The world’s top soybean buyer is trying to lower its heavy reliance on imports of the oilseed as the pandemic, growing trade tensions and increasing climate disasters raise concerns about feeding its 1.4 billion people.

In its annual rural policy blueprint, known as the “No. 1 document,” the State Council, China’s cabinet, reiterated a recently stated goal to boost grain production capacity by 50 million tonnes, from current production of more than 650 million tonnes.

It will seek to raise corn yields, further support wheat farmers and “vigorously” promote rapeseed production, as well as lesser known oilseed crops such as camelina, state news agency Xinhua reported.

It will also speed up the commercialization of biotech corn and soybeans, according to the document.

No time frame was provided for the launch of GMO corn and soybeans, but many in the market expect a launch this year.

The document said China will fully implement a campaign to reduce soymeal rations in feed, another move to lower its reliance on soybean imports.

However, it acknowledged the role played by trade, and said it will “implement the diversification strategy of agricultural product imports thoroughly.”

The document also outlined plans to protect soil and conserve water, while strengthening controls on the use of arable land.

It also called for further development of indoor farms, with plans to explore building such facilities in the Gobi and other deserts.

— Dominique Patton is Reuters’ chief commodities correspondent in Beijing.

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The ministry of agriculture and rural affairs published a draft document late on Friday proposing a series of amendments to several different regulations that cover GM crops.

The changes implement decisions by the Communist party’s powerful Central Committee and the cabinet on safe management of genetically modified organisms, or GMOs, and development of a modern seed industry, according to the statement.

China’s leadership last year called for an urgent “turnaround” in the country’s seed industry, which is struggling with overcapacity and rampant infringement of intellectual property that has stifled innovation in the sector.

Top policymakers also urged progress in biotech breeding, widely seen as GM crops, and seen as key to ensuring food security.

Beijing has invested heavily in GM research and development for years but has been cautious about commercializing plants that enter the food chain and has never permitted planting of GM soybeans or corn even though they can be imported for use in animal feed.

Among the many proposed changes, a GM trait applied to an already approved hybrid would only need to undergo a one-year production trial before receiving approval, rather than going through the full round of trials needed for new varieties.

“I believe that this is a significant step for GMO commercialization,” said Han Gengchen, chairman of Origin Agritech, the first Chinese company to develop GM corn crops.

“It clarifies the procedures for GMO variety approvals and simplifies the process. It will accelerate GMO corn commercial production,” he told Reuters.

The proposals came after last week’s plenum, or closed-door meeting of more than 300 top leaders of the party’s Central Committee.

The draft is open to public comment until Dec. 12.

— Reporting for Reuters by Dominique Patton.

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The move comes after China last year approved three domestically designed GMO crops as safe, the first in a decade, in a fresh push toward commercial planting of GMO crops in the world’s top soybean importer and a major corn buyer.

Beijing has never permitted planting of GMO soybean or corn varieties but it permits their import for use in animal feed.

The government has said recently, however, that it wants to support biotech breeding to boost food security, leading the industry to expect progress toward commercialization in the coming year.

The ministry of agriculture and rural affairs has opened its plan for safety approval for public comment until Feb. 1.

One of the new products, a glufosate and glufosinate-resistant soybean known as DBN9004, has already been approved as safe in Argentina, where Dabeinong is also seeking commercial production.

The other, known as DBN9501, is a corn resistant to the fall armyworm pest, which last year reached China’s cornbelt region.

Dabeinong could not be reached for comment.

Though several further steps must be taken before farmers in China are allowed to plant the crops, the approval is seen as timely given a growing corn deficit in the world’s top grain grower.

“The arrival of GMOs can bring an increase in production efficiency,” said Mao Yifan, analyst at Industrial Securities.

The ministry also said on Monday it had approved two new GMO corn varieties for import, the glyphosate- and insect-resistant MON87411 sold by Bayer’s CropScience unit, and MZIR098, produced by Syngenta.

The two corn varieties have been approved in Canada since 2015 and 2016 respectively.

“We appreciate the approval of an existing product,” said Holger Elfes, a spokesman for Bayer.

“Syngenta Seeds is pleased to receive import approval from China for our innovative corn, which successfully combats corn rootworm, a scourge of farmers,” said Saswato Das, spokesman for Syngenta, a unit of China’s state-owned ChemChina.

— Reporting for Reuters by Dominique Patton and Hallie Gu; additional reporting by John Revill in Zurich. Includes files from Glacier FarmMedia Network staff.

