a group of opponents to GMOs went into a trial field of the French Agricultural Research INRA and pulled out vine plants. Two associations reacted strongly to this act of vandalism. The French Association for Scientific Information and the French Association for Plant Biotechnology stated that this act demonstrated that “science and technology are the targets” of such action groups. Of course, this statement is “colored” with some bias, and a little bit of paranoia always adds to the dramatic effect. What I see here is just that instead of a constructive debate about the use of genetic engineering, the rhetoric slides into partisanship and name-calling. Clearly, science does not really weigh much in this. The reality is that two groups with different views on how the world’s future should like oppose each other. The debate is more about politics than science. The people who pulled out the vines just do not want GMOs. Period. Nothing will convince them otherwise. The scientists and technicians see such an act as a threat to their jobs and to their beliefs as well. They will fight back. You can find more details in the article from the French agricultural magazine La France Agricole.

Interestingly enough, the French Minister of Research spoke during an interview about the matter. One of the arguments she brought up was that the “vandals” should be fined the value of all the work involved, meaning all the materials and salaries of the researchers. INRA is a state-owned research institute. As such, that is an interesting idea. Although, she is the Minister and she could use her position to press charges. However, there is no mention of such action from her part, at least explicitly. Would her indignation be only for political reasons? Another interesting aspect of this story is that France, although conducting research on GMOs is one of the fiercest opponents of the use of GMOs in agriculture. Where does science fit in all this?

The thing with science is that it does not take sides. Science is not biased. The same statements apply to Nature, too. It only serves to explains why things are the way they are. Technology, on the other hand is man-made, and therefore assists their users to pursue their agenda and goals. Another aspect about science, especially research is its cost. Conducting research is quite expensive and requires large amounts of funding. Since getting funding is quite similar in its process as selling a service or a product, researchers need to convince. Using drama and even fear works rather well and “polishing” scientific results and conclusion to get the yes to funding is not an unusual practice. The “climategate” story using the emails from researchers telling that they overstated the consequences of climate change is just an example of what extremes scientists sometimes need to go to be able to continue their research and in some cases keep their jobs. Sometimes, scientists are just so convinced about their own conclusions that they also report slightly beyond the truth. Mendel, the “father” of modern genetics supposedly “improved” the results he got with the crossing of his peas to demonstrate how characteristics were passed on through genes.

Copyright 2010 – The Happy Future Group Consulting Ltd.


Future Harvests – A preview of the book

July 24, 2010

My book, Future Harvests, is expected to be published before the end of August.

Here is a preview to give you a flavor of the content.

For a full view, please click on the thumbnails.

 

 

 

 

 

 

 

 

 

 

Here is a sample containing the table of contents and the preface of the book:

 

For the video trailers, please visit my YouTube channel.


Future Harvests – The book is coming soon!

April 9, 2010

 

The editing of my book “Future Harvests – The next agricultural revolution” is about completed. All that is left to do is developing the cover and start the publishing.

I have already received orders, even before the book is out. That is quite a good sign. And a great surprise for me.

If you wish to be updated automatically when the book is published, just subscribe in the sidebar window on the right.

To describe the topics addressed, I have posted three short promotional videos on YouTube. In previous articles (The fun of writing this book and The next agricultural revolution), I had already given an idea about the content of the book.

Video #1: The Fundamentals (duration 2:37) – Introduction to the background and fundamental principles mentioned in the book “Future Harvests – The next agricultural revolution” to achieve food security for 9 billion people in 2050. Topics such as demographics, the shift in economic power, the control of food  and food security strategies are reviewed. Sustainability, innovation, efficient market driven food production and strong leadership are required.

or click here if video does not appear

Video #2: The Actions (duration 2:12) – A short review of some of the actions mentioned in the book to achieve the objectives. Solving the water challenge, finding new land for production, urban farming, hydroponics, farming the desert, rebuilding fisheries and developing aquaculture further are all possibilities.

or click here if video does not appear

Video #3: The Questions (duration 3:08) – A sample of some of the questions raised in the book. They cover technology, land deals in Africa, improving yields, restoring soil fertility, change in consumer needs, organic farming, risks of conflicts, biofuels or meat are some of the topics presented.

or click here if video does not appear

If you know someone who could be interested by the topics on this page, please pass it on!


The next agricultural revolution

February 19, 2010

(Excerpt from my upcoming book, Future Harvests)

The next agricultural revolution to feed nine billion people will be different from the previous one. After World War II, agriculture advanced thanks to chemistry and petroleum. This time, biology and renewable energies will lead us to progress. It will not be just a revolution in science and technology. It also will be a different way to think about the economy and the environment. Knowledge and communication will become increasingly important, even more so than today.

Agriculture is a life science. Biological solutions will gradually replace chemical applications. All sorts of organisms will be involved to improve the way farmers and the food industry will produce.

Bacteria and viruses will help fight pests and diseases. They will help us reduce our use of chemical herbicides and pesticides dramatically. Genetic engineering will evolve and, as a business, it will mature. DNA science will focus on eliminating flaws and on increasing the metabolic efficiency of living organisms. Genetic engineering cannot continue to be about intellectual property and patents. Soon, seed companies all over the world will know how to do the same. Competition and market forces will determine which model will survive. Governments will not allow a select few to control food. They will get involved in genetic engineering programs and they will break monopolies. Genetic improvement will become collective property again.

Ecology will be a part of food production. Agriculture will manage ecosystems, and economy will become the management of the planet. Living organisms on land and in water will assist us. Farmers will think in terms of systems and cycles. Instead of isolating the field, they will integrate environmental parameters as well.

Organic matter will become central in the future agriculture. Farmers will recreate the cycles to improve the structure of the soil and its fertility. Agriculture will help fixing carbon. The use of mineral fertilizers will decrease sharply.

The economics of agriculture will be different, because the economics of energy will be different. New technologies will come. Solar power and wind energy will become common sources of energy. The economics of water will change, too. The management of water will reshape our food production. Water will become substantially more expensive and only systems that save and preserve water will survive.

Information technology will help make decisions faster than ever before. Portable computers will give the farmer the ability to get data almost instantly about the status of the crops, markets, health status and conditions of production. It will allow them to optimize inputs and outputs better and faster. It will save time, inputs and money. Knowledge and information will be our best tool to act efficiently and to improve our food production.

Transparency will become the rule. There will be no secret because consumers will be better informed and because there will be nothing left to hide.

The most critical part of the next agricultural revolution is leadership. Having a responsible long-term vision is critical, but it will not be enough. The world will need leaders that will make the right things happen. In all sectors of the society, there will be a need for such leaders who can muster the energies and who make the general interest and the long-term come first. The need for food security will alter our governance systems, in government as in business ethics. A challenge will be to manage greed and fear. First, there will be greed. Then, there will be fear. Until this day, humans have done a poor job of feeding the world. Famines have come and have gone and there still are hungry people. Humans have done a poor job at preserving their environment, too. With nine billion people, such a poor performance will have much heavier consequences. Procrastinate or being sloppy are attitudes the world cannot afford anymore. The proper leadership will come, but the change will not happen per accident. There will be a heavy crisis first.

Agriculture will regain its place in the economy as the most important activity. A change in the attitude towards funding and investments will also be part of the revolution. More players will engage in agriculture because returns will be higher for all.

The revolution will not just be for farmers and the other players in agriculture to carry out, but consumers will have their share to deliver. A change in mentalities is necessary. Wasting food is not acceptable. Selfishness will not work anymore. Food security is not a given, it is work in progress.

Copyright 2010 – The Happy Future Group Consulting Ltd.