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As a result, some products could be sold to farmers without a USDA review — a move that comes despite concerns by consumer groups over biotech crops.

The final rule is the first major overhaul of USDA’s regulations over biotech plants, seeds and microbes since 1987, the agency said. Previously, USDA’s review system focused on genetically modified organisms, where a gene is added from another organism.

Existing regulations have not kept up with emerging technologies such as plant gene editing, which works like the find-and-replace function on a word processor: It finds a gene and then makes changes by amending or deleting it.

Scientists can edit genomes more precisely and rapidly, and altered agricultural products could get to market more quickly and cheaply, say biotech advocates.

If a company uses biotech to create a product that has traits that could have been achieved through traditional plant breeding, it would no longer have to go through a pre-market review through USDA, the agency said.

Such products typically require USDA to conduct a risk assessment of whether they can cause or spread plant diseases, among other vetting. Some of those products also are reviewed or regulated by the Food and Drug Administration, which has oversight over food safety, and the Environmental Protection Agency.

“If it’s a GMO, that’s basically what they’ve been looking at over and over again for the past 20 years, they’re saying they don’t need to look at new examples,” said Clint Nesbitt, senior director of science and regulatory affairs with Biotechnology Innovation Organization, an industry group that represents companies such as Bayer.

“If what you’ve done with gene editing could have been done with plant breeding, you’re good to go,” Nesbitt said.

The change, first proposed during the Obama administration, comes after U.S. President Donald Trump signed an executive order last summer directing federal agencies to streamline the review process for agricultural biotechnology including genetically modified livestock and seeds.

Consumers have pushed for years for greater transparency over what is in their food, fighting for GMO labeling on consumer products against pushback from farmers, biotech firms and food companies that argue such genetically engineered ingredients are safe.

Genetically modified crops were a sticking point between the United States and China during their trade war. Beijing took years to approve new strains of those crops, which U.S. companies and farmers have complained stalls trade by restricting the sales of new products.

— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Tom Polansek in Chicago.

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Trump signed the order during a visit to an ethanol plant in Council Bluffs, Iowa.

The executive order, he said, would “speed up reviews of biotechnology so that farmers can get access to critical scientific advances faster and reap the full benefits of American innovation for many years into the future.”

The White House said in a statement the order “will help eliminate delays, reduce developer costs and provide greater certainty about the review process for farmers.”

The Biotechnology Innovation Organization, an industry group that represents companies such as Bayer, said the order was an “important step forward to ensure government policy does not hinder 21st-century biotechnology from addressing the many global challenges.”

“America is on the threshold of entering a new era of sustainable agriculture and food production, and it’s important we get this right for farmers, consumers, U.S. companies, and the world as a whole,” said Jim Greenwood, chief executive of the organization.

The order directs the U.S. Department of Agriculture, the Food and Drug Administration and the Environmental Protection Agency to work together on “common sense regulations and to develop awareness and education programs to gain acceptance of new technologies by consumers and global trading partners,” the National Pork Producers Council said.

The United States is falling behind countries such as Canada, Brazil and China that have established regulatory frameworks conducive to investment in the development of gene editing, said David Herring, president of the pork council and a hog farmer from Lillington, North Carolina.

“Today’s executive order paves the way for common sense regulation to keep America first in agriculture so that we remain the global leader in an economic sector that has offset the U.S. trade imbalance for decades,” Herring said.

Unlike traditional genetically modified organisms, in which a gene is added from another organism, gene editing works like the find-and-replace function on a word processor. It finds a gene and then makes changes by amending or deleting it.

Scientists can edit genomes more precisely and rapidly than ever before, and altered agricultural products could get to market more quickly and cheaply.

The U.S. told the World Trade Organization on Friday that it was planning to revise its regulations on importing, transporting and releasing GMOs.

— Roberta Rampton is Reuters’ White House correspondent based in Washington, D.C.; additional reporting by Tom Polansek in Chicago; writing by David Alexander and Mohammad Zargham.

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The prospect of “very tangible changes” contributed to a decision by key board members to extend the contract of Hartmut Klusik, the 62-year-old head of personnel, which was due to expire at the end of the year, the source said. That decision is due to be signed off by the full board in September.

The savings that Bayer — the inventor of Aspirin and maker of Yasmin birth control pills — could make as part of the overhaul would give it financial wiggle room as it competes with larger rivals to buy the right to promising treatments from biotech firms.

Bayer, which is due to release second-quarter results on Wednesday, is under pressure from investors to make purchases or do licensing deals that they say are needed to ensure the long-term independence of the pharmaceutical division.

But any major external expansion is unlikely until after the review is complete, the source said.

A company spokesman declined to comment on Klusik, any potential job cuts or outsourcing.

An extension of Klusik’s contract had been in doubt, two sources familiar with the company said. This is because drug production at Bayer’s Leverkusen plant in Germany was found to be substandard by U.S. regulators in February and this fell under his remit.

Bayer has said it launched the R+D review — starting in January when drug development head Joerg Moeller was given additional control over research and discovery in January — to “seamlessly steer” R+D activities.

A new team reporting directly to Moeller has just been appointed to help map out the new setup, a third source said.

The review will look at whether drug testing services should be outsourced to cheaper contractors. Labour representatives, who are worried about jobs moving outside the company, are involved in the talks, the first source said.

Window of opportunity

After Bayer’s US$63 billion acquisition of Monsanto, which was concluded June 7, profits depend equally on farming supplies and pharmaceuticals. Without an upgrade of the drugs pipeline, analysts say the balance could swing in favour of the agriculture unit.

Revenues from the drug unit’s top products, blood thinner Xarelto and eye drug Eylea, will peak over the next six years.

“That gives Bayer a window of one two three years to licence something in and, if not, to show that something is yet to emerge from its earlier-stage pipeline,” said Frankfurt-based fund manager Markus Manns at Union Investment, who holds Bayer shares.

Analysts say a better pipeline is crucial to preserving the independence of a pharma business that ranks 15th place among global peers, with about half the revenues of top three, Novartis, Pfizer and Roche.

“If Bayer consisted only of its pharma division they would certainly be an attractive takeover target and would probably not prevail on a standalone basis,” said Manns.

The sources said that CEO Werner Baumann and chairman Werner Wenning’s push to acquire Monsanto was meant to render Bayer immune to unwanted overtures from larger pharmaceutical rivals.

The Bayer spokesman declined to comment.

Limited firepower

Bayer has said its six most promising experimental treatments had an annual peak sales potential of at least six billion euros. CEO Baumann said in May that, with 50 projects in the clinical stage, pharma development was well positioned.

Investors have said Bayer’s November deal with Loxo Oncology to jointly develop cancer drug larotrectinib, was a step in the right direction.

A number of drug development projects fell short recently, including a trial on drug anetumab ravtansine against an asbestos-linked type of cancer and a bid to widen the use of prostate cancer drug Xofigo.

Other problems are also piling up for CEO Baumann. These include the prospect of years of lawsuits against Monsanto, the order by U.S. regulators to fix production problems in Germany and weak sales of consumer healthcare products.

Financial firepower for expansion is limited. Standard + Poor’s cut its credit rating to triple-B in the wake of the Monsanto deal. Bayer has said it will pay back debt to return to a single A rating.

— Reporting for Reuters by Ludwig Burger and Patricia Weiss; additional reporting by Matthias Inverardi in Duesseldorf.

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The U.S. seed and chemical company’s Canadian arm announced last week it plans to commercialize TruFlex canola in 2019, following plot trials and field demonstrations scheduled to run this year at “several locations” in Western Canada under a “robust” stewardship plan.

Monsanto has had TruFlex technology on hold for about seven years pending regulatory approval from canola-importing nations — including China, by far Canada’s biggest export customer for canola seed, which has yet to sign off on the technology.

TruFlex, Monsanto said, will be the company’s “next-generation” canola trait and its first new biotech trait in canola since it introduced Roundup Ready canola in 1996.

The TruFlex canola system is expected to “enable a wider application window, providing growers with up to 10-14 more spray days than our current technology,” extending past the six-leaf stage “all the way to the first flower.”

The system is also meant to allow growers more flexibility in spray rates and help them choose “the right rate for the unique weed challenges they face.”

TruFlex canola will allow growers the option to apply the company’s Roundup WeatherMax glyphosate herbicide in-crop at a rate of 1.33 litres per acre for a single application, or 0.67 litres/acre for two applications, controlling 24 new weed species.

That’s compared to the maximum permitted rate of 0.5 litres/acre for a single application or 0.33 litres/acre for split applications with the company’s current Genuity Roundup Ready canola lines.

However, a Monsanto representative emphasized via email, that doesn’t mean a TruFlex canola grower will always use the higher TruFlex rate.

“We encourage farmers to use the right rate at the right time for the targeted weed spectrum,” the company said. “The higher rates permitted with TruFlex canola will allow farmers to control those tough-to-control weeds if required, without affecting crop safety.”

“Dandelions, foxtail barley and wild buckwheat are some examples of tough-to-control perennial and annual weeds that will have improved control with the TruFlex canola system compared to our current technology,” David Kelner, Monsanto’s North American canola portfolio manager, said in a release, referring to the company’s Genuity Roundup Ready canola system.

“As well, the flexibility in spray rates will allow for control of a much wider spectrum of weeds, with the ability to control new weeds such as yellow foxtail, biennial wormwood and common milkweed.”

Both the Canadian Food Inspection Agency and Health Canada have long since signed off on TruFlex, having granted full food, feed and environmental safety approval for the new trait in June 2012.

Import approval from China “should be granted in the first quarter of 2019,” said Monsanto, which applied for China’s approval of the trait in late June 2012.

Approvals are also pending from India, where Monsanto applied in May 2013 for permits for import of crude and processed TruFlex canola oil, and from Vietnam, where Monsanto filed for TruFlex approval in late 2015.

TruFlex technology, “in my mind, should’ve been in the Canadian market three or four years ago,” Robb Fraley, Monsanto’s chief technology officer, told reporters on a conference call in January this year.

Approvals have been received over the past seven years from regulatory agencies in Japan, Mexico, the U.S., Australia, South Korea, Taiwan, the Philippines, Colombia and the European Union’s European Food Safety Authority.

The most recent such approval came from Singapore, whose Agri-Food and Veterinary Authority signed off on the trait in March last year. — AGCanada.com Network

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China, which has spent billions of dollars researching GMO crops, has already embraced the technology for cotton but has not yet permitted the cultivation of any biotech food crops amid fears from some consumers over perceived health risks.

In its latest five-year plan for science and technology to 2020, China for the first time outlined specific GMO crops to be developed, including soybeans — used in food products such as tofu and soy sauce and for animal feed — and corn.

The blueprint, published on the government’s website on Monday, recommended “pushing forward the commercialization of new pest-resistant cotton, pest-resistant corn and herbicide-resistant soybeans.”

The use of the technology for corn was flagged in April when an agriculture official said that Beijing could greenlight GMO crops in the next five years. Corn is used mostly for animal feed and industrial products like starch and sweeteners and a move to biotech crops could be less contentious than with soybeans.

Support for new soybean varieties comes as China seeks to overhaul its crop structure. Farmers are being encouraged to switch from growing corn to soybeans and to rotate between crops.

But analysts say boosting soybean production could be difficult without higher subsidies.

China is expected to produce 12.5 million tonnes of soy in 2016-17 but will import a record 86 million tonnes, according to a forecast by U.S. agriculture officials. China permits the import of GMO soybeans for use in animal feed.

Herbicide-resistant soybeans are already planted by most growers in the U.S., the world’s top soy producer.

“You can’t manually kill weeds on the large farms in the northeast,” said an executive at a seed company in China. “If if you’re going to rotate between soy and corn, herbicide-tolerant soybeans are needed for mechanization,” he added, referring to the need for crops to be able to tolerate repeated exposure to herbicides applied by tractors.

But cultivating GMO soybeans is likely to face strong resistance from consumers and a local industry that sells GMO-free soybeans at a premium to imported beans.

“The major production areas for key commodity crops shouldn’t be planted with GMOs,” said Liu Denggao, vice-president of the Chinese Soybean Industry Association.

“Domestic soybeans are extremely desired and trusted by consumers for food.”

Commercialisation of GMO soy is likely to take a backseat to GMO corn, however, said Huang Dafang, professor at the Biotechnology Research Institute under the Chinese Academy of Agricultural Sciences.

The government has previously said it will roll out biotech varieties of industrial crops such as corn before moving to food crops like soya.

“Corn is more important from a production point of view,” Huang said.

— Reporting for Reuters by Dominique Patton.

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BASF’s plant biotechnology unit is developing improved plant characteristics such as drought tolerability but relies on partners, the biggest being Monsanto, to bring finished seed products to market.

Alliances with such partners are not affected by the cutbacks, a spokeswoman said.

BASF, also the world’s third largest maker of farming pesticides, spends about 150 million euros (C$225 million) per year on plant biotechnology research but has not disclosed sales or earnings figures for these activities.

A spokeswoman declined to comment on any cuts to annual budgets at the unit.

— Reporting for Reuters by Ludwig Burger.

